Striking accord

Paris accord weakens Exxon's proxy defences

The warm winds of Paris are blowing through Irving, Texas. A United Nations accord on climate change struck in the French capital late last year has emboldened shareholders to propose more resolutions on global warming, including at Exxon Mobil with its Lone Star state headquarters. Energy companies can't so easily resist such demands.

The New York state comptroller and four other stockholders of the $350-billion oil and gas titan are pressing ahead with their fight. They want a vote urging Exxon to publish annual assessments of the risks posed by climate policy to its wells, reserves and other operations.

The proposal is just one among many. About 85 similar ballot suggestions have been filed so far in 2016, a quarter more than a year ago, according to proxy advisory firm Institutional Shareholder Services (ISS). Ones that proceed have better odds of weathering a challenge like Exxon's at the US Securities and Exchange Commission (SEC). The agency shot down only one of 12 last year.

Exxon's two main arguments are weak. First, the company says the proposal is too vague. On the other hand, it says it already has substantially implemented the objectives in a 2014 report about managing risks. The claims are in conflict, and suggest Exxon is trying to game the system. It only needs to persuade the SEC to latch onto one to keep the measure from going to a vote.

The ambiguity assertion also has less validity. The Paris agreement codifies a 196-party goal of limiting the rise in temperature to less than two degrees Celsius. What's more, Exxon's rivals don't seem to have any problem spelling out the potential effects of this specific greenhouse-gas policy. Royal Dutch Shell, BP, Statoil and ConocoPhillips all have recognised the risks.

Environmental and social resolutions typically struggle to secure a majority. Support has grown steadily, though, from an average of under eight percent in 2000 to 20 per cent in 2015, according to ISS. A significant minority can move management and boards. With Paris at their backs, the climate is right for shareholders to extract more useful information from the likes of Exxon.