Exxon Mobil shareholders reject Vermont’s greenhouse gas resolution

State Treasurer Beth Pearce references an enlarged screen shot of a news website, behind her. An ad for pension loans appears above an article quoting her concern about pension funding. Photo by Hilary Niles/VTDigger

State Treasurer Beth Pearce. Photo by Hilary Niles/VTDigger

A decision by Exxon Mobil Corp. shareholders to reject greenhouse gas emission goals has reignited a debate over whether Vermont should pull its pension investments out of oil and gas companies.

Exxon Mobil shareholders overwhelmingly voted down at least eight miscellaneous resolutions at an meeting annual meeting May 27 in Dallas, which State Treasurer Beth Pearce attended. Pearce handles investments for 48,000 retirees in Vermont.

The state and other investors say Exxon Mobil’s management strategy for climate change is “wholly inadequate.” They pushed for Exxon Mobil to adopt “quantitative” greenhouse gas emission goals and present a plan for reaching the goals by Nov. 30. It gained 9.6 percent shareholder approval.

Two other environmental resolutions — one requiring the board to submit a report on hydraulic fracturing and another to appoint a specific climate change expert to the board of directors — failed with 24.9 percent and 21 percent of shareholder support, respectively. A proposal to put a third and fourth female on the 12-person board of directors received 4.3 percent support.

“The overwhelming defeat of the resolution offered by Vermont Treasurer Pearce asking Exxon Mobil to reduce its greenhouse gas emissions proves that simply asking fossil fuel corporations to change their ways does not work,” Sen. Anthony Pollina, P/D-Washington, said in a statement.

“The best strategy for Vermont is to divest from fossil fuel companies,” Pollina said. “It makes no sense for us to say we oppose climate change and then invest in the companies that are causing it.”

Pollina says the state needs to vote with its pocketbook, and he is putting pressure on Pearce and Gov. Peter Shumlin to sell state Exxon investments. The state senator said Vermont could set an example as the first state to divest its assets from fossil fuels.

“Obviously, we don’t want to divest until our pension funds are going to lose their value,” Pollina said in an interview. “You can divest from these kinds of funds and still have a solid investment return.”

Pearce said this week that she will continue her “shareholder activism” and encourage oil companies such as Exxon Mobil and Chevron to reduce carbon pollution.

Shumlin’s spokesperson, Scott Coriell, said the governor “doesn’t believe divestment is the sharpest tool available to combat climate change,” and is open to a conversation about the merits of divestment.

Fossil fuel divestment is the rallying cry of 350.org a climate change group based in Middlebury.

Green Mountain in College in Poultney, Goddard College in Plainfield and Sterling College in Craftsbury Common have joined 350.org’s divestment movement. Suncommon, a solar company in Vermont, announced this month its employees’ 401(k) plans would not invest in fossil fuels.

Vermont’s retirement funds are $4 billion on any given day, according to Pearce’s office, and about $101.2 million is invested in the energy industry. That total includes $1.6 million in coal, $30 million in utilities, and $69.6 million in other energy investments.

Pearce said she opposes divestment for two reasons: Vermonters who depend on the pension fund might lose money; and the state would be giving up its seat at the table with energy companies.

“We don’t think that [divestment] is a workable strategy for Vermont,” Pearce said. “That doesn’t mean we’re going to give up the fight. … To me, that’s a responsibility we have.”

She referenced a study from her office’s Boston-based investment adviser, NEPC, which said that selling all stock in the fossil fuel industry would cost Vermont about $10 million.

“Many of those Vermonters stay here in Vermont when they retire, and they buy goods and services,” Pearce said. “When you look at it on whole, we’ve done a number of initiatives because we are committed to a clean energy future.”

She pointed to Vermont’s role in pushing two large companies — Dunkin Donuts and Krispy Kreme — not to use palm oil because companies that manufacture palm oil clearcut tropical forests. Vermont was also a founding member of the Investor Network on Climate Risk, which brings shareholders together to advocate for climate change initiatives.

Sen. Anthony Pollina. VTD/Josh Larkin

Sen. Anthony Pollina. VTD/Josh Larkin

Pollina, who is one of the most vocal lawmakers in support of divestment, wants to legislate divestment if he can’t advocate for it.

“The Legislature does have the power to require or ask the pension board to divest,” he said.

This year, Pollina introduced a bill that would require Vermont to divest any assets from “the 200 publicly traded companies that hold the largest carbon content fossil fuels reserves” over the course of five years.

“We would be doing the right things for ourselves,” Pollina said, “but I think we would also send a message to other states and provide the leadership that it will take for others then to follow us.”

According to Politico, Exxon Mobil’s Chief Executive Officer Rex Tillerson “mocked” climate change after the May 27 shareholders’ meeting. He said the company doesn’t want to “lose money on purpose” and that society can adapt to climate change.

Pollina said Tillerson’s comments mean that “Vermont clearly does not have a significant seat at Exxon Mobil’s table.”

Erin Mansfield

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  • Walter Carpenter

    “A decision by Exxon Mobil Corp. shareholders to reject greenhouse gas emission goals has reignited a debate over whether Vermont should pull its pension investments out of oil and gas companies.”

    Why was I not surprised?

  • Charles Finberg

    How was Vermont State Treasurer Pearce’s trip to Dallas funded — by taxpayers? At what cost? And presumably fossil fuels were consumed in her quixotic round trip. Occasionally, even Anthony Pollina is right. Can the State’s outside investment adviser not find anything better?

  • Rex Tillersin was paid a Salary $40.3 million (2012).

    Oh my.

    Steve Ames

  • sandra bettis

    Exxon Mobil cares about one thing and one thing only – their bottom line. The future of our planet? Not an issue for them.

