Exxon Mobil Corp. and Chevron Corp.'s unwillingness to venturebeyond their core oil and gas business will face a test Wednesdaywhen shareholders vote on climate change proposals at both oilcompanies' annual meetings.

The U.S. oil majors have typically enjoyed an easier ride frominvestors on environmental issues compared with their Europeanrivals. But pressure is building from some investment managers,especially after Royal Dutch Shell Plc and BP Plc made significantshifts to address investor concerns.

“I don't think they're doing nearly as much as the majors inEurope are,” said Brian Rice, a fund manager at the CaliforniaState Teachers' Retirement System, which manages about $230 billionincluding Exxon and Chevron shares. “Alternative energy—to methat's the future.”

There's still a big difference between the U.S. and European oilmajors over how they deal with investors' climate concerns. Forexample, BP's board this month supported a proposal that itdisclose how the company's investments are compatible with theParis climate accord. Exxon, by contrast, asked the Securities andExchange Commission (SEC) to strike a similar proposal off theballot—a wish that was granted.

Yet U.S. energy companies can't afford to be complacent. The NewYork State Common Retirement Fund and the Church of Englandcriticized Exxon's plea to the SEC and vowed to vote against allthe company's directors at its meeting. They're urging othershareholders to do the same.

Exxon's “inadequate response to climate change constitutes aserious failure of corporate governance,” they said in a filingearlier this month. The oil giant said in response that its boardalready holds at least one session a year dedicated to climateissues and already discloses the likely effects on itsbusiness.

Representatives from Exxon and Chevron didn't respond torequests for comment.

The two funds, which are working with the Climate Action 100+group of investors who oversee $32 trillion in assets, also urgedshareholders to vote in favor of the establishment of a climatechange board committee. Chevron investors will vote on the sameproposal.

Exxon CEO Darren Woods and his counterpart at Chevron, MikeWirth, are both reluctant to embrace wind and solar power toreplace oil and gas because renewables generally offer lowershareholder returns while also offering their companies little inthe way of a competitive advantage. They claim they can increaseoil and gas production even if fossil fuel demand shrinks, becausethey aim to have the lowest-cost assets that will be economic,regardless of commodity prices or the policy environment.

Woods this month announced a partnership with the Department ofEnergy to make new discoveries in the clean energy space. “We'reworking on a solution that doesn't exist but is needed,” he said atthe time. “Somebody needs to be doing that.”

Aside from climate change, Exxon and Chevron also face anotherpotentially controversial vote: Whether to split the roles of CEOand chairman once the incumbents step down. Both boards recommendinvestors reject the idea, but Institutional Shareholder ServicesInc. and Glass Lewis, two leading shareholder advisory firms,pledged their support for the idea.

Copyright 2019 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.