Resilient LLP (formerly DeMarco Allan LLP)
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DT Vollmer

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Shareholders Vote to Support Climate Action at ExxonMobil and Chevron

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Shareholders and investors at two of the largest oil companies in the U.S. have voted to support increased climate action during recent shareholder meetings.   Led by activist investors and hedge funds, shareholders at ExxonMobil’s annual shareholder meeting voted to replace at least two board members with individuals perceived to be supportive of firmer action on climate change and CO2 emissions reductions. Similarly, shareholders at Chevron voted 61% in support of a resolution to “substantially reduce” Scope 3 emissions from Chevron’s energy products, which account for over 90% of its carbon emissions. Management at both Exxon and Chevron unsuccessfully came out against the respective votes.    Hedge fund Engine No.1 was behind the vote to replace board members at Exxon with individuals more aligned with taking increased climate action. Engine No.1 was able to gain the backing of institutional investors (including BlackRock) that want firmer commitments to act on reducing emissions and taking climate change into account as part of a broader investment and carbon transition strategy.   These developments follow last month’s vote at ConocoPhillips, advanced by activist shareholder group Follow This, in favour of setting Scope 1, 2, and 3 emissions reduction targets, which 58% of shareholder supported. Please contact Lisa DeMarco at lisa@resilientllp.com should you wish to discuss the contents of this bulletin.

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Dutch Court Orders Shell to Reduce Emissions

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A Hague District Court today ordered Royal Dutch Shell (Shell) to reduce the CO2 emissions of the Shell group by net 45% in 2030, compared to 2019 levels, through the Shell group’s corporate policy. The lawsuit was brought by Milieudefensie/Friends of the Earth Netherlands on behalf of 17,000 plaintiffs and alleged that Shell has a duty of care to reduce GHG emissions in line with the Paris Agreement. The plaintiffs alleged that Shell’s current policy, which seeks to achieve carbon neutrality by 2050 and reduce emissions by 20% by 2030, is inadequate to meet the necessary emissions reductions. The decision today, supporting the plaintiffs’ position, is said to be the first example of a court requiring a company to reduce its emissions and follows Urgenda v The Netherlands, a similarly successful case brought against the Dutch government for its own insufficient GHG reduction plan. The Court found that Shell bears individual responsibility for limiting climate change and ordered that Shell, inclusive of all the company’s legal entities forming the Shell group, must reduce the aggregate annual volume of all Scope 1, 2, and 3 CO2 emissions in its entire energy portfolio that are a result of its business operations, including all “energy-carrying” consumer products, by a minimum of 45% by 2030 relative to its 2019 levels. The Court determined that such reductions must be achieved through Shell’s own corporate policy, to be developed and designed by Shell. In addition, the Court made clear that the reductions with respect to Shell’s own emissions are an “obligation of result”, whereas reductions as they relate to the business relations of the Shell group including end-users are a “best-effort obligation”. With respect to end-users, the Court noted that Shell may be expected to take the necessary steps to remove or prevent serious climate-related risks associated with CO2 emissions and that…

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CCLI Releases New Opinion on Legal Implications of Climate Change For Pension Plans

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The Canadian Climate Law Initiative today released a new opinion by pensions lawyer Randy Bauslaugh, titled Climate Change: Legal Implications for Canadian Pension Plan Fiduciaries and Policy-Makers (the Opinion). The Opinion makes clear that (i) pension fund fiduciaries have a duty to consider climate-related financial risks and opportunities and (ii) failing to do so may lead to personal liability for economic, reputational, or organizational loss. This bulletin briefly summarizes the key findings of the Opinion: Legal responsibilities of plan fiduciaries. Climate change poses immediate and long-term economic and portfolio risks and opportunities that result in the need to take a multi-generational oversight approach. In addition, flowing from the fiduciary’s standard of care and duty of loyalty, climate change is a primary consideration of fiduciaries in advancing the primary purpose of plan fiduciaries: providing periodic payments to individuals after retirement and until death in respect of their service as employees. The financial relevance of climate change to fiduciary investment responsibilities. The financial relevance of climate change is supported by its acceptance by the financial services sector, including bankers, accountants, insurers, investment managers, securities regulators, academics, and public sector organizations, as well as the unequivocal acceptance of the causes and impacts of climate change by all parties in the recent Supreme Court of Canada decision upholding the federal Greenhouse Gas Pollution Pricing Act (read our earlier bulletin here). Must plan fiduciaries consider implications of climate change? The Opinion notes that with the growing consensus around the materiality of climate-related risks and opportunities, failure to take climate change into account may result in a fiduciary facing:  -removal;  -court-ordered disclosure of information related to climate change-related risks;  -fines and penalties under pension standards legislation; and -personal financial responsibility for investment underperformance or loss resulting from failure to properly manage climate change risks and opportunities, including equitable compensation or exemplary damages Please contact Lisa DeMarco at lisa@resilientllp.com should…

