Many public companies are wrestling with their climate change reporting obligations in light of new guidance issued by the Securities and Exchange Commission earlier this year. Several of those companies have also been asked by concerned shareholders to put specific climate change disclosure resolutions to their respective shareholders. While the resolutions target companies in a variety of sectors, those regarding Canada's oil sands provide an interesting example of the types of demands shareholders are making, demands that may also be made by securities regulators in coming years.

As of the date of this posting, about 99 shareholders resolutions regarding climate change disclosure have been tabled for consideration during the 2010 proxy season, an increase of over 45% from 2009. The Investor Network on Climate Risk, a project of Ceres, is maintaining a current list of shareholder resolutions, which cover companies in Oil and gas, transportation, finance, electric power, coal, buildings and agriculture/forestry.

As detailed below, four of these resolutions pertain specifically to the development of Canada's oil sands. Oil sands projects are an interesting test case for climate change disclosure requirements, both because of their profile as significant sources of emissions and because of the potential exposure they may have to long term regulatory and physical climate change risks.

BP

Shareholder activists suffered a significant defeat last week when shareholders of BP roundly rejected a resolution calling for more specific disclosure regarding the company's investment in Canada's oil sands. The resolution had been supported by Fair Pensions, a UK group that lobbies pensions and other large institutional investors to make socially and environmentally responsible investments.

Shell

A similar resolution (also supported by Fair Pensions) remains pending for Shell:

"That in order to address our concerns for the long term success of the Company arising from the risks associated with oil sands, we as shareholders of the Company direct that the Audit Committee or a Risk Committee of the Board commissions and reviews a report setting out the assumptions made by the Company in deciding to proceed with oil sands projects regarding future carbon prices, oil price volatility, demand for oil, anticipated regulation of greenhouse gas emissions and legal and reputational risks arising from local environmental damage and impairment of traditional livelihoods. The findings of the report and review should be reported to investors in the Business Review section of the Company's Annual Report presented to the Annual General Meeting in 2011."

Fair Pensions presents its case in an Investor Briefing. Shell's director's have voted unanimously to recommend that the resolution be rejected, and have devoted 3 pages of their 20-page AGM circular to explaining why.

ExxonMobil

ExxonMobil's shareholders will be asked to require the company to prepare a report on its oil sands operations. For more information, see the lead filer's briefing and the company's response in its AGM circular.

ConnocoPhilips

ConnocoPhilips's shareholders will be asked to require the company to report on environmental damage of oil sands operations. For more details, see Trillium Asset Management and California State Teachers Retirement System's briefing (the AGM circular is not yet available).

As the fate of the BP resolution suggests, these oil sands resolutions are unlikely to be successful, nor are many of the resolutions that target the climate change disclosure of companies in other sectors. However Ceres reports that 28 climate change resolutions have already been voluntarily withdrawn after the relevant companies made specific commitments in response to the resolutions (including resolutions filed with Canadian issuers Agrium, Enbridge, PotashCorp and Suncor). Companies are therefore increasingly responding to this type of shareholder activism, which is increasingly comming from large institutional investors.

Companies are likely also responding to emerging pressure from securities regulators and other stakeholders. As mentioned above, the SEC has issued guidance that explains how, for some companies, climate change disclosure is just another type of material disclosure that public companies are already expected to provide. Canada's securities regulators are also considering issuing similar guidance, with the OSC expected to clarify its expectations in time for the 2011 proxy season.