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The Paris Climate Agreement's Most Surprising Defender: Exxon Mobil

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The Paris Climate Agreement's Most Surprising Defender: Exxon Mobil
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President Donald Trump is withdrawing from the Paris Agreement, Axios reported in a story quoting sources with direct knowledge of the decision.

For his part, the president tweeted he would announce his decision in the coming days, leaving open the possibility for a change of mind.

EPA Administrator Scott Pruitt and White House Chief Strategist Steven Bannon are among those in support of the decision.

Director of the National Economic Council Gary Cohn, Energy Secretary Rick Perry, the leaders of almost every country in the world and countless CEOs from the United State’s largest companies have all pushed for Trump to keep the U.S. in the deal, citing reasons ranging from environmental protection to economic downfalls.

Another outspoken supporter of the Paris climate deal is Secretary of State Rex Tillerson, the former CEO of Exxon Mobil Corporation (NYSE: XOM).

The Unlikely Ally

Exxon Mobil CEO Darren Woods endorsed the climate accords in February. “I believe, and my company believes, that climate risks warrant action and it’s going to take all of us — business, governments and consumers — to make meaningful progress," he said. 

The company has also sent two letters to the president in support of the agreement.

“By remaining a party to the Paris Agreement, the United States will maintain a seat at the negotiating table to ensure a level playing field so that all energy sources and technologies are treated equitably in an open, transparent and competitive global market so as to achieve economic growth and poverty reduction at the lowest cost to society,” Woods wrote, according to the New York Times.

Are Shareholders Aligned?

Exxon Mobil shareholders voted on two resolutions Wednesday — items 11 and 12 on the 2017 annual meeting and proxy statement notice — regarding the climate deal's impact on the company.

Item 11 calls for the company to reduce investment spending and increase capital distributions, citing concerns over forecast reductions in oil consumption and “catastrophic climate disruption” caused by carbon emissions.

Prior to the meeting, the oil giant recommended shareholders vote against the resolution, saying that the risk of climate change and related technological investments “must be taken seriously,” but that the company is in the best position to determine whether to invest or return capital.

The resolution failed in the preliminary vote Wednesday, with 3.8 percent for and 96.2 percent against.

Shareholders Approve Climate Change Assessment

Item 12 calls for Exxon Mobil to publish an annual assessment of the long-term impacts of global climate change policies and technological advancements on the business.

The resolution passed by a wide margin, with 62.3 percent for and 37.7 percent against — nearly the exact opposite of last year’s results.

The company opposed the resolution, defending its heavy investment in “researching technologies that address [the] dual challenge of energy development and climate change risk.”

The results of these resolutions suggest investors are supportive of increasing investment in new technologies and fighting climate change, but are still very cautious regarding the company’s bottom line.

The same proposal received only 38.1 percent support at last year’s meeting. This year it had the open support of major financial advisory firms including Blackrock, Inc. (NYSE: BLK), State Street Global Advisors (NYSE: STT) and Vanguard Group.

The text of the resolution said the assessment should specifically “analyze the impacts on ExxonMobil’s oil and gas reserves and resources under a scenario in which reduction in demand results from carbon restrictions and related rules or commitments adopted by governments consistent with the globally agreed upon 2-degree [Celsius] target.”

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