Report on Kyoto Protocol Compliance. – ExxonMobil

WHEREAS, international energy companies face unprecedented pressure to reduce greenhouse gas (GHG) emissions. Nations implementing the Kyoto Protocol are committed to significant reductions.

The Guardian (10/07/04) reported: “Exxon… saw its greenhouse gas emissions jump 2% last year to 135.6m tones” and that “an Exxon spokesman admitted that the company had no targets for reductions in CO₂ emissions although he insisted that it was working hard on ‘energy efficiency’ gains.” It said ExxonMobil’s “emissions are more than 50% higher than those of rival Britain’s BP despite the US firm’s oil and gas production being only slightly larger.”At the World Energy Congress (09/07/04), ExxonMobil’s Science Strategy and Programs Manager, Brian Flannery, said the company depends on new technology to address the issue, “not emissions abatement goals” (Asia Pulse Pte Limited, 09/07/04).

Flannery also noted the bulk of new energy demand “would come from developing countries which were outside the Kyoto Protocol.” However, presently ExxonMobil is significantly exposed to climate regulations. In 2003 at least 37% of our Company’s revenue came from just five nations (Canada, Japan, UK, Germany, Italy) that have signed the Kyoto Protocol.

ExxonMobil’s commitment toward “technological solutions for energy supply and use with much lower greenhouse gas emissions” seems overly dependent on the $10 million a year it’s given Stanford University’s Global Climate and Energy Project.

Competitors (ie, Shell, BP, ConocoPhillips, Statoil, Amerada Hess and Suncor) have taken early actions to reduce their exposure to climate related risks, including assuming costs for carbon in their strategic planning, reporting on and reducing their GHG emissions, engaging in emissions trading, and investing in renewable energy. BP’s emissions reduction activities have generated savings with an NPV of $650 million.

ExxonMobil’s own data show its total spending on research and development from 1997 – 2003 decreased between 2002-2003; meanwhile two of its three main competitors’ expenditures increased (WSJ 07/17/04).

Such conflicting data and statements create confusion about whether and how the company is prepared to cost-effectively meet GHG reduction requirements, exposing it to unnecessary risks. Pressure from pension funds to examine climate change risks raises the possibility that industry segments like our own “could be viewed as inherently risky because of their exposure to climate-change regulations” (WSJ 10/27/04).

This same resolution received an unprecedented 28+% of the vote of shareholders at the 2005 annual meeting.

RESOLVED: Shareholders request the Board undertake a comprehensive review and publish within six months of the annual meeting a report on how ExxonMobil will meet the greenhouse gas reduction targets of those countries in which it operates which have adopted the Kyoto Protocol.

Supporting Statement:

The proponents hope the report will include:

• Projections of costs;
• Timelines for meeting mandatory reduction targets.
• An evaluation of whether earlier action to reduce emissions, as undertaken by key ExxonMobil competitors, would have reduced these costs.
• A study of the feasibility of reducing emissions in the US, which does not have restrictions on GHG emissions at the federal level but might implement them in the future.

Greenhouse Gas Emisions – Anadarko Petroleum

Climate Change – General Motors

WHEREAS: In the past two years higher, more volatile fuel prices in the U.S. has changed the purchasing patterns of consumers disrupting the financial health of our company. The latest federal projections suggest gasoline prices will be significantly higher over the next decade (Energy Information Administration, Annual Energy Outlook, 2006).

In the U.S., passenger cars and light trucks account for one-fifth of all annual U.S. carbon dioxide emissions linked to climate change.

General Motors bears the auto industry’s highest “carbon burden” – or total carbon dioxide emissions associated with its fleet, due in part to the poor fuel efficiency of its products, not just the size of its fleet.

Worldwide consensus that greenhouse gas (GHG) emissions need to be reduced continues to grow, with ratification of the Kyoto Protocol causing many countries to enact limits on these emissions. Already, the European Union and some U.S. states have enacted similar limits, and Canada’s reduction target of 25% is due by 2010.

