Activist wins Exxon board seats in major shareholder pushback on oil giant’s climate strategy
Powerful shareholders have forced ExxonMobil to make room for climate-minded board members and a new vision for the oil giant’s strategy in one of the biggest boardroom fights over climate change to date.
Hedge fund Engine No. 1 pushed to replace four of Exxon’s XOM,
Shareholders have gotten louder in their demands for publicly traded companies to address global warming and other environmental issues.
This year, 25 climate-related shareholder proposals have made it onto ballots, and those that have been voted on so far have received support from 59% of shareholders on average, according to the Institute for Shareholder Services.
“Activist shareholders concerned about climate change have secured a win that could change the trajectory of the historically climate-hostile company,” said Emily Atkin, writing in her Heated newsletter.
Engine No. 1 does not have a significant stake in Exxon’s shares. But the slate of board members it advanced also had the backing of some of the largest public pension funds, which have taken positions to reduce exposure to fossil fuel investments.
For starters, Engine No. 1 wanted Exxon to add directors who have a track record of managing change in the energy sector. Many major fossil fuel companies have diversified, although not fast enough for some shareholders.
More broadly, the hedge fund argues that Exxon has underperformed rivals, giving up market share even when demand for oil CL00,
The Biden administration has set an ambitious goal of slashing America’s greenhouse gas emissions in half by the end of the decade. And the International Energy Agency earlier this month recommended ending investments in new oil and gas wells and coal mines, a surprising shift from the “watchdog” historically seen as backing the industry.
Exxon, for its part, says it has refreshed its board with directors who have expertise in energy, capital allocation and transitions. And it promotes the investments made in low-carbon solutions, including a recent proposal for a hub for carbon capture and sequestration. To accomplish that, Exxon called on government and industry to together invest $100 billion.
Read: Exxon floats idea for $100 billion private-public carbon capture hub, largest of its kind
Exxon has said it would spend $3 billion through 2025 on carbon capture and other low-carbon initiatives.
Other major oil companies, including BP BP,
A Dutch court on Wednesday ordered Royal Dutch Shell to cut its carbon emissions by net 45% by 2030 compared to 2019 levels in a landmark case brought by climate activism groups.
“What we’re finding with other oil companies, is we’re making progress, and Exxon needs to catch up,” Anne Simpson, managing investment director for board governance and sustainability at the California Public Employees’ Retirement System — known as CalPERS — America’s largest pension fund, told the Associated Press. “Exxon is still saying one thing and doing another.”
The New York State Common Retirement Fund has also backed the latest proposed changes for Exxon’s board.
“The new board should act on this mandate for change and adopt Paris compliant transition plans immediately and begin the hard, but necessary work of creating the roadmap to transform the company’s core business,” said Andrew Behar, CEO of As You Sow, an environmental shareholder advocacy group.
Exxon shares are up 41% in the year to date, rebounding as the economy emerged from COVID-19 lockdowns. The Dow Jones Industrial Average DJIA,
