Chevron Corp. suffered a backlash on Wednesday during the annual meeting as a shareholder proposal was overwhelmingly approved for the energy major to reduce the emissions of its customers, aka Scope 3.
According to a preliminary tally of the vote, 61% were in favor of the nonbinding proposal to reduce Scope 3 emissions, which Chevron does not directly control.
Approval of the proposal does not mandate Chevron to set targets on how much or when it needs to reduce customer emissions. However, the strong support may send a signal to management that investors want more action to combat climate change.
CEO Michael Wirth ensured stockholders that the company is listening to their concerns.
“Chevron has navigated through the challenges of the last year better than most in our industry,” he said during the annual meeting. “We’re optimistic about the future as we work to deliver higher returns and lower carbon.”
The Chevron vote came the same day that Engine No. 1, which controls 0.02% of ExxonMobil shares, convinced shareholders to grant it at least two seats on the supermajor’s board.
Reducing Scope 1 (direct) emissions and Scope 2, which are indirect emissions controlled by a company, are becoming standard protocol for oil and gas operators. However, tracking and reducing customer emissions is considered a more expensive challenge.
While there was strong support for the one climate change initiative, Chevron shareholders reelected each of the 12 board nominees. They also turned back another shareholder proposal that would have required Chevron to report the impacts of the net-zero 2050 scenario, which garnered 48% of the vote.
Chevron is taking action to reduce the carbon intensity of its operations and assets, while increasing the use of renewables and offsets, he noted. Plans are underway to invest in low-carbon technologies to enable commercial solutions across its global operations, which include liquefied natural gas projects in the Eastern Mediterranean and in Australia.
In March the San Ramon, CA-based supermajor set lower carbon dioxide reduction targets, which it expects to achieve in 2028, with zero routine natural gas flaring by 2030.
The three “core elements” of Chevron’s business strategy are “consistency, preparation and adaptability,” Wirth said. “Consistent values, because the world changes, but our foundation doesn’t. Staying prepared, because our business has cycles, and adaptive, because we live in a dynamic world.”
Chevron’s financial priorities are to protect the dividend, which Wirth noted is on track for the 34th consecutive year with an increase in annual payout per share. The company also plans a lower reinvestment rate because of improved capital efficiency.
“We’re a company you can count on in good times and in tough ones,” he said.
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