Kathy Mulvey, Climate Accountability Campaign Manager, Union of Concerned Scientists
Today ConocoPhillips holds a virtual annual shareholders’ meeting, where the company will face two significant climate-related resolutions. These resolutions intersect with some of the key findings and recommendations of UCS’s 2016 report The Climate Accountability Scorecard. ConocoPhillips responded to the report shortly after its release, and UCS has been engaging with company officials over the company’s climate-related positions and actions since then. We’ll be following the shareholders’ meeting with keen interest.
1) Lobbying disclosure
This proposal, filed by Walden Asset Management, calls for ConocoPhillips to report on its direct and indirect lobbying expenditures and grassroots lobbying communications at the federal, state, and local levels. It received support of one-quarter of ConocoPhillips shareholders last year.
The resolution highlights ConocoPhillips’s representation on the Board of the US Chamber of Commerce (US Chamber) and the lack of transparency about the company’s payments to the US Chamber—including the portion of those payments used for lobbying. Last year alone, the US Chamber spent $104 million on lobbying.
While the US Chamber claims to represent the interests of the business community, few companies publicly agree with the group’s controversial positions on climate change. Last month, a range of civil society organizations urged Disney, Gap, and Pepsi to withdraw from US Chamber because of the inconsistency between their positions on climate change and the US Chamber’s lobbying on the issue.
Today the US Chamber is also reportedly hosting an event to highlight a new oil and gas-industry sponsored report attacking the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), on which UCS submitted comments.
Chaired by former New York City Mayor and businessman Michael Bloomberg, the TCFD has conducted an open, collaborative process through which it is recommending consistent, comparable, and timely disclosures of climate-related risks and opportunities in public financial filings.
Implementation of these common-sense, mainstream recommendations by companies across all sectors of the economy—including transparent discussion of the business implications of a 2° Celsius scenario—would begin to fill gaps in existing disclosures and provide necessary data to investors and other stakeholders.
Indeed, some companies are already following such guidelines, and the broad range of respondents to the TCFD’s public consultation process were generally supportive of the recommendations. However, the IHS Markit report (funded by ConocoPhillips along with BP, Chevron, and Total SA) claims that adoption of the TCFD recommendations could obscure material information, create a false sense of certainty about the financial implications of climate-related risks, and distort markets.
This effort by the fossil fuel industry and the US Chamber to resist transparency is alarming, particularly in light of the oil and gas companies’ limited disclosure of physical and other climate-related risks to investors and in light of evidence that climate change poses financial risks to the fossil fuel industry. (And this pushback against corporate transparency is particularly alarming under a Trump administration that has close ties to the fossil fuel industry and has shown no inclination to hold these companies accountable).
ConocoPhillips’s affiliation with the US Chamber contributed to its “Poor” score in the area of Renouncing disinformation on climate science and policy in UCS’s Climate Accountability Scorecard.
ConocoPhillips is also represented on the Boards of the American Petroleum Institute (API) and the National Association of Manufacturers (NAM), two other trade associations that UCS has found to spread disinformation on climate science and/or block climate action. Both API and NAM are named defendants in Juliana vs. United States, a lawsuit through which 21 young people supported by Our Children’s Trust are seeking science-based action by the U.S. government to stabilize the climate system.
UCS recommends that ConocoPhillips use its role as chair of API and its leverage as a leader within NAM and the US Chamber to demand an end to the groups’ disinformation on climate science and policy, and speak publicly about these efforts.
The company has shown some discretion in managing its public policy advocacy: ConocoPhillips confirmed in 2013 that it was no longer a member of the American Legislative Exchange Council (ALEC), it provides good disclosure of its political spending, and it has extensive policies and oversight related to political activities in general.
2) Executive compensation link to 2 degrees transition
Another resolution, filed by the Unitarian Universalist Association (on whose Socially Responsible Investing Committee I serve), calls for a report to shareholders on the alignment of ConocoPhillips’s executive compensation incentives with a low-carbon future. Proponents are seeking information, for example, on the ways the company’s incentive compensation programs for senior executives link the amount of incentive pay to the volume of fossil fuel production or exploration and/or encourage the development of a low-carbon transition strategy.
In March, ConocoPhillips CEO Ryan Lance expressed support for the U.S. staying in the Paris Climate Agreement. However, in UCS’s Climate Accountability Scorecard, ConocoPhillips ranked “poor” in the area of Planning for a world free from carbon pollution.
On the positive side, the company provides details about efforts to improve energy efficiency, reduce natural-gas flaring, and reduce the intensity of emissions from oil sands. It uses carbon scenarios, including a low-carbon scenario, to evaluate its current portfolio and investment options. And ConocoPhillips has set limited, short-term emissions reduction targets—but not in the service of the Paris Climate Agreement goal of keeping warming well below a 2°C increase above pre-industrial levels.
Building on discussions at today’s annual shareholders’ meeting, UCS looks forward to further dialogue with ConocoPhillips over its response to our Scorecard findings and recommendations, toward improvements in the company’s climate-related positions and actions.
Kathy is also a member of the UUA’s Socially Responsible Investing Committee