In September 2004, the California Air Resources Board adopted regulations requiring new vehicle GHG emissions reduction in California starting in model year 2009; other states are following. Roughly, one-quarter of the US vehicle market is currently required to meet California’s standards, which will include GHG emissions standards.

Increasingly stringent fuel efficiency standards in major markets are creating business opportunities markets favorable to automakers with lower carbon burdens and agility in introducing clean technology vehicles.

Competitors Honda and Toyota, whose fleetwide fuel economy averages are already higher than average, have been moving quickly to introduce advanced technology vehicles with low GHG emissions to consumers. Toyota successfully introduced hybrid vehicles to the U.S. market in 1998, and has moved to the second generation of hybrid technology. Toyota and Honda are projected to dominate the market for hybrids over the next five years.

While GM is investing in advanced technologies such as hybrids and hydrogen fuel cells and plans to bring some advanced technologies and some improved conventional technologies to market in select products, our Company has not reported to investors its expectations for reductions in GM’s overall carbon burden or its ability to meet near-and long-term emerging global competitive and regulatory scenarios.

RESOLVED:

The shareholders request that a committee of independent directors of the Board assess (a) how the Company will ensure competitive positioning based on emerging near and long-term GHG regulatory scenarios at the state, regional, national and international levels, (b) how the Company plans to comply with California’s greenhouse gas standards, and (c) how the Company can significantly reduce GHG emissions from its national fleet of vehicle product (using a 2005 baseline) by 2015 and 2025, and report to shareholders (at reasonable cost and omitting proprietary information) by September 1, 2006.

Supporting Statement

We believe management has a fiduciary duty to carefully assess and disclose to shareholders all pertinent information on its response associated with climate change, particularly as it relates to an emerging business reality. Last year Ford agreed to this request and published its report in December 2005.

Climate Change Report – Wells Fargo

Climate Change Report – General Motors

Whereas:

In the U.S., passenger cars and light trucks account for one-fifth of all annual U.S. carbon dioxide emissions linked to climate change.

General Motors bears the auto industry’s highest “carbon burden” – or total carbon dioxide emissions associated with its fleet, due in part to the poor fuel efficiency of its products, not the size of its fleet.

Worldwide consensus that greenhouse gas (GHG) emissions need to be reduced continues to grow, with ratification of the Kyoto Protocol causing many countries to enact limits on these emissions. Already, the European Union and some U.S. states have enacted similar limits, and Canada’s reduction target of 25% is due by the end of the decade.

In September 2004, the California Air Resources Board adopted regulations requiring vehicle emissions reduction in California; other states will follow. Roughly one-quarter of the US vehicle market is currently required to meet California’s standards, to which the greenhouse gas regulations will eventually be added.

Fuel-efficiency standards more stringent than U.S. standards have recently been approved in China, the fastest-growing passenger car market in the world. Most of GM’s SUVs sold today in the U.S. would be illegal for sale in China by 2008.

These standards are creating markets favorable to automakers with lower carbon burdens and agility in introducing clean technology vehicles.

Competitors Honda and Toyota, already offering vehicles with better than average fuel economy, have been moving quickly to introduce lower-emission advanced technology vehicles to consumers. Toyota successfully introduced hybrid vehicles to the U.S. market three model years ago, and has already moved to the second generation of hybrid technology. Toyota is now poised to sell more cars in the U.S. than Chevrolet and Ford combined (Associated Press 9/5/03).

In January, 2004, General Motors delayed the production of its first full hybrid vehicle, the Saturn Vue SUV, in order to develop new technologies not already patented by Toyota.

While GM is investing in advanced technologies such as hybrids and hydrogen fuel cells and plans to bring some advanced technologies and some improved conventional technologies to market in select products, our Company has not reported to investors its expectations for reductions in GM’s overall carbon burden or its ability to meet near-and long-term emerging global competitive and regulatory scenarios.