  • Mary Alice Bisbee

    Perhaps our pension funds just need to DIVEST from Exxon Mobil and other oil, natural gas and coal producing entities. Our young people and those who come after us need to be able to live and breathe on this planet, our only home. Profits should not be our only priority but they certainly seem to be important in the world of higher finance with no concern as to what is happening to our planet as a place for all species to continue living.

  • Todd Spayth

    Exxon Mobil is up 20% in 5 years. Russell 3000 index fund (which may or may not contain petrochem stocks) was up 100% in the same period. So tell me again why we need to keep these shares of XOM. I say vote with your wallet. I have not done business with Exxon since the spill in Perth Amboy, NJ, which was not too soon after Valdex, AK.
    If enough people cared you most certainly could affect their business and ultimately their thinking.

  • steve merrill

    Funny–They said the same thing about “slaves” when they turned from “assets” on a balance sheet to “stranded assets”, thanks to Vermonters and about 600,000 other “Yankees”. They will scream and writhe to the very end and if we’d listened to Jimmy Carter in 1979 we’d be 3/4 there on energy independence..No–we’d rather have “mourning in America” or whatever else that tired old actor was selling. The time is now and the place is here, lets NOT get fooled again. SM, N. Troy

  • Dave Bellini

    The goal of the pension fund is to make money, not, social policy. If the fund was only invested in what is politically correct it would likely cost tax payers a great deal more money. No “green” organization has offered to kick in to cover any losses.

    Put your money where your mouth is.

    • Andy Davis

      You cannot escape that fact that whenever you invest or spend your money you are making social policy. Decisions we make everyday about where our money goes – and who we loan it to – contribute to the direction of our society. If that ain’t making social policy I don’t know what it is.

      In a free society personal and group choices we make about food, energy, transportation, healthcare all contribute to where we are heading as a community, a state and a nation. Hiding behind the idea that to “make money” is somehow neutral is naive.

      A pension fund’s purpose is to prepare us for the future. How can we invest in companies whose business goals are blind to the challenges of our future?

  • David Dempsey

    Divestment from fossil fuel corporations should be a goal for the state of Vermont. But we need to keep in mind that for many years state administrators and the legislature have woefully underfunded the Teachers and state employees pension and retiree healthcare funds for many years. Beth Pearce estimates that it will take until 2038 to fix the underfunding, so the state needs to get a decent return on investments. Anthony Pollina said that “you can divest in these kind of funds and still have a solid investment return”. I have heard Anthony make broad statements like is before. I hope he is right. but more details to prove his point would be nice.

  • Kevin Teford

    When shares are sold in a company, they change hands. They don’t affect a company’s finances. And the buyer of a stock obviously sees value where the seller does not, otherwise they wouldn’t be purchasing the shares. So they must be willing to live with the consequences. As a result, if someone who really cares about an issue sells their shares, they are giving up their say in corporate governance and yielding it to someone who either cares less or is more committed to having a dialogue about the issue.

    If Vermonters really care about an issue, they’ll stay in the dialogue. Shareholder engagement is a cumulative process, not a one shot, one vote deal.

    Apparently Treasurer Pearce sees this and those lacking investment experience do not.

    There has yet to be any reasoning that shows how divesting would actually result in the change that Sen. Pollina talks about. You might not like the odds of a particular resolution winning a vote, but the odds are greater than the odds of a change from an action that does not affect a company at all, which is exactly zero.

    If those commenting in and on this story want change, they should focus their substantial energy and efforts on actions that affect end-user demand, which absolutely will get a company’s attention. Then pension systems face enough stress as it is. Having to endure feeble-minded logic shouldn’t be added to the pile.

  • Jillian Mayer

    The 2013 NEPC study that Treasurer Pearce quotes claims that the pension funds will lose millions of dollars when it divests. However, NEPC, a longtime opponent of fossil fuel divestment, makes several errors in drawing its conclusions. First, the study encompasses a much bigger slice of the energy sector pie than the “Carbon Tracker 200” – the 200 largest fossil fuel companies – that 350.org calls to divest from. Second, legislation supported by Senator Pollina and 350 Vermont supporters asks for divestment of the pension funds from the 200 largest fossil fuel companies within FIVE years. This is ample time to divest without incurring large transaction and management fees during the switch, and gives the VPIC and NEPC time to responsibly invest into cleaner ventures. Many colleges in Vermont, including Goddard and Green Mountain, divested without paying any of these fees. And many fossil free portfolios, especially those managed by Trillium Asset Management in Boston and Clean Yield Asset Management in Norwich are performing as well (if not better than) those invested in fossil fuels.
    Additionally, while shareholder engagement has an admirable track record, it is not a viable strategy when shareholders wish to change a core business model of a company. The shareholder resolution that Treasurer Pearce defended at the ExxonMobil Annual Meeting of Shareholders this year was voted down by 90% of shareholders. This is not a new proposal – in fact, proposals like these have been around for decades. Clearly, this is not a viable strategy.
    For more on why shareholder engagement is a waste of time we don’t have for our planet: http://cleanyield.com/talking-hand-engagement-fossil-fuel-companies-offers-little-promise/
    Finally, it is Treasurer Pearce’s and the Vermont Pension Investment Committees fiduciary responsibility to begin seriously considering the growing carbon bubble and its promise of stranded assets. Divestment is a smart environmental and financial policy in the face of our climate and looming financial crisis. To avoid the worst effects of climate change, most reserves of coal, oil and gas must stay underground. Fortunately, due to rising social and regulatory pressure, fossil fuel companies will likely be forced to keep reserves underground. When that happens, stockholders will be left with stranded assets – trillions of dollars in overvalued reserves of coal, oil, and gas that will be rendered valueless when the carbon bubble bursts, according to the World Bank.

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