Exxon chief executive keeps door open to future shareholder litigation

Hello from New York, where we just had a historic week in US politics. The Republican criticism of Donald Trump’s debate performance has been devastating.

Republican strategist Karl Rove said in the Wall Street Journal that “Trump was crushed”. The Trump campaign is reeling, and the debate showed “Trump at his absolute worst”, Frank Luntz, the veteran Republican pollster, told my colleagues.

The election is 52 days away. The next few weeks will have massive ramifications for climate policy and clean tech companies. Buckle up.

For today, I have a dispatch on ExxonMobil chief executive Darren Woods’s remarks at an investor conference in New York.

And secondly: to all coffee connoisseurs, those single-use pods are not very recyclable after all.

The Moral Money Summit Americas returns to New York on October 15-16, with top-class speakers including Nobel-winning economist Esther Duflo. Newsletter subscribers can enjoy a 30 per cent discount on an in-person pass or participate online for free — click here to register.

institutional investors

Pension funds and protesters line up against Exxon CEO Darren Woods at investor conference

Darren Woods sparred with some of his toughest critics at the Council of Institutional Investors conference in New York this week.

The tension had been building in the days leading up to the event because earlier this year Exxon sued investor Arjuna Capital and shareholder group Follow This to stop their shareholder proposal concerning Exxon’s climate actions from going to a vote.

The activists quickly dropped their resolution, but Exxon continued its litigation — angering many of the pension funds that were present on Tuesday. A judge ultimately dismissed Exxon’s lawsuit. 

Climate protesters clearly see Woods as a top target and on Tuesday they turned physical when they attempted to storm the venue to disrupt the Kansas-born executive’s panel. (Climate activists also targeted an event featuring Woods in December.) A CII staffer “was knocked to the ground” in the melee, according to organisers, but fortunately no one was hurt.

When Woods did get his chance to speak over video link, he left open the door for future litigation over shareholder proposals. “The message coming out of this is very simple: let’s follow the process and all the rules that exist,” he said.

“I would just say that we hope we don’t have to use [legal] action in the future, but if we find people continue to abuse the process, we are going to hold them to the rules,” Woods said.

Woods’s comment ruffled feathers among the pension executives present at CII. After his remarks, Calpers chief executive Marcie Frost said in a statement to Moral Money: “We strongly disagreed with the course of action by ExxonMobil leaders in response to shareholder proposals they didn’t like, and we hope the issue is settled.” At Exxon’s annual meeting this year, Calpers voted against Woods and all of the company’s board directors to protest against its litigation.

“We believe that our actions regarding ExxonMobil’s anti-shareholder lawsuit successfully raised awareness about the vital role shareholders play in good corporate governance,” Frost added.

Separately, it’s worth highlighting something Woods said about carbon accounting.

“We do not have an accounting system for carbon emissions,” he said. “The job number one is to understand what you have got and where it comes from and we can’t do that.”

The comment should raise eyebrows on two points. First, there is Emmanuel Faber’s International Sustainability Standards Board (ISSB), which has written standards for sustainability disclosures, including around emissions.

Secondly, the Securities and Exchange Commission laid the groundwork for carbon accounting with its climate disclosure rule earlier this year. But the business community lobbied heavily to defeat the rule. The Business Roundtable, which counts Woods as a member, has called for a US appeals court to strike down the rule.

If Exxon and other companies succeed in torpedoing the agency’s climate disclosure rule, then Woods’s statement on carbon accounting will look more accurate.

Exxon’s share price is down 5 per cent over the past 12 months. The S&P 500 index is up 25 per cent over that time.

greenwashing

The SEC’s latest buzzkiller

If your offices are like the FT bureau in New York, you have a fast-serve espresso machine. To make brews, the apparatus consumes colourful little pouches of coffee grinds like a Venus fly trap.

Our trusty machine devours these pods all day — especially close to deadlines. Once it is full, it requires an unlucky victim to empty its innards. If this has happened to you, have you ever asked yourself: are these single-use coffee pods, um, recyclable?

Despite claims that the pods can be recycled, the SEC investigated and this week said: that’s not really true.

Keurig Dr Pepper on Tuesday agreed to pay the SEC $1.5mn to resolve allegations that inaccurately described the recyclability of its coffee pods. Beginning in 2016, the company tested the recycling process for its pods, which were tagged with a tracking chip. But two recycling companies expressed concerns with the viability of recycling the pods. According to the SEC, they said the recyclers could not accept the company’s pods in their facilities.

In regulatory filings, Keurig said that it conducted testing to validate that the pods could be recycled. These statements, the SEC said, “were incomplete and inaccurate because they did not also disclose the negative feedback received from recycling companies involved in the testing concerning the recyclability of pods”.

A spokeswoman for the company said: “We continue to encourage consumers to check with their local recycling programme to verify acceptance of pods, as they are not recycled in many communities,” and added the company was pleased to have settled the SEC action.

While the SEC’s fine was tiny for a global company such as Keurig, the enforcement action shows the agency is still on the hunt for potential greenwashing in regulatory filings.

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