Resolved: The shareholders request that a committee of independent directors of the Board assess (a) how the Company will ensure competitive positioning based on emerging near and long-term GHG regulatory scenarios at the state, regional, national and international levels, (b) how the Company plans to comply with California’s greenhouse gas standards, and (c) how the Company can significantly reduce greenhouse gas emissions from its national fleet of vehicle product (using a 2004 baseline) by 2014 and 2024, and report to shareholders (at reasonable cost and omitting proprietary information) by September 1, 2005.

SUPPORTING STATEMENT

We believe management has a fiduciary duty to carefully assess and disclose to shareholders all pertinent information on its response associated with climate change, particularly as it relates to an emerging business reality.

Climate Change Report – Ford Motor

WHEREAS: In the U.S., passenger cars and light trucks account for one-fifth of all annual U.S. carbon dioxide emissions linked to climate change.

Ford Motor Company bears the auto industry’s second-highest “carbon burden” – or total carbon dioxide emissions associated with its fleet, due in part to the poor fuel efficiency of its products, not the size of its fleet.

Worldwide consensus that greenhouse gas (GHG) emissions need to be reduced continues to grow, with ratification of the Kyoto Protocol causing many countries to enact limits on these emissions. Already, the European Union and some U.S. states have enacted similar limits, and Canada’s reduction target of 25% is due by the end of the decade.

In September 2004, the California Air Resources Board adopted regulations requiring vehicle emissions reduction in California; other states will follow. Roughly one-quarter of the US vehicle market is currently required to meet California’s standards, to which the greenhouse gas regulations will eventually be added.

Fuel-efficiency standards more stringent than U.S. standards have recently been approved in China, the fastest-growing passenger car market in the world. Most of Ford’s SUVs sold today in the U.S. would be illegal for sale in China by 2008.

These standards are creating markets favorable to automakers with lower carbon burdens and agility in introducing clean technology vehicles.Competitors Honda and Toyota, already offering vehicles with better than average fuel economy, have been moving quickly to introduce lower-emission advanced technology vehicles to consumers. Toyota successfully introduced hybrid vehicles to the U.S. market three model years ago, and has already moved to the second generation of hybrid technology. Toyota has outsold Ford worldwide for the first time in history (USA Today 11/11/03).

In January, 2004, Ford announced that it would be forced to purchase patent rights from Toyota in order to launch its first hybrid-technology vehicle, a hybrid version of the Escape SUV.

While Ford is investing in advanced technologies such as hybrids and hydrogen fuel cells and plans to bring some advanced technologies and some improved conventional technologies to market in select products, our Company has not reported to investors its expectations for reductions in Ford’s overall carbon burden or its ability to meet near-and long-term emerging global competitive and regulatory scenarios.

RESOLVED:

The shareholders request that a committee of independent directors of the Board assess (a) how the Company will ensure competitive positioning based on emerging near and long-term GHG regulatory scenarios at the state, regional, national and international levels, (b) how the Company plans to comply with California’s greenhouse gas standards, and (c) how the Company can significantly reduce greenhouse gas emissions from its national fleet of vehicle product (using a 2004 baseline) by 2014 and 2024, and report to shareholders (at reasonable cost and omitting proprietary information) by September 1, 2005.

SUPPORTING STATEMENT

We believe management has a fiduciary duty to carefully assess and disclose to shareholders all pertinent information on its response associated with climate change, particularly as it relates to an emerging business reality.

Climate Change Report – Dominion Resources

WHEREAS: A 2004 report by the Bush Administration’s Climate Change Science Program stated that increases in human-derived greenhouse gas emissions are the only likely explanation for global warming over the past three decades.

A 2004 Conference Board report declared that, “scientific consensus that the climate is changing is growing steadily stronger over time; Corporate boards will be increasingly expected to evaluate potential risks associated with climate change; and, the global economy will become less carbon-intensive over time…The real questions are what the pace of the transition will be and who will be the winners and losers.”

U.S. power plants are responsible for nearly 40 percent of the country’s carbon dioxide emissions, and 10 percent of global carbon dioxide emissions. Scientists estimate that about 160,000 people die yearly from side-effects of global warming ranging from malaria to malnutrition and the numbers could double by 2020.

