INVESTOR AND MEDIA UPDATE
- Phillips 66 reluctantly sets ambition for Scope 3 (product emissions)
- Follow This expects Chevron and ConocoPhillips to follow
Voting for climate resolutions works: Phillips 66 is the first US oil major to set an ambition to reduce the carbon intensity of its products (so-called Scope 3 emissions, by 15%) by 2030, the company announced last week.
Many thanks to the 80% of investors in P66 who voted for the Follow This climate resolution that requested Scope 3 targets earlier this year, prompting this significant advance in the reach of their strategy.
Scope 3 U-turn
Follow This welcomes Phillips 66’s crucial U-turn on Scope 3. At the AGM in May, Phillips 66 advised shareholders to vote against the Follow This climate proposal, stating that “implementing the proposal [..] is unnecessary” (Proxy Statement, page 66). Nevertheless, 80% of the shareholders defied board advice and voted in favor of the climate proposal.
A familiar pattern
We recognise this pattern: European peers Shell, BP, and Equinor also advised shareholders to vote against the Follow This resolution requesting Scope 3 targets, and also reluctantly set intensity targets for Scope 3 when a growing group of investors made it evident that they would not accept less.
No absolute emission reduction targets for 2030
The similarities continue: like its European peers, Phillips 66 still plans to grow their fossil fuels production and sales. As a result, they will increase absolute emission by 2030, which is in direct contempt with all efforts to achieve the goals set out in the Paris Accord. According to the IPCC’s Sixth Assessment Report (2021) and the IEA Net Zero by 2050 Roadmap (2020) the world needs to achieve absolute emission reductions of around 40% by 2030 to confront the climate crisis.
The recent IPCC report couldn’t be clearer: unless there are “immediate, rapid, large-scale reductions in greenhouse gases”, global temperature rise will not be limited to 1.5°C. There is no room for fossil fuel growth in a livable world.
Engagement and voting
We value engagement with all oil majors that we file resolutions at in order to support them to advance their climate strategy. We were disappointed to discover that all oil majors that we engaged with this year fail to recognise the urgency or necessity of reducing their emissions this decade. Oil companies accept the fact that emissions must be reduced by 40% by 2030, yet maintain that this responsibility falls to anyone other than themselves.
Given this lack of urgency, investors must continue to be crystal clear in their communication with oil majors: “Unless there are immediate, rapid, large-scale reductions in greenhouse gases, limiting global temp to 1.5 will be beyond reach” (recent IPCC report again). This is a message that should be emphasised during engagement and through voting practices at AGMs.
Follow This expects Chevron and ConocoPhillips to respond with Scope 3 ambitions this quarter as well. They also received the same mandate from shareholders that Phillips 66 responded to last week. Chevron announced that they intend to address Scope 3 later this year.
We thank investors again for their engagement and votes; this small but crucial step by Phillips 66 would not have taken place without both of them.