As reports circulated that President Donald Trump was preparing to withdraw the U.S. from the Paris Climate Agreement, a significant shift in the other direction took place in an unlikely setting: the annual shareholders meeting of the world's largest oil company.

In a massive Dallas ballroom, shareholders of ExxonMobil approved a resolution that asks the company to test its business plans against a world in which policy makers enact measures to limit the burning of fossil fuels.

Specifically, the resolution asks the company to stress test its plans for a world in which leaders fully implement their Paris Agreement pledges in order to keep global warming to 2 degrees Celsius, or 3.6 degrees Fahrenheit, above preindustrial levels through 2100.

SEE ALSO:Elon Musk told Donald Trump what to do about the Paris Climate Agreement

The resolution, which garnered 62.3 percent of the vote, is aimed at providing shareholders with more information about how well-prepared the company is for grappling with potential constraints on burning its oil and gas reserves.

Via Giphy

Arguably, climate policies are one of the biggest uncertainties that Exxon and other oil and gas companies face. However, Exxon, more than most other oil companies, has consistently taken the position that the world will not enact significant carbon cuts because such actions would be too expensive.

This contention has become more difficult to defend now that many nations, from Canada to China, are implementing carbon pricing measures, and almost every country in the world has adopted the Paris Climate Agreement. Publicly, Exxon supports the treaty, even though its own business forecasts don't include its implementation.

So basically, the question is: Will companies get away with supporting a climate treaty while at the same time planning to propel our climate to catastrophe?

So basically, the question is: Will companies get away with supporting a climate treaty while at the same time planning to propel our climate to catastrophe? Shareholders are sounding the alarm that their business plan is unsustainable.

Some climate and economic experts, including former Vice President Al Gore, who co-founded an investment firm that studies this problem, view fossil fuel companies as a looming, systemic economic risk because they are not properly planning for the future.

Many shareholders are worried that Exxon's fossil fuel reserves could become "stranded assets" if policies favor renewable energy over oil and gas resources. To some extent, this is already happening, as Exxon had to take a multibillion dollar write-down of its investments in Canada's tar sands during the past year.

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Exxon Chairman & CEO, Darren Woods and other company officials at the New York Stock Exchange in 2017.Credit: HANDOUT/EPA/REX/Shutterstock

"Climate change is now front and center in investors' engagement," said Robert Schuwerk, senior U.S. counsel for Carbon Tracker, an investment research group focused on climate change risks. 

"As Exxon is a standard bearer for the oil and gas industry, smaller companies should take note and respond accordingly."

The resolution asks Exxon to disclose how it is managing climate change risk and how the Paris Climate Agreement's temperature target would affect its business decisions.

In 2016, the same resolution got only 38.1 percent of votes in favor.

The Exxon vote follows a similar vote at a smaller oil firm, Occidental Petroleum, where shareholders passed a resolution calling for the company to assess how climate change affects the firm's long-term business plans.

Climate studies have shown that in order to meet the Paris Agreement's temperature target, much of currently known fossil fuel reserves would have to stay in the ground, rather than being used for energy. That could imperil certain companies that don't take this into account.

"We have a significant problem with the company's unwillingness to conduct an analysis of the Paris agreement’s 2 degree scenario," said Patrick Doherty, director of corporate governance for the New York State Office of the State Comptroller, which cosponsored the shareholder resolution. The state has about $1 billion invested in the company.

"They have told us that they felt that it was unrealistic and not likely to occur, so therefore it would not merit corporate resources being expended to do such an analysis," he said.

Officials celebrate the adoption of the Paris Climate Agreement in December 2015.Credit: Mori/AP/REX/Shutterstock

"Asking for the company to do a thorough analysis of the Paris Agreement's goals and to report that analysis to shareholders, that’s very important because it’s our money," Doherty said. "We’re fiduciaries, we have a responsibility."

In addition to facing shareholder pressure, Exxon is under investigation by two state attorneys general for allegedly hiding what it knew about the dangers of its products for decades, and instead spreading disinformation on climate science.

Largely because of revelations about the company's climate denial and misinformation activities, Exxon has been a major target of climate activists, who hailed the vote on Wednesday.

“When the markets realize that Exxon won’t be able to burn its remaining oil and gas reserves because doing so would put cities like New York and Shanghai underwater, the company’s share price is going to plummet," said Jamie Henn of 350.org, a climate advocacy organization.

"That’s not a matter of if, but when."

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