A 2003 Department of Defense report outlined a plausible abrupt climate change scenario that “would challenge the United States national security in ways that should be considered immediately.”

An August 2004 Business Week cover story noted that executives at AEP, Exelon and Xcel are preparing for mandatory carbon dioxide emissions constraints. Developments include: more than 90 countries ratifying the Kyoto Protocol; eleven Governors pledging to reduce emissions significantly; and renewable energy standards in sixteen states, indicating increasing support for non-polluting electricity sources. In October 2003, 43 U.S. Senators voted in favor of legislation to cap greenhouse gas emissions from a range of industrial sectors.

Recent reports by CERES, The Carbon Disclosure Project, Innovest Strategic Value Advisors, and the Investor Responsibility Research Center demonstrate the growing financial risks of climate change for US corporations.

Attorneys general from eight states have filed a public nuisance lawsuit demanding that Cinergy, American Electric Power Co., Southern Co., Xcel Energy and Tennessee Valley Authority reduce carbon dioxide emissions 3 percent per year for the next 10 years.

In a July 2004 Newsweek story, the insurance company AXA estimated that 20 percent of global GDP is affected by climatic events and, “climatic risk in numerous branches of industry is more important than the risk of interest rates or foreign exchange risk.”

In 2004, AEP, Cinergy, TXU, and Southern Company agreed to issue comprehensive reports to shareholders about their financial exposure under potential emissions control scenarios. AEP stated, “some initial mandatory reductions of greenhouse gas emissions are likely in the next decade, the economic impact of controlling greenhouse gas and other emissions thus depends on the company’s ability to meet these goals… Management and the Board have a fiduciary duty to carefully assess and disclose to shareholders appropriate information on the company’s environmental risk exposure.”

RESOLVED: The shareholders request that a committee of independent directors of the Board assess how the company is responding to rising regulatory, competitive, and public pressure to significantly reduce carbon dioxide and other emissions and report to shareholders (at reasonable cost and omitting proprietary information) by September 1, 2005.

Report on Kyoto Protocol Compliance – Exxon Mobil

WHEREAS, as investors we believe Exxon Mobil’s management is sending confusing messages about its efforts at greenhouse gas reductions; international energy companies face unprecedented pressure to reduce greenhouse gas (GHG) emissions. Nations implementing the Kyoto Protocol are committed to significant reductions. 

This resolution’s proponents believe Exxon Mobil is poorly positioned to meet increasing mandates to reduce GHG emissions in a cost-effective way.

The Guardian (10/07/04) reported: “Exxon saw its greenhouse gas emissions jump 2% last year to 135.6 million tonnes” and that “an Exxon spokesman admitted that the company had no targets for reductions in CO2 emissions although he insisted that it was working hard on ‘energy efficiency’ gains.” It said Exxon Mobil’s “emissions are more than 50% higher than those of rival Britain’s BP despite the US firm’s oil and gas production being only slightly larger.”

At the World Energy Congress (09/07/04), Exxon Mobil’s Science Strategy and Programs Manager, Brian Flannery, said the company depends on new technology to address the issue, “not emissions abatement goals” (Asia Pulse Pte Limited, 09/07/04).

Flannery also noted the bulk of new energy demand “would come from developing countries which were outside the Kyoto Protocol.” However, presently Exxon Mobil is significantly exposed to climate regulations. In 2003 at least 37% of our Company’s revenue came from just five nations (Canada, Japan, UK, Germany, Italy) that have signed the Kyoto Protocols. 

Exxon Mobil’s commitment toward “technological solutions for energy supply and use with much lower greenhouse gas emissions” seems limited to the $10 million a year it’s given Stanford University’s Global Climate and Energy Project.

Competitors (ie, Shell, BP, ConocoPhillips, Statoil, Amerada Hess and Suncor) have taken early actions to reduce their exposure to climate related risks, including assuming costs for carbon in their strategic planning, reporting on and reducing their GHG emissions, engaging in emissions trading, and investing in renewable energy. BP’s emissions reduction activities have generated savings with an NPV of $650 million.

