Outcome: Omitted by SEC.
Resolved: Shareholders request EOG Resources, Inc. (EOG) adopt company-wide, quantitative, time-bound targets for reducing greenhouse gas (GHG) emissions and issue a report, at reasonable cost and omitting proprietary information, discussing its plans and progress towards achieving these targets.
Whereas: The Paris Climate Agreement of 2015, agreed to by 195 countries, established a target to limit global temperature increases to 2-degrees Celsius above pre-industrial levels. To meet the 2-degree goal and mitigate the most severe impacts of climate change, climate scientists estimate it is necessary to reduce global emissions 55 percent by 2050 (relative to 2010 levels), entailing a US reduction target of 80 percent.
According to a 2015 report by Citigroup the costs of failing to address climate change could lead to a $72 trillion loss to global GDP.
EOG states: “Our safety and environmental management processes are based on a goal setting philosophy. The company sets safety and environmental expectations and provides a framework within which management can achieve safety and environmental goals in a systematic way.” Despite this philosophy, EOG has not established time-bound or quantitative emissions reductions goals.
Motivated by the imperative to reduce emissions, cut costs, and/or achieve the goals of the Paris Agreement, many companies are setting goals:
• Over 300 global businesses have committed to setting GHG emissions reduction targets consistent with the 2-degree goal.
• Hess, Apache, Kinder Morgan, and Southwestern, are among EOG’s peers in the U.S. Oil and Gas sector that have set quantitative, time-bound GHG and/or methane reduction targets.
• The 10 major international oil and gas companies that constitute the Oil and Gas Climate Initiative recently announced their intention to work towards near-zero methane emissions.
• Over half of EOG’s peers in the S&P 500 have set GHG reduction targets.
Setting GHG reduction targets is frequently found to be a sound business strategy. A 2013 report by CDP, WWF, and McKinsey & Company found that companies with GHG reduction targets achieved 9% better return on invested capital than companies without targets.
Setting targets would address a common concern of investors that are increasingly attune to the risks of climate change. State Street Global Advisors recently published disclosure recommendations for oil and gas companies, wherein it states, “We view establishing company-specific GHG emissions targets as one of the most important steps in managing climate risk.”
One of the recommendations of The Task Force on Climate-related Financial Disclosures, whose members include JPMorgan Chase, UBS Asset Management, Generation Investment Management, and BlackRock, is: “Describe the targets used by the organization to manage climate-related risks and opportunities and performance against these targets.”
While EOG has implemented various emissions reduction strategies, proponents believe establishing time-bound, quantitative emissions reduction targets would serve to align new and existing initiatives, spur innovation to drive further emissions reductions, lower costs through enhanced efficiency, mitigate risk, and enhance shareholder value.