Shareholders Raise Alarm: Petrochemical Investments Are a Risky Bet

Today, at the annual meetings of two fossil fuel majors, 46% of investors voted to support a shareholder resolution at Chevron and 25% at Exxon, according to preliminary results announced at the meeting. The proposals, filed by shareholder advocacy group As You Sow, ask Exxon and Chevron to report on the public health risks of expanding petrochemical operations in areas increasingly prone to climate change-induced storms, flooding, and sea level rise. The same proposal received a majority 54.7% vote at Phillips 66 earlier this month.

"These investor votes demonstrate increasing concern for companies expanding petrochemical operations in areas that are facing climate-related physical impacts like stronger and more frequent storms and flooding," stated Lila Holzman, Energy Program Manager of As You Sow. "Company disclosures that indicate clinging to status quo risk management practices are clearly insufficient."

This is the second year this proposal has gone to a vote at Exxon, with last year's proposal having received the same notable 25% of shareholders in support. Since then, Exxon has failed to acknowledge the significance of its investors' concern and has made no substantive changes to its related disclosures since the vote in May 2019.

While climate impacts pose clear and growing risk to petrochemical operations and surrounding communities, Exxon and Chevron continue to contribute to that climate risk with their greenhouse gas-intensive, business as usual, operations -- despite the global energy transition away from fossil fuels. As You Sow has sought information as to whether the companies have any future plans to reduce their full carbon footprints, filing shareholder resolutions on the topic of Paris alignment with Exxon and Chevron; rather than respond, both companies have denied shareholders the right to vote on this critical issue by challenging the proposals at the U.S. Securities and Exchange Commission.

"Exxon and Chevron continue to give lip service to the goals of the Paris Agreement, while failing to clarify for investors if or how they will reduce their emissions in alignment with the Paris Agreement's critical 1.5 degree Celsius goal," stated Danielle Fugere, President of As You Sow. "Rather than meet the science head on, with proactive plans and long-term business strategies responsive to the global energy transition, Exxon and Chevron's focus appears short term as they lag their European peers. Their actions are exacerbating the climate crisis and, in turn, putting their own operations, communities, and investors' portfolios at risk."

Both companies have made a significant push into carbon-intensive petrochemical investments across the flood-prone Gulf Coast. These petrochemical operations include facilities that also produce dangerous pollutants, such as benzene, volatile organic compounds (VOCs), and sulfur dioxide. Such facilities can become inundated during extreme weather events and release toxic chemicals as they experience upsets and malfunctions.

During Hurricane Harvey, some estimates found roughly two million pounds of hazardous air pollutants were emitted from local oil refineries and chemical plants around the Houston area. One report found Chevron Phillips Chemical Company (a joint venture of Chevron and Phillips 66) was responsible for more than 745,000 pounds of storm-related pollution and Exxon 560,000 pounds, the second and fourth largest pollution releases during Harvey respectively. Following the storm, local community members reported health impacts such as respiratory illness, nausea, and headaches, among others. Some health impacts may be long-term and worse than captured by initial incident reports.

"Shareholders are also concerned that Exxon and Chevron are allocating significant resources to risky petrochemical investments at a time when trends show that plastic use must be limited due to its significant carbon footprint in addition to the growing global backlash against ocean plastic pollution," commented Holzman. "This concern is exacerbated because the companies do not appear to sufficiently account for physical climate change impacts in their planning processes, thereby exposing themselves, their shareholders, and their communities to more avoidable and unacceptable risks."

To learn more about As You Sow's work on climate change, click here.