Will Exxon's refusal to address climate change spell its demise?

Anne Simpson lost a battle with Exxon this week. But she's still convinced she'll win the war. 

Simpson is an Investment Director for Global Governance for the California Public Employees' Retirement System or CalPERS. CalPERS owns about $1 Billion U.S. worth of shares in Exxon and it's trying to use that leverage to get the company to tackle the threats posed by climate change. 

The goal, she says, is to get companies to understand that last year's Paris climate change agreement means the world is changing and that their current business models may not be workable in the long-term.

"Those companies which are not reporting on how they're going manage these risks and opportunities are looking backwards," she tells Brent Bambury. "They're not keeping pace with what investors expect. We want these risks managed, but we also want the returns that will come from the company doing well for the next 25 years."

Walking away from Exxon doesn't have any impact on its agenda. We actually have to be the owners, with a seat at the table who make the change that we want to see in the world.- Ann Simpson, CalPERS

This week, at the annual general meetings for oil giants Exxon and Chevron, investors tabled resolutions calling on both companies to start reporting the risk that climate change could pose to their bottom lines. In both cases, the resolutions were voted down. 

But Anne Simpson prefers to focus on the big picture. 

"In an arena where the environment has been viewed as a side issue, it's being understood to be a mainstream financial issue," she tells Bambury, adding that other energy companies including Shell, BP, Statoil and Suncor have all responded much more positively to the idea of assessing and reporting on the risks posed by climate change. 

"Climate change is going bring great risk, but it's also bringing opportunity and we need to see that boards are on top of that."

No Divestment

While CalPERS is trying to change Exxon from within, others are threatening to divest themselves from companies that won't make the kinds of changes Simpson and others are calling for. But Simpson says that's the easy way out. 

"Walking away from Exxon doesn't have any impact on its agenda. We actually have to be the owners, with a seat at the table, who make the change that we want to see in the world. Simply selling our shares in the company doesn't have any impact on what that company does."

Simpson also says that she doesn't see CalPERS as being in opposition to Exxon. 

"We're fiduciaries," she says. "Our goal is to make sure the companies in our portfolio are well-governed and set for success over the long term."