Activist investors are looking to take over control at Chevron’s board of directors. In a 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 in favor of climate savvy replacements.
According to the filing, current managers have not done enough to follow on two resolutions that passed with shareholders in 2020 and 2021. The resolutions were related to the company’s substantial lobbying against climate policy, and the need to increase reduction of emissions. Shareholder resolutions, however, are not legally binding in the US.
Chevron’s latest climate target adopted in 2021 is considered not substantial and activist investors call for a more ambitious target. The company wants to only reduce emissions per unit of energy by 5% by 2028, and lacks a plan for deeper long-term cuts to greenhouse gasses coming from customers’ use of its products.
Even though Exxon’s targets are similar and lack an official commitment to net zero by 2050, competitors like Shell and BP are ahead of the game, announcing plans to become net zero energy companies by 2050. Chevron is also near the bottom of its peers in an analysis of climate lobbying by nonprofit research group InfluenceMap.
Even though the company has announced on its website it supports the Paris Agreement and the future of energy being low carbon, it has spent over $91 million lobbying the federal government against climate change legislation in the period from 2011 to 2021, according to publicly available data from Fossil Fuel Industry’s Legislative Lobbying and Capital Expenditures Related to Climate Change analysis.
The vote on whether or not Chevron’s top managers will be replaced with more active members on climate change is also considered a test of how committed is BlackRock and its peer investors on climate actions.
Chevron recently posted its highest earnings since 2014 which means there is not much argument to support voting out of managers apart from not carrying out climate-related resolutions. If BlackRock fails to keep Chevron accountable for not following climate pledges, that would put into question its integrity and the commitments on climate they have announced.
It would also question the philosophy favored by many financiers that holding fossil fuel stocks is more effective in achieving climate progress than dumping them.