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In a key win, the Oakland-based non-profit advocacy group, As You SowÂ defeated ExxonMobilâ€™s attempt to suppress an innovative, first of its kind shareholder resolution. TheÂ resolution asks Exxon to report its energy resources in an energy-neutral metricâ€”BTUsâ€”in addition to theÂ traditional â€œbarrels of oil equivalentâ€ standard. Establishing a climate-friendly measure of energy reserves isÂ a key step in incentivizing management, and the market, to support the transition to a clean energy economy.
â€œWe are pleased the SEC sided with shareholders concerned with climate risk,â€ said Danielle Fugere, As YouÂ Sowâ€™s president and chief counsel. â€œExxon must allow shareholders to vote on this first step on the pathÂ toward clean energy. Broad support will give management the latitude to develop a diverse and profitableÂ low carbon business plan, while maintaining 100 percent BTU energy replacements.â€
In response to Exxonâ€™s SEC bid to stop the resolution from being voted on by shareholders, As You SowÂ successfully argued that, â€œâ€¦ in a rapidly decarbonizing economy, fossil fuel companies must develop climate change-responsive business modelsâ€ and one possible path is to transition into energy companiesÂ not dependent on carbon intense, climate damaging commodities.
Exxon currently accounts for its energy assets in â€œbarrels of oil equivalent.â€ As You Sow noted in its SECÂ reply that this accounting measure discourages a low carbon transition by linking the calculation of aÂ companyâ€™s assets, and therefore its value, to carbon based-metrics.
The resolution proposes reportingÂ company energy resources neutrally, by category, so that all resourcesâ€”including solar, wind, biofuels,Â geothermal and other renewablesâ€”will be accounted for as BTUs and valued. This metric decouples ExxonÂ and its shareholders from oilâ€™s declining profitability, its escalating climate damage and Exxonâ€™s decreasingÂ ability to economically replace its oil reserves.
Shareholders seek Exxonâ€™s leadership in beginning the inevitable transition to becoming a diversifiedÂ energy company able to compete in a decarbonizing economy.
As You Sow is simultaneously filing a petition with the SEC to change its reporting requirements to anÂ energy neutral metric, which will free the oil industry as a whole from oil-dependent financial valuation.
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