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Hermes and Wespath withdraw Chevron ‘Stress-Test’ Proposal

  • Wespath Investment Management (Wespath) and Hermes EOS, the stewardship and engagement team at Hermes Investment Management (Hermes), have withdrawn their proposal filed with Chevron Corporation, which asked the company to provide an annual assessment of long-term portfolio impacts relating to the transition to a low-carbon economy. This proposal is similar to the shareholder resolution, co-filed by Wespath and Hermes, that received 41% support at Chevron’s 2016 annual shareholders’ meeting.

    In March 2017, Chevron published a new report, Managing Climate Risks: a Perspective for Investors. Although the report lacks a substantive discussion of Chevron’s strategies and only describes in limited detail the potential impact of one reduced demand/carbon-constrained scenario, we accept the report as a “first step” toward explaining to investors how the company assesses climate change scenarios as an element of its strategic planning efforts. Over the ensuing year, we expect Chevron to provide investors with a more robust and comprehensive analysis that identifies emerging risk factors that will enable the company to evaluate its business plan to ensure its long-term resilience. The recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) will provide important guidance in this regard.

    Accordingly, Wespath and Hermes believe it is appropriate to provide Chevron with additional time to adopt these new best practice recommendations into its disclosure of how climate change is factored into its strategic planning.

    We both look forward to ongoing collaboration with our fellow investors that will enhance climate-risk disclosure by Chevron and other companies affected by the transition to a low-carbon economy, consistent with the TCFD recommendations.

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