comm-appendix-support-cross

4 February 20! 2016
the power generation sector, which is the subject of litigation with an uncertain outcome.: In short,
there remains significant uncettainty regarding the specific future public policy steps to be taken
to implement the Paris Agreement. Therefore, as stated in the Company Np Action Letter,'the
use of the term 2 degree as a core element of the Proposal renders the Proposal inherently
vague and indefinite, because current and future public policy surrounding the 2 degree target,
and how to get there, is highly uncertain. Given this uncertainty, it is impossible for shareholders
to know what actual policy actions they are asking the Company to assess When voting oh the
Proposal.
3. The vagueness of the Proposal is not excused simply because the Proponent Letter
claims the Proposal gives the Company "flexibility."
The Proponent Letter claims on page 8 that the vagUe references to a 2 degree target in
the Proposal were intended to prpyide ''flexibility for the Company tP review other publicly
available materials, including those of its peers, tP evaluate and determine the range of plausible
pathways to achieve the 2 degree scenarip and choose the trajectory or trajectories that it views
as most likely." Leaving aside the fact that the Proposal itself makes no reference to this
supposed "flexibility" being offered to the Company, this quote from the Proponent Letter simply
serves to demonstrate the inherent vagueness of the Proposal because it admits that there is a
"range of plausible pathways to achieve the 2 degree scenario." Accordingly, shareholders
cannot reasonably be expected to understand that the Proppsal intends for the Company to
exercise this type of "flexibility," nor does the Proposal inform shareholders of the wide range of
different pathways from which the Company would supposedly have discretion to choose. The
request that the Company "review other.publiGly available materials" demonstrates the
insufficiency of the language dftHe Proppsal itself. If the Proponent Letter is asking the
Company to review numerous public materials to chppse a particular 2 degree pathway,
shareholders armed with only the text Pf the Proppsal itself cannot reasonably be expected to
know which pathway they are being asked to support.
4. The Company's 2014 Report clearly shows that the Proposal has been substantially
implemented.
As discussed in the Company No ActiPn Letter, the Company prepared its 2014 Report in
connection with the withdrawal pf a prior shareholder proposal from Arjuna Capita! and As You
Sow that requested an analysis of the potential for the Company's oil arid gas assets to become
stranded as a result Pf global public policy regarding climate change. The 2014 Report's analysis
and conclusion - that hone of the Cdmpany's proved reserves 4 is ofwill become "stranded,"
even under a 2 degree pathway, is updated annually via the Company's Outlook for Energy (the
"Outlook for Energy") 5 and Corporate Citizenship Report ("CCR"). but the fundamental
analysis and conclusions remain unchanged. As a result, the 2014 Report's conclusions as
updated by the Outlook for Energy and CCR remains sufficient to meet the essential objective of
the Proposal as explained in the Company No Action Letter.
4
The Company determines its proved reserves in full compliance with SEC reporting standards,
including the test of "reasonable certainty," These reserves are updated and reported annually in the
Company's i 0-K filing, including discounted cash flows as. required. Proved reserves are a
fundamental element of a company's valuation:
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