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Taskforce on Scaling Voluntary Carbon Markets Launches Public Consultation

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The Taskforce on Scaling Voluntary Carbon Markets (the TSVCM) today released its Phase 2 Public Consultation Report (the Report). The Report provides background on TSVCM activities and current thinking in support of consultations launched today to help inform and provide stakeholder feedback for the Phase 2 Final Report, to be published in July (read our previous bulletin on the TSVCM’s Phase 1 Final Report on creating large-scale carbon credit trading markets here). The TSVCM is conducting public consultation between May 21 and June 21, 2021 on the proposed governance design and preliminary recommendation guidelines from interested parties, particularly those interested in being a Founding Sponsor, Independent Board Member, Expert Panel Member or Executive Secretariat Host for the new governance body. Interested parties are encouraged to contact Lisa DeMarco at lisa@resilientllp.com to discuss opportunities for engagement with the TSVCM. Background. The TSVCM was launched in 2020 by Mark Carney, UN Special Envoy for Climate Action and Finance and former governor of both the Bank of Canada and the Bank of England, and is chaired by Bill Winters, Group Chief Executive, Standard Chartered, and sponsored by the Institute of International Finance (IIF) through the leadership of Tim Adams, President and CEO, with Annette Nazareth, former Commissioner of the US Securities and Exchange Commission, serving as TSVCM’s Operating Lead. Objectives and focus of the TSVCM. The Report provides the objectives and focus of the TSVCM, which include increasing public awareness of the climate and co-benefits associated with voluntary carbon markets (VCM). In addition, the TSVCM focuses on: High-integrity carbon credits and robust, transparent, and liquid markets; Addressing the oversight needs for an at-scale market; Legal principles and contracts through harmonization and liquidity by streamlining standard Terms of Use and developing general trading terms; Credit level integrity with respect to Core Carbon Principles (CCPs)…

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Unilever Shareholders Overwhelmingly Support Climate Transition Action Plan

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Yesterday, over 99% of Unilever shareholders voted in favour of a non-binding resolution supporting the company’s Climate Transition Action Plan (the “Plan”). The Plan sets a target of achieving net-zero by 2039 for each and all of Scope 1, 2, and 3 emissions. The Plan sets the following targets: Net-zero by 2039 across Scope 1, 2, and 3 emissions; 70% reduction against a 2015 baseline in Scope 1 and 2 emissions by 2025 and 100% reduction by 2030; 1.5oC aligned Science Based Target; Cut the footprint of products in half by 2030 against a 2010 baseline; and €1 billion for a Climate and Nature Fund To achieve the goals and targets of the Plan, Unilever is undertaking, among others, the following actions: 100% reusable, recyclable, or compostable plastic packaging by 2025; By 2030, electric vehicles will make up 100% of Unilever’s global car fleet; 100% renewable grid electricity (achieved in 2020) and heat by 2030; phase out high-impact HFC refrigerant from cooling systems; align capital expenditure with their 1.5oC pathways; €1B target for annual sales of plant-based meat and dairy alternative by 2025-2027; 60% reduction of product emissions through concentration and compaction; Replace fossil-fuel derived carbon with renewable or recycled carbon by 2030 in home care formulations; and Help protect and regenerate 1.5 million hectares of land, forests, and oceans by 2030. In addition, as part of the Plan, Unilever will begin to disclose the carbon footprint of every product is sells. Please contact Lisa DeMarco at lisa@resilientllp.com should you wish to discuss the contents of this bulletin.

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