Assessing impairment risk under Net Zero Emissions 2050 at ExxonMobil.

Vote occurred May 25, 2022.

The International Energy Agency (IEA) Net Zero Emissions 2050 (NZE) scenario envisions a significant reduction in fossil fuel demand, projecting that oil prices drop and that no new exploration is needed. This is a risk to the business model of oil majors.

Why it’s relevant

ExxonMobil has net-zero roadmaps for its major assets.1 In its Advancing Climate Solutions 2022 Progress Report, ExxonMobil projected that $11 trillion of new investment is needed in oil and gas development under NZE,2 whereas the IEA projected that no new fossil fuel development would be required.3 ExxonMobil acknowledges the risk its investments face in the energy transition.4 Its strategy includes investments that depend on continuing growth in hydrocarbon demand, but the company has not provided detail on those assumptions.

The proposal

Shareholders requested that ExxonMobil conduct an audited report to assess how applying the IEA’s NZE assumptions would affect the company’s financial statements and projections.5

The outcome

ExxonMobil has reinforced its commitment to support society’s ambition of net-zero emissions by 2050 and continues to invest in new technologies to reduce emissions at scale. This report will help drive greater transparency at ExxonMobil to align its assumptions with wider industry standards, ensuring that its investment plans deliver returns in line with projections and that it navigates the energy transition with economic success.

This proposal passed with 51% of the vote.