Exxon Mobil’s own data show its total spending on research and development from 1997 – 2003 decreased between 2002-2003; meanwhile two of its three main competitors’ expenditures increased (WSJ 07/17/04).

Such conflicting data and statements create confusion about whether and how the company is prepared to cost-effectively meet GHG reduction requirements, exposing it to unnecessary risks. Pressure from pension funds to examine climate change risks raises the possibility that industry segments like our own “could be viewed as inherently risky because of their exposure to climate-change regulations” (WSJ 10/27/04).

RESOLVED: shareholders request the Board undertake a comprehensive review and publish within six months of the annual meeting a report on how Exxon Mobil will meet the greenhouse gas reduction targets of those countries in which it operates which have adopted the Kyoto Protocol.

Supporting Statement

The proponents hope the report will include:

§         Projections of costs;

§         Timelines for meeting mandatory reduction targets.

§         An evaluation of whether earlier action to reduce emissions, as undertaken by key ExxonMobil competitors, would have reduced these costs.

§         A study of the feasibility of reducing emissions in the US, which does not have restrictions on GHG emissions at the federal level but might implement them in the future.

Drilling in the Arctic National Wildlife Refuge – ConocoPhillips

Climate Change Report – Apache Corporation

WHEREAS:

The American Geophysical Union, the world’s largest organization of earth, ocean and climate scientists, states it is “virtually certain” that greenhouse gas (GHG) emissions cause global warming and that the warming will continue.

A 2004 report by the Bush Administration’s Climate Change Science Program stated that increases in human-derived GHG emissions are the only likely explanation for global warming over the past three decades.

The Environmental Protection Agency’s “Climate Action Report – 2002,” concluded that climate change poses risks to coastal communities from sea level rise, water shortages, and increases in the heat index and heat wave frequency. Polls in 2003 and 2004 found 75-80% of Americans favor mandatory controls on GHG emissions.

Carbon regulation is growing. The Kyoto Protocol will cap GHG emissions in 30 industrialized countries beginning in 2005. At least half of U.S. states are addressing global warming through legislation, lawsuits or governors’ programs.

A 2004 Conference Board report declared, “The global economy will become less carbon-intensive over time…The real questions are what the pace of the transition will be and who will be the winners and losers…[B]usinesses that ignore the debate over climate change will do so at their peril.”

We believe our industry is highly exposed to climate change risk; over half of US GHG emissions are from oil and gas combustion, according to the Energy Information Administration.

Analysts at Goldman Sachs, Deloitte & Touche, Booz Allen, McKinsey, Bank of America, and WestLB Panmure have recognized the financial risks of climate change and raised concerns about companies that do not adequately disclose them.

Industry leaders like Shell, BP, ConocoPhillips, Statoil, Amerada Hess and Suncor are taking actions to reduce their exposure to climate related risks, including assuming a cost for carbon in their strategic planning, reporting and reducing their GHG emissions, engaging in emissions trading, and investing in renewable energy. BP reports that its emissions reduction activities have generated savings with an NPV of $650 million. Apache has not taken the basic step of committing to publicly report its GHG emissions for its global operations.

According to Oil and Gas Investor, the industry’s environmental record is hurting its ability to attract strong employees. Companies like BP claim that their proactive stance on climate change helps to recruit and retain quality employees.

RESOLVED: Shareholders request that a committee of independent directors of the Board assess how the company is responding to rising regulatory, competitive, and public pressure to significantly reduce carbon dioxide and other greenhouse gas emissions and report to shareholders (at reasonable cost and omitting proprietary information) by September 1, 2005.

SUPPORTING STATEMENT

We believe management has a fiduciary duty to assess and disclose to shareholders all pertinent information about its response to climate change. We believe early action to reduce emissions and prepare for standards could provide competitive advantages, while inaction and opposition to emissions control efforts could expose companies to regulatory, litigation, and reputation risk.