ExxonMobil has responded to a shareholder resolution on plastics with an astonishing attack on the filer and arguably the entire concept of shareholder democracy. The resolution was filed by United Church Funds with support from California-based shareholder advocacy non-profit As You Sow. It raises the issue of single-use plastics and ExxonMobil’s exposure to potential regulatory moves to curtail their use. The resolution, and ExxonMobil’s response to it came to light when the company filed its 2024 proxy statement with the Securities and Exchange Commission (SEC) on 11 April.
In presenting their case the filers refer to respected source material from the likes of the WWF, United Nations, European Union, National Geographic, and the US Environmental Protection Agency (EPA). The resolution states: “Of particular concern are single-use plastics (SUPs), which make up the bulk of the 24-34 million metric tons of plastic ending up in waterways annually. Without drastic action, this amount could triple by 2040.” It argues that a shift away from virgin plastic production is crucial to resolving the fast growing plastic waste problem, as advocated by the EPA and further laid out in detail in the comprehensive Breaking the Plastic Wave Report produced by the Pew Charitable Trusts and Systemiq.
A polite request
The resolution asks ExxonMobil to take heed of the growing trend for governments around the world to implement measures to encourage or compel packaging companies to reduce their use of SUPs. It points to BP’s explicit acknowledgement of the potential impact of a worldwide ban on single-use plastic by 2040, which it says could reduce global oil demand by 60%. ExxonMobil, United Church Funds argues, is ignoring this trend with its continued investment in virgin plastic production infrastructure. The Texan oil giant is the world’s largest producer of polymers for the production of SUPs, with an annual output of more than 11.5 million tonnes. Having laid out the arguments, the resolution’s simple and politely worded demand is as follows:
“Shareholders request that ExxonMobil issue a report, at reasonable cost and omitting proprietary information, addressing whether and how a significant reduction in virgin plastic demand, as set forth in Breaking the Plastic Wave’s System Change Scenario, would affect the Company’s financial position and the assumptions underlying its financial statements.”
This all seems quite sensible coming from shareholders concerned not only by environmental destruction but also the financial implications of potentially stranded assets. They are even worried that ExxonMobil should not spend too much of its $85.6 billion annual profits on the report, which is thoughtful.
A fossil-fuelled hissy fit
Cue ExxonMobil’s hysterical and fact-free response, which is characterised by bold statements regarding plastics and the dismissal of the filers as biased timewasters. “This proposal,” whines the oil giant, “Represented by As You Sow, is consistent with As You Sow’s well-documented anti-oil and gas agenda used to attack ExxonMobil and others by diminishing the widely acknowledged societal value of plastics, denying the obviously growing demand for these products, and asking us, for the third consecutive year, to waste investors’ resources on a narrow and prescriptive report tied to an unrealistic future scenario.” Well obviously, if there is growing demand for plastics one cannot conceivably consider trying to reduce it. One wonders how ExxonMobil executives deal with their children when they demand sweets at the supermarket checkout.
Readers of the Laundromat will recognise some of the favourite arguments employed by the 2023 Greenwasher of the Year, the Alliance to End Plastic Waste (AEPW). ExxonMobil states in its rejection of the proposal: “The problem is not plastics; it is mismanaged plastic waste.” It goes on to promote its various “advanced recycling” projects, which will create a magical circular world of endless plastic happiness without any waste whatsoever. It then shoots itself squarely in the foot: “Globally, only about 9% of all plastics produced are recycled. To improve circularity we need: 1) more investment in municipal collecting and sorting and 2) the ability to recycle more products.” Brilliant, ExxonMobil, truly brilliant. Those pesky externalities should be paid for by taxpayers, and regarding point #2, we can only bow down in awestruck wonder and gratitude at the sheer genius of it.
But wait, there is more! “The proponent also overlooks the fact that plastics enable GHG emissions reductions.” Quick, call António Guterres, the climate crisis is solved! We just need to produce more plastics. The crux of ExxonMobil’s argument is its Exceed™ and Enable™ “performance plastics”, which are a bit lighter and therefore reduce fuel consumption a smidgen when transported. Somehow the petrochemicals used to produce them have been left out of the equation, but still, the company managed to slip a sales pitch into its proxy statement. Pretty (oil) slick.
Toys thrown from pram
The attempted character assassination of the filers of this fairly innocuous shareholder resolution has been described by As You Sow as an attempt at intimidation. “This is one of three proposals at this annual shareholder meeting brought by serial proponents,” complains the oil giant, going on to bemoan the number of resolutions filed by As You Sow, the United Church Fund and the Interfaith Center on Corporate Responsibility (ICCR). ExxonMobil describes this “professional activist consortium” as promoting an agenda that is detrimental to long-term investor value and points out that they have been behind 40% of all proposals over the past decade (pause for applause). As You Sow’s accusations of intimidatory tactics are reinforced by ExxonMobil’s recent lawsuit against shareholders filing resolutions that it does not like, including ICCR members.
The Laundromat calls on all pesky shareholders to stop bullying poor ExxonMobil and let it get on with solving the plastic pollution and climate crises by producing yet more quantities of Exceed™ and Enable™ performance plastics. Danielle Fugere, President and Chief Counsel of As You Sow has other ideas: “As You Sow has what should be an uncontroversial suggestion to the company: Exxon’s management and board — like its shareholders — should consider proposals on their merits, rather than attacking shareholders or assaulting the longstanding rights of company owners or their representatives.”
