‘A Seismic Shift’ for Big Oil
“The outcome is a sign that Exxon’s morally inept and fiscally questionable long-term climate strategy is finally catching up with it,” wrote one journalist.
Wednesday, May 26, 2021
In a historic rebuke of fossil fuel giant ExxonMobil, shareholders on Wednesday voted to elect at least two people to the company’s board of directors who were backed by activist investors eager to accelerate the transition to clean energy.
During Exxon’s annual shareholder meeting, an activist hedge fund called Engine No. 1—which “owns only about 0.02%” of the oil company’s stock, according to climate reporter Emily Atkin—ran four of its own director candidates in opposition to the fossil fuel corporation’s hand-picked board members. At least two of Engine No. 1’s candidates won, with the races for additional boardroom seats too close to call as of this writing.
“The outcome is a sign that Exxon’s morally inept and fiscally questionable long-term climate strategy is finally catching up with it,” wrote Atkin.
Journalist Brian Kahn tweeted: “Hard to overstate how much Big Oil is getting its ass kicked today by courts and shareholders alike,” before proceeding to highlight three major victories claimed by climate activists on Wednesday.
In addition to the shareholder revolt at Exxon, 61% Chevron’s shareholders voted Wednesday in favor of slashing carbon emissions, and Royal Dutch Shell earlier in the day was ordered by a court in the Netherlands to reduce its carbon emissions 45% by 2030, compared with 2019 levels, as Common Dreams reported.
Hard to overstate how much Big Oil is getting its ass kicked today by courts and shareholders alike.
🔥Shell loses massive trial
🛢Chevron shareholders want to limit Scope 3 emissions
⛽️Exxon expecting at least two new climate activist board members
— Brian Kahn (@blkahn) May 26, 2021
“It’s important to understand,” explained a news dispatch by The New Republic about Exxon’s board election, that Engine No. 1 “is fundamentally a financial company, not some kind of environmental justice collective.” The outlet continued:
As such, its criticism of Exxon, outlined in an investor presentation, stems from the fundamental principle that “ExxonMobil has significantly underperformed and has failed to adjust its strategy to enhance long-term value.” But the source of this underperformance, the hedge fund claims, is something approaching climate denial: “A refusal to accept that fossil fuel demand may decline in decades to come has led to a failure to take even initial steps towards evolution, and to obfuscating rather than addressing long-term business risk.”
Environmentalist Bill McKibben emphasized that the election of Engine No. 1-nominated candidates to Exxon’s board happened despite the company’s “strenuous objections.”
Jess Shankleman of Bloomberg News, meanwhile, described the news this way: “A tiny activist investor has just held a proxy referendum on Exxon’s climate plans—and won.”
The Guardian reported that the “rival upstart” received a boost when BlackRock—the world’s biggest asset manager and the second largest shareholder at Exxon with a 6.7% ownership stake—threw its support behind three of Engine No. 1’s four director candidates, all of whom “have a background in fossil fuels but leadership experience in green energy innovation… due to frustration with the company’s refusal to take climate concerns seriously.”
As Atkin noted:
Exxon’s long-term strategy, you may remember, is to significantly ramp up oil production over the next decade, climate crisis be damned. The company released an absolutely laughable “climate plan” a few months ago, which allows the company to increase its carbon emissions in line with that strategy.
The oil giant has also faced heat in recent months for refusing to fully explain to investors how climate change poses a risk to the company; how much and to whom is it giving political contributions; and where its political lobbying efforts are focused.
While BlackRock “has previously pledged to make climate change central to its investments, and has received a good deal of praise for it,” Atkin wrote, the financial giant “did not back all of Engine No. 1’s candidates… [and] still likely voted to retain Exxon CEO Darren Woods—who has been central to pushing the oil giant’s current strategy—as director of the board.”
Environmental campaigners echoed Atkin, simultaneously celebrating Wednesday’s surprise boardroom victory while calling for more far-reaching changes that are consistent with what scientists and climate justice advocates say is necessary.
“Make no mistake: the shareholder vote to shake-up Exxon’s board represents a seismic shift for the company,” said Ben Cushing, financial advocacy campaign manager at Sierra Club. “It’s a culmination of years of activist energy and a result of massive shareholder frustration with the company’s failure to change course on climate.”
“However,” Cushing added, “change must come from the top as well. And with Darren Woods still in charge of Exxon, we question if the new board members will be able to change course quickly or drastically enough. Exxon needs to stop greenwashing, align with the goals of the Paris Agreement, and phase-out oil and gas production, starting now.”
Roberta Giordano, finance program campaigner at The Sunrise Project, said that “what Engine No. 1 could accomplish with such a small ownership stake at Exxon is remarkable.”
“Imagine what BlackRock, Vanguard, and other major asset managers could do if they really wanted to effect change at the major polluters of the world,” Giordano continued.
“New board members are a start,” she added, “but Exxon needs new leadership at the very top.”
Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.