The U.S. Securities and Exchange Commission has ordered two of America’s largest oil companies to hold shareholders’ votes on far-reaching new emissions targets, as the regulator follows a stricter approach to climate under the Biden government.
The SEC rejected requests from both ConocoPhillips and Occidental Petroleum to throw away shareholder denials that would force them to come up with detailed plans to reduce their so-called ‘Scope 3’ emissions – those of the burning of their products by customers .
Both companies have argued that the proposals, which should be submitted at their annual meetings, seek to micromanage their operations – grounds under which the regulator has allowed companies to reject similar proposals under the Trump administration. But the SEC said it could not agree with this argument in either case.
“In our opinion, the proposal does not want to target the company in such a way that such exclusion from the proposal is appropriate,” the regulator wrote to Conoco in a letter seen by the Financial Times.
The decisions are, according to activists, the first time that oil and gas companies’ requests to exclude votes on the Scope 3 emissions have been rejected for the first time. They suggest that the regulator continue with a more radical approach under the new government, even before the new chairman is confirmed.
“They are not wasting any time,” said Mark van Baal, founder of Follow This, a Dutch shareholder group that filed the motion against Conoco. “I think it’s impressive that less than two months after the inauguration, there’s a whole new spirit at the SEC.”
Under the Trump administration, campaigners have said the SEC makes it easier for companies to throw out shareholder proposals on false grounds rather than place them under investor votes, following a broadening of the definition of micromanagement.
According to Institutional Shareholder Services, an independent investment advisory group, in 2018 about 15 percent of environmental and social proposals were rejected, compared to 9 percent in 2016.
Joe Biden has vowed to put climate change efforts at the heart of his presidency. Although a narrow majority in Congress limits his ability to use legislation as a tool, analysts have said that SEC decisions make it clear that he will use every available path to achieve his ambitions.
“This is undoubtedly just the beginning of Biden appointments that require much greater financial disclosure through fossil interests, similar to those entrusted to Europe in recent years,” said Paul Bledsoe, a former White House climate adviser under Bill Clinton.
“The Biden team intends to leave no climate stone untouched, especially the shareholder rights and the financial sector in general.”
While U.S. oil and gas companies began to set some emission targets, they were generally less ambitious than those set by their European counterparts.
ConocoPhillips is committed to reducing the emissions of its operations and those of its suppliers to zero, but has drawn the line to set targets for the scope of emissions of Scope 3, created by its customers. Occidental has said it will reduce Scope 3 emissions to zero by 2050, but has yet to set intermediate goals on how it will get there.
Occidental declined to comment. Conoco and the SEC did not respond to requests for comment.