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Occidental Petroleum shareholders pass climate change disclosure proposal

Vicki Hollub, president and CEO, Occidental Petrol
Vicki Hollub, president and chief executive officer of Occidental Petroleum Corp.

Occidental Petroleum Corp. shareholders voted in favor of a climate change disclosure proposal led by CalPERS and other investors at the company's annual meeting Friday.

The proposal, filed by the $318.9 billion California Public Employees' Retirement System, Sacramento, and $31.5 billion Connecticut Retirement Plans & Trust Funds, Hartford, among others, requested the oil and gas company provide an assessment of the company's portfolio under the 2-degrees scenario, the concept of limiting the average global temperature increase to 2 degrees Celsius.

“The passing of this resolution is a sign of progress. It is a first in the United States. The vote at Occidental demonstrates an understanding among shareowners that climate change reporting is an essential element to corporate governance,” said Anne Simpson, CalPERS' investment director, sustainability, in an emailed statement. “I believe that we will see many more companies move in this direction. This vote shows that investors are serious about understanding climate risk.”

The proposal received more than 50% 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 Occidental board, 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, BlackRock (BLK), which owns a 7.8% 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% support.

This year's vote marks the first time BlackRock has supported a climate-change related shareholder 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.

“Today's historic vote puts the oil and gas industry on notice — the climate is changing and so are investor expectations of how companies should respond. Occidental Petroleum's board must respond to shareholders' show of support for increased information on the company's prospects in a carbon-constrained world. We look forward to the company's response and will work with our partner, Wespath Investment Management, to make sure this issue stays on their radar screen,” said a statement from the $460 million Nathan Cummings Foundation, New York, another co-filer of the proposal.

“This day is long overdue,” said Denise Nappier, Connecticut treasurer and principal fiduciary of the state’s retirement plan and trust funds, in an emailed statement. “Climate change is a significant threat to the global economy and the value of our pension fund investments. We need to move much more quickly to reduce carbon emissions to avoid serious economic impact. I hope that the vote at Occidental Petroleum tells other energy companies that it is time to come to the table. We must work together to ensure the sustainability of the companies in which our pension funds invest and the long-term value of our shares.”

The C$175.6 billion ($128.6 billion) Ontario Teachers' Pension Plan; $202.8 billion California State Teachers' Retirement System, West Sacramento; $189.4 billion Florida State Board of Administration, Tallahassee; C$287.3 billion Canada Pension Plan Investment Board, Toronto; and the $133.2 billion Texas Teacher Retirement System, Austin, all said in their proxy-voting disclosure they planned to vote in favor of the climate change disclosure proposal.

Bloomberg contributed to this story.