Exxon Mobil Corp. "could put at risk more than $100 billion in long-term shareholder value" through liability for environmental-related damages and litigation costs, according to a study commissioned by Robert A.G. Monks, shareholder activist, and two groups, whose members include the New York City comptroller's office.
Mr. Monks and the two groups are seeking to change the company's policy on global warming and other environmental issues. The study suggested five steps shareholders can take to try to protect their stakes.
Sensitivity to environmental performance is directly linked to shareholder value, Mr. Monks said in a teleconference May 2. Because of the company's attitude on the issue, "Exxon Mobil (stock) trades needlessly at a discount," he added. The study, which calls Exxon Mobil "the obvious chief climate-change villain," is an effort to begin a discussion between shareholders and the company on the issue, he said. Company executives have declined to have a dialogue, he added.
The company responded in a statement, saying, "while we have not seen the report, it's ridiculous to suggest ... Exxon Mobil's approach to climate change is diminishing shareholder value.
"Exxon Mobil agrees with Robert Monks and Peter Altman (national coordinator of Campaign Exxon Mobil, one of the sponsors of the study) that climate change is an important issue and ... one that we are taking very seriously."
Emissions control costs
The study suggests potential costs of mandatory emissions control policies for Exxon Mobil, if it acts soon, could be "as little as $2 billion - less than 1% of market capitalization."
The other group commissioning the study by Claros Consulting of London is the Coalition for Environmentally Responsible Economics, which consists of investor and public interest groups, including the New York City comptroller's office, which oversees $54 billion in pension assets, and the Interfaith Center on Corporate Responsibility. Campaign Exxon Mobil is a coalition of religious group shareholders and national environmental organizations
"The point is not to withhold investment (in Exxon Mobil) but to retain investment," Mr. Monks said in the teleconference, saying for many investors such an investment is "permanent" as part of an indexing or other investment style strategy.
"It's incumbent on shareholders to instruct managers on how they want the company run," he added. "We don't want people running our company to be contemptuous of" the global warming issue.
The study suggests Exxon Mobil support a mandatory framework to reduce greenhouse gas emissions. It also urges shareholders to, among other steps, support a shareholder resolution in the proxy statement on renewable energy sources. The company's annual meeting is May 29.
Company `recognizes risk'
Exxon Mobil's statement said the company "recognizes that the risk of climate change and its potential impacts on society and the environment may prove to be significant.
"The mere fact that we opposed a mandatory framework that does little, if anything, to reduce emissions over the long-term does not equate to a lack of concern for the environment or the issue of climate change."
"To say that we have not been open to dialogue is completely false," the statement added. "We have met with Robert Monks and Peter Altman and explained our position; however, it's they who haven't been open to hear about the concrete actions we have taken in this regard."
The statement also cited securities analysts who report Exxon Mobil stock trades at a premium to peers.