Occidental investors vote to pass proposal on climate impacts

Occidental Petroleum Corp.’s shareholders approved a proposal Friday to require the oil and gas exploration company to report on the business impacts of climate change, marking the first time such a proposal has passed over the board’s objections.

The resolution, initiated by a group of investors including the California Public Employees’ Retirement System, received more than 50 per cent of the votes at Occidental’s shareholder meeting in Houston on Friday, according to spokesmen for the company and Calpers.

Occidental didn’t provide the tally, but said the exact figures will be submitted to the Securities and Exchange Commission in coming days.

“The board acknowledges the shareholders support for this proposal,” Eugene L. Batchelder, chairman of the board for Occidental, said in an emailed statement Friday after the vote.

“We look forward to continuing our shareholder engagement on the topic and providing additional disclosure about the company’s assessment and management of climate-related risks and opportunities.”

The proposal received the backing of Occidental’s largest shareholder, US$5.4 trillion asset manager BlackRock Inc.

BlackRock, which owns a 7.8 per cent stake in the oil explorer, said it took action due to the “lack of response” on the issue by the company and a lack of improvement in its climate-change-related reporting following a similar proposal last year which received more than 40 per cent support.

This year’s vote marks the first time BlackRock has supported a climate-change related share- holder proposal, according to spokesman Ed Sweeney.

“When we do not see progress despite ongoing engagement, or companies are insufficiently responsive to our efforts to protect the long-term economic interests of our clients, we will not hesitate to exercise our right to vote,” BlackRock said a statement posted to its website Friday.

Occidental’s board recommended investors vote against the proposal because its business strategies already incorporate the risks of a lower carbon economy.

The proposal asks Occidental to assess its portfolio for long-term climate change impacts consistent with the Paris Agreement’s goal of limiting global temperature increases to 2 C.

“Calpers is calling on companies like Occidental to inform their investors about how they are positioned for the transition to a low carbon energy future,” the pension fund’s investment director for sustainability, Anne Simpson, said in a May 10 statement.

Calpers owns 3.9 million Occidental shares, according to data compiled by Bloomberg data.

A similar proposal filed by a different group of Occidental shareholders last year received almost 42 per cent of the vote, including abstentions, according to Proxymonitor.org.

Global oil and gas companies are increasingly examining climate change issues.

For instance, in 2015, the boards of Royal Dutch Shell Plc, BP Plc and Statoil ASA endorsed shareholder proposals asking them to report on how climate change will affect their businesses.

Asset managers including BlackRock are also beginning to evaluate how companies they invest in grapple with climate change.