 
Statements at Imperial Oil Annual General Meeting
Content
Move the motion - My name is Stephen Allen and I hold the
proxy of The Trustee Board of the Presbyterian Church in Canada,
a shareholder of Imperial Oil Limited. I hereby move the motion.
Statement from the floor – My name is Stephen Allen
and I am speaking on the proxy of the Trustee Board of the Presbyterian
Church in Canada, one of the filers of the shareholder proposal
on ‘embedded climate risk’. As a shareholder, the Presbyterian
Church is concerned with the possible financial liabilities that
this company may face due to its greenhouse gas emissions. The church
has, therefore, requested that the company prepare a report which
would outline, for its shareholders, the range of potential financial
liabilities associated with its greenhouse gas emissions and the
company’s strategy to reduce this liability.
The issue of liability is not an insignificant one. There is increasing
concern among governments, business leaders, and institutional investors
that climate change has the potential to adversely impact social
development, economic growth, corporate cost structures, and stock
market valuations. As producers and retailers of fossil fuels, these
developments pose significant potential financial liabilities for
integrated oil and gas companies, including:
- Increasing regulatory pressure to reduce operational emissions
of greenhouse gas emissions;
- Potential long term disruption to core company business as
growth in fossil fuel usage is dampened by government regulatory
action to curb greenhouse gas emissions;
- A market shift away from greenhouse gas-intensive fuels;
- Loss of competitive position due to the development and distribution
of cleaner and/or more efficient fuel substitutes;
- Potential litigation due to failure to disclose potential financial
risks from global warming;
- Reputational and brand damage if companies are identified as
laggards on the issue of GHG reduction.
In recognition of these risks, many top asset management and insurance
firms are calling for greater integration of climate change into
future investment and underwriting activities. In the United States,
several large pension funds have expressed concern about the risks
of climate change to long-term investments. On April 2 of this year,
for example, pension funds for the City of New York and the states
of Connecticut, Vermont and New York, which represent approximately
$130 billion in investments, indicated that they will be supporting
shareholder proposals which call for disclosure of and plans to
reduce greenhouse gas emissions. Furthermore, they are planning
to hold a summit with other institutional investor within the next
six months to examine risks associated with climate change and corporate
disclosure practices.
By Imperial Oil’s own admission, climate change is an important
issue for the company. The company, however, studiously avoids the
phrase ‘financial risk’ in its discussion of the shareholder
proposal. Scant mention is made of climate change in the company’s
Annual Report to Shareholders 2002. Unless the company discloses
how it evaluates its potential financial liabilities associated
with climate change and greenhouse gas emissions, investors cannot
independently assess the risk involved nor management’s ability
to mitigate these risks.
It is in this context that the Presbyterian Church has filed this
proposal which asks the company to disclose to its shareholders
the potential financial liabilities which the company might face
due to its greenhouse gas emissions. We would ask that other shareholders
begin to look at the financial liabilities involved in greenhouse
gas emissions and support the proposal which has been submitted.
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Move the motion - My name is Nancy Palardy and I hold the
proxy of the Congregation of the Sisters of Saint Anne, a shareholder
of Imperial Oil Limited. I hereby second the motion.
Statement from the floor – My name is Nancy Palardy
and I am speaking on the proxy of the Congregation of the Sisters
of Saint Anne, one of the filers of the shareholder proposal on
‘embedded climate risk’. I would like to speak to the
issue of greenhouse gas emissions and this company’s record
on that matter.
While Imperial Oil is to be commended for taking certain ad hoc
and isolated initiatives to improve energy efficiency, as outlined
in the company’s proxy materials, its overall emissions performance
is poor when compared with other companies in its sector. Both BP
and Shell have reduced emissions well ahead of the target date established
by the Kyoto Protocol and, in particular, Shell has indicated that
its emissions have been reduced to 10% below 1990 levels as of 2002.
According to Imperial Oil’s own October 2002 Voluntary Climate
Change progress report, the company’s total greenhouse gas
emissions were 11,385 kilotonnes in 2001, a 6.8% increase from 10,660
kilotonnes in 1990 which is the base year.
On a per-unit-of-production basis, greenhouse gas emissions increased
by 25% between 1990 and 2001 for the company’s conventional
oil business. According to its Voluntary Climate Change report,
Imperial Oil’s greenhouse gas emissions will increase, not
decrease, over the next five years. The company expects that by
2006 overall emissions will increase by 12% over 1990 levels. Considering
that scientists are now asserting that greenhouse gas emissions
must be reduced by more than 50% over the next few decades in order
to stabilize concentrations of these gases, it strikes those of
us who are concerned about climate change that this is, indeed,
the wrong direction to be heading.
According to Michael Jantzi Research Associates, a respected independent
research provider covering the social and environmental performance
of Canadian companies, Imperial Oil has set no meaningful targets
for greenhouse gas reductions and has poor environmental management
system compared to other companies in its sector.
It is light of this track record on greenhouse gas emissions that
the filers have submitted this shareholder proposal. I would reiterate
the request made by the proxyholder from the Presbyterian Church
in Canada that shareholders of Imperial Oil begin to look seriously
at the financial liabilities associated with greenhouse gas emissions,
particularly as they are predicted to increase by this company,
and to consider supporting the resolution now before them.
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