The U.S. Securities and Exchange Commission has ordered two of America’s largest oil companies to uphold shareholder votes on new long-range emissions targets as the regulator takes a tougher approach to the climate under the Biden administration.
The SEC has denied requests from ConocoPhillips and Occidental Petroleum to reject shareholders’ motions that would force them to draw up detailed plans to cut their so-called “Scope 3” emissions – those arising from the burning of their products by customers.
Both companies argued that the proposals, to be presented at their annual meetings, were aimed at micromanaging their operations – reasons why the regulator had allowed companies to reject similar proposals under the Trump administration. But the SEC said it was “unable to agree” with that argument in both cases.
“In our opinion, the proposal is not intended to micromanage the company to such an extent that the exclusion from the proposal is appropriate,” the regulator wrote to Conoco in a letter read by the Financial Times.
The decisions mark the first time the SEC has denied requests from oil and gas companies to exclude votes on Scope 3 emissions, according to activists. They suggest that the regulator is moving forward with a more interventionist approach under the new administration, even before the confirmation of his new presidency.
“They are not wasting time,” said Mark van Baal, founder of Follow This, a group of Dutch shareholders who filed the motion against Conoco. “I find it really impressive that, less than two months after the inauguration, there is a completely new spirit at the SEC.”
Under the Trump administration, activists said the SEC made it easier for companies to reject shareholder proposals for spurious reasons, rather than putting them in investor votes, after an expansion of the definition of micromanagement.
Companies were allowed to reject about 15 percent of environmental and social proposals in 2018, compared with 9 percent in 2016, according to Institutional Shareholder Services, an independent investor advisory group.
Joe Biden promised to put efforts to combat climate change at the center of his presidency. Although a narrow majority in Congress limits his ability to use the legislation as a tool, analysts said the SEC’s decisions made it clear that he would use all available means to fulfill his ambitions.
“This is undoubtedly only the beginning of Biden’s appointments requiring much greater financial disclosure for fossil interests, similar to those required in Europe in recent years,” said Paul Bledsoe, former White House climate adviser under Bill Clinton.
“Biden’s team does not intend to leave stone on the stone in stone, including the rights of shareholders and the financial sector more broadly.”
Although US oil and gas companies have started to set some emissions targets, they are generally less ambitious than those set by their European counterparts.
ConocoPhillips is committed to reducing emissions from its operations and its suppliers to zero, but has set the limit for setting Scope 3 emissions targets created by its customers. Occidental said it will reduce Scope 3 emissions to zero by 2050, but has not yet set tentative targets on how to get there.
Occidental declined to comment. Conoco and the SEC did not respond to requests for comment.