U.S. and European oil and gas companies are under increasing pressure from shareholders to stress test their businesses against a global climate target to limit warming to below 2-degrees in order to halt irreversible and catastrophic climate change.

Institutions managing some $8 trillion in assets are supporting climate-risk disclosure resolutions to be put before ExxonMobil’s and Chevron’s AGMs on Wednesday May 25. The resolutions ask both Exxon and Chevron to explain how resilient their portfolios and strategy would be if policy measures to restrict warming to 2˚C, as agreed in Paris in 2015, were successfully enforced.

The U.S. Securities and Exchange Commission has ruled that Exxon must include the resolution at its AGM despite the firm arguing it already provides adequate carbon disclosures.

James Leaton director of research at Carbon Tracker said:

”Two degree scenarios need to become the new default setting for how companies report on their future business strategy – it’s not clear what the oil majors are so afraid of that they resist focusing on a smaller higher margin business.”

Earlier this month, an unexpectedly high 49% of shareholders backed a resolution urging Occidental Petroleum to stress test its business against the global target. Meanwhile, 1,000 academics from some of the world’s top universities – including Oxford, Cambridge, Yale and Harvard – have publicly backed both resolutions. A report published in March by Carbon Tracker found that while Chevron’s climate disclosures generally lagged its peers it was representative of thinking right across the fossil fuel sector.

Royal Dutch Shell and French company Total, who additionally have AGMs next Tuesday, have generally been more responsive to shareholder and public pressure to take steps to align their businesses than their U.S. counterparts.

A few days after Total announced it would boost its solar presence with the billion dollar acquisition of a French battery maker, Shell for the first time published a “below 2˚C scenario”. It was quickly followed by the publication of its Energy Transition and Portfolio Resilience paper.  The beginning of the document includes this disclaimer: “We believe our portfolio is resilient under a wide range of outlooks, including the IEA’s 450 scenario [compatible with avoiding 2C of warming]…[However,] we have no immediate plans to move to a net-zero emissions portfolio over our investment horizon of 10–20 years.”

An analysis by Carbon Tracker on Shell’s latest offerings entitled Shell climate disclosures: Déjà vu? shows its continued intransigence to be at best disappointing and at worst stonewalling. Shell has previously dismissed those, such as Bank of England governor Mark Carney, who have warned that fossil fuel assets could become stranded and worthless in the face of climate action.

“Shell has known about the carbon bubble for nearly 20 years, and used to be more transparent about the impact of its products. The company has all the information it needs to adopt a different course, if its management can get beyond its growth at all costs culture,” Leaton said.

Earlier this month the think-tank published a report that found the world’s oil and gas majors will be worth significantly more by aligning their investment plans with a 2˚C global climate target than pursuing business as usual.

The analysis found, somewhat surprisingly, that only proceeding with lower cost, less carbon-intensive projects needed to satisfy demand in a carbon-constrained world will add over $100 billion to the value of the world’s seven oil majors, unless oil prices spike beyond $100 a barrel for a sustained period of time — well over OPEC’s long-term average assumption of around $80 a barrel. The study is believed to be the first independent stress to be published to date.

Global management consulting company, Accenture, in a report this week on how the energy industry needs to transform to survive cited the “carbon bubble” — first coined by Carbon Tracker five years ago —  as a real risk. “Our assessment of post-COP21 climate-related constraints on E&P companies’ valuation and business suggests it is certainly something oil and gas companies must be concerned about,” the report said.

Notes to Editors

The wording of the resolution, item 12 on Exxon’s AGM ballot, is available here: http://www.ceres.org/investor-network/resolutions/exxon-carbon-asset-risk-2016.

The full list of investor supporters, updated on a rolling basis, is available here:  http://www.ceres.org/issues/carbon-asset-risk/investor-support-of-portfolio-resilience-resolutions.

Exxon’s AGM papers are available at the following address: http://ir.exxonmobil.com/phoenix.zhtml?c=115024&p=irol-asm.