In a reply on Wednesday to proxy advisor Glass Lewis, Exxon said the prospect of the world achieving net-zero carbon dioxide emissions by 2050 is remote and should not be further evaluated in its financial statements.
A shareholder proposal seeking a report on the cost of having to abandon projects faces a shareholder vote on May 31. Glass Lewis backed the initiative, concluding Exxon could face material financial risks from the net-zero scenario.
Glass Lewis did not reply to requests for comment.
Exxon has said the world is not on a path to achieve net-zero emissions in 2050. It says limiting energy production to levels below consumption demand would lead to a spike in energy prices, as observed in Europe following oil sanctions against Russia over Ukraine.
The 2050 net-zero emissions (NZE) scenario of the International Energy Agency (IEA) envisions a path to limit the global temperature rise to 1.5 degrees Celsius.
The World Meteorological Organization on Wednesday said that threshold could be hit for the first time in the next five years.
For the NZE scenario to be met, the IEA had said new oil exploration would have to have stopped in 2021 and nations would have to switch to renewable energy from fossil fuels. Exxon is among the companies heavily investing in new exploration to generate oil and gas for decades to come.
“It is clear that the IEA NZE does not, by the scenario authors’ own assessment, meet the level of likelihood required to be considered in our financial statements,” Exxon said in a response filed with the U.S. Securities and Exchange Commission.
“It is highly unlikely that society would accept the degradation in global standard of living required to permanently achieve a scenario like the IEA NZE,” Exxon said in dismissing the proposal.
Exxon rebutted the proxy firm’s recommendation that it evaluate the impacts of a worst-case oil spill at its offshore Guyanese oil platforms. Exxon leads a consortium responsible for all of Guyana’s offshore oil production and its board has recommended against the proposal.
“The requested report clearly would not provide new, decision-useful information,” Exxon said, adding the shareholder request “ignore(s) the time, additional cost, and resources every report takes for the company to prepare.”
(Reporting by Sabrina Valle; Editing by Howard Goller)