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Chevron Dodges Climate, Methane Proposals in Annual Meeting

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Chevron Corporation CVX recently held its annual meeting, wherein its shareholders voted against two non-binding resolutions proposed to fight climate change. The outcome of the vote can upset the environment activists who are pressurizing the oil and gas companies to reduce their greenhouse gas emissions. But the last laugh is still up for grab.

Chevron’s shareholders are following a similar path as shown by Royal Dutch Shell plc’s RDS.A investors, who rejected a resolution that could have compelled Shell to commit to firmer carbon-emission reducing objectives. Notably, the Anglo-Dutch energy mammoth is currently following a “wide-ranging and progressive approach” toward energy transition, enabling the company to invest more in renewable energy since the last few quarters.

Climate-Related Resolutions

One out of the two resolutions focused on methane emissions, demanding the company to take firmer steps toward monitoring and reducing emissions. Methane is the primary component of natural gas, and stronger and harmful than carbon dioxide. The resolution received 45% of the total votes cast.

The second resolution demanded Chevron to provide a business model, following which the company can reduce its carbon footprint and shift more toward renewable energy. The proposal was in line with the Paris accord and received only 8% of the total votes cast.

What’s in Store?

Although oil majors like Chevron are not being affected at the moment from these proposals, it might not be the same in the future. The votes cast were against the resolutions proposed, yet the companies are responding to the pressure from the activists. Chevron has been focusing on reducing carbon footprint since a long time, and the recent votes will only add to that notion.

Winning against the emission proposal by a low margin (55-45%) further confirms the fact. This is the current trend in the industry, despite President Trump pulling back from the issue. Although Chevron does not need to address the situation currently, failure to pay heed to the investors’ sentiment can hurt the company’s bottom line in the future.

Another energy company, Fort Worth, TX-based Range Resources Corp. RRC witnessed somewhat similar voting scenario, wherein the company lost to the proposals, as 50.3% voted in favor of the resolution. Range Resources is now required to review its methane-curbing policy. Even though the vote was non-binding, it surely shows which way the investors are treading.  

Price Performance

San Ramon, CA-based Chevron has gained 21% in the past year compared with 14.8% growth of its industry.


Zacks Rank and a Stock to Consider

Currently, Chevron has a Zacks Rank #3 (Hold).

Investors interested in the Energy sector can opt for a better-ranked stock in the same space like BP p.l.c. BP, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

London-based BP is an integrated oil major. For 2018, its bottom line is likely to be up 67.6%. In the last four reported quarters, the company delivered an average positive earnings surprise of 29.6%.

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BP p.l.c. (BP) : Free Stock Analysis Report
Chevron Corporation (CVX) : Free Stock Analysis Report
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