Resolved clauseRESOLVED: Shareholders support the Company, by an advisory vote, to go beyond current plans, further accelerating the pace of emission reductions in the medium-term for its greenhouse gas (GHG) emissions across Scope 1, 2, and 3, and to summarize new plans, targets, and timetables.
Whereas clauseWHEREAS: In the absence of effective climate change mitigation, up to 10 percent of global economic value could be lost by 2050.1 The Intergovernmental Panel on Climate Change (IPCC) has advised that GHG emissions must be halved by 2030 and reach net zero by 2050 to limit global warming to 1.5 degrees Celsius. Every incremental increase in temperature above 1.5 degrees will increase physical, transition, and systemic risks for companies and investors alike.2
Current Goals: Chevron has acknowledged the importance of emission-reduction goals across its entire value chain by setting a Portfolio Carbon Intensity (PCI) target, which covers Scope 1, 2, and 3, to reduce emissions by over 5 percent by 2028. The Company has also set near-term gas, oil, and refining carbon intensity metrics for Scope 1 and 2 emissions.3
Yet, Chevron’s current 2028 targets are significantly below the IPCC’s recommendation of 50 percent absolute emission reductions by 2030. The Company’s current metrics are all on an intensity basis, which allow the Company to increase its absolute emissions. Furthermore, Chevron lacks ambition for its Scope 3 emissions, which account for 90 percent of its carbon footprint. The aggregated PCI target also obfuscates whether reductions are attributed to carbon efficiencies in operations, value chain, or products sold, or even attributable to offsets rather than reduction in emissions.
Capital Expenditures: The International Energy Agency reports peak global demand for coal, oil, and gas could be reached before 2030.4 Despite this trajectory, Chevron has dedicated only 2 billion dollars to lower carbon projects, with total capital expenditures reaching 15.5 to 16.5 billion dollars in 2024.5 Carbon Tracker projects that even under a moderate transition scenario, continued oil and gas investments could lead to commodity oversupply, resulting in lower pricing, negatively impacting existing and new project revenue.6
Cost of Capital: Chevron’s cost of capital may substantially increase if it fails to control transition risks by significantly reducing absolute emissions. In October, federal bank regulatory agencies issued Principles for Climate-Related Financial Risk Management for Large Financial Institutions, warning such institutions to thoroughly address risks associated with climate change within their investments.7
Peer Targets: Oil and gas peers BP, TotalEnergies, Repsol, and Eni recognize climate transition risks and have set more ambitious, medium-term emission reduction targets. These companies aim to reduce absolute Scope 1, 2, and 3 targets by at least 30 percent by 2030. Peer companies Equinor and Shell have more ambitious Scope 1 and 2 targets, as they aim to reduce these absolute emissions by 50 percent by 2030.8
1 https://www.swissre.com/dam/jcr:5d558fa2-9c15-419d-8dce-73c080fca3ba/SRI_%20Expertise_Publication_EN_LITE_The%20economics_of_climate_change.pdf
2 https://www.ipcc.ch/2022/04/04/ipcc-ar6-wgiii-pressrelease/
3 https://www.chevron.com/-/media/chevron/sustainability/documents/climate-change-resilience-report.pdf-page=1
4 https://www.nytimes.com/2023/10/24/climate/international-energy-agency-peak-demand.html
5 https://www.chevron.com/newsroom/2023/q4/chevron-announces-2024-capex-budget-:~:text=San%20Ramon%2C%20Calif.%2C%20Dec.%206%2C%202023%20%E2%80%93%20Chevron,capex%29%20budget%20of%20approximately%20%243 %20billion%20for%202024.
6 https://carbontracker.org/reports/navigating-peak-demand/
7 https://www.federalreserve.gov/newsevents/pressreleases/bcreg20231024b.htm
8 https://carbontracker.org/reports/absolute-impact-2023/