ExxonMobils shareholders voted Wednesday to push the oil giant to test how the fight against global warming could affect its business, handing a victory to environmentalists at a critical juncture for climate policy worldwide.
The proposal backed by a decisive 62.3 percent of shareholders urges Exxon to come clean on what tougher public policies -- pursued in line with the Paris accord on curbing global emissions -- would mean for its portfolio.
The non-binding vote came as President Donald Trump weighs whether to pull the United States out of the 196-nation climate agreement.
Exxon chief executive Darren Woods, who praised the Paris accord but called the shareholder proposal unnecessary, said the American oil giant would consider its position in light of the majority vote.
Supporters cheered the outcome.
"This is an unprecedented victory for investors in the fight to ensure a smooth transition to a low carbon economy," said New York state comptroller Thomas DiNapoli. "The burden is now on ExxonMobil to respond swiftly and demonstrate that it takes shareholder concerns about climate risk seriously."
Exxon has for years beaten back shareholder votes on climate change, but some leading institutional investors signaled they were considering changing their stance following pressure from activist investors.
Environmentalists have argued that Exxon's petroleum-dominated portfolio could become uneconomic under tougher climate policies, and the company has not thoroughly analyzed this risk. They call on Exxon to invest more in renewable energy and less in oil.
The proposal submitted by the New York State Common Retirement Fund seeks an annual assessment of Exxon's assets under different policy scenarios, including those that limit temperature increases to under two degrees Celsius, consistent with the 2015 Paris accord.
Exxon had argued that its planning already took into account the possibility of stricter climate policies and that oil would in any event remain a vital source of global energy for years to come.
Woods told shareholders at Wednesday's meeting that even under the Paris accords, some $11 trillion in new oil investment would be needed.
"We believe the risks of climate change are serious and warrant thoughtful action," Woods added, adding that public policy should reduce emissions "at the lowest cost to society."
Controversial climate legacy
Exxon has long been a lightning rod for environmentalists over its stance on climate change, which included publicly challenging climate science at a time when most scientists and some leading oil companies called for action.
In recent years Exxon has shifted its stance, recognizing climate change as a risk that needs to be mitigated and announcing research initiatives on fuel cells and other low-carbon technology.
In January, it appointed to its board Susan Avery, a leading climate scientist.
But environmentalists say the oil giant is still doing too little and question its commitment on the climate issue.
Edward Mason, head of responsible investment for the Church of England, told the meeting he was disappointed with Exxon's response after a similar proposal garnered nearly 40 percent of shareholder support last year.
The oil giant continued to avoid "meaningful" disclosures on climate change and "rebuffed" efforts by advocates to meet directly with directors, he said.
"This is a historic vote -- despite strong opposition from the Board, the majority of Exxon's shareholders have sent an unequivocal signal to the company that it must do much more to disclose the impact on its business of measures to combat climate change," Mason said in a news release.