Two top managers at Chevron are in the crosshairs of activist investors over a perceived failure to act on climate change.
The activists hope to pull off a replica of the coup last year at Exxon, when three board members were voted out in favor of climate-savvy replacements. But Chevron today is in a stronger financial position than Exxon was.
In a March 8 filing with the Securities and Exchange Commission, the nonprofit group Majority Action called for the removal of Chevron CEO Michael Wirth and lead director Ronald Sugar at the company’s shareholder meeting in May. They have not done enough, the filing says, to follow two resolutions that passed with shareholders in 2020 and 2021.
One called on the company to reign in lobbying against climate policy, and the second wants the company to “substantially” reduce the carbon footprint of its products. Shareholder resolutions are not legally binding in the US.
“Chevron this year will be an answer to the question of what happens when shareholders experience a breakthrough on climate, and the company fails to adequately respond to the spirit and specifics,” says Majority Action executive director Eli Kasargod-Staub.
In October 2021, after the carbon footprint resolution passed, Chevron did adopt a more ambitious target. But it aims only to reduce company-wide emissions per unit of energy 5% by 2028, and does not lay out a plan for deeper long-term cuts to the emissions that come from its customers’ use of oil and gas. That puts it behind European peers like Shell and BP (Exxon’s targets are similar to Chevron’s).
Chevron also ranked near the bottom of its peers in an analysis of climate lobbying by nonprofit research group InfluenceMap, conducted a year after the lobbying-related shareholder vote.
In a statement to the Washington Post, Chevron said that it “reviews proposals from shareholders in detail” and will say more about its directors before the general meeting.
While shareholder support for climate action is building, that may not be enough to topple Wirth and Sugar. At the time of its vote, Exxon was still in dire straits from the pandemic, and had spent a decade annoying investors with expensive drilling gambles that left the company buried in debt. So it wasn’t too hard for activist group Engine #1 to talk BlackRock and other top investors into supporting regime change, regardless of the climate crisis.
Chevron, however, recently posted its highest earnings since 2014 and doesn’t have the same history of bad blood with shareholders. That means the vote will be a narrower test of how committed BlackRock and its peers are to holding managers accountable if they don’t carry out winning climate-related resolutions. If managers can ignore climate and keep their jobs, it calls into question the philosophy favored by many financiers that holding fossil fuel stocks is more effective in achieving climate progress than dumping them.
“If those stances are to really mean anything,” Kasargod-Staub said, “they would translate into boardroom accountability at Chevron.”