Exxon Mobil’s administration will face an enormous problem over its climate change insurance policies at an annual shareholder assembly on Wednesday as activists problem the election of 1 third of the corporate’s board.
Led by Engine No. 1, an activist hedge fund, a coalition of investors involved concerning the atmosphere has argued that Exxon has not invested sufficient in cleaner vitality, which will damage its income sooner or later. These investors argue that the corporate ought to comply with European oil corporations like BP and Total which have begun investing closely in renewables like wind and photo voltaic vitality.
Engine No. 1 is looking for to defeat the election of 4 of the corporate’s director candidates and has proposed 4 of its personal. A victory for even considered one of its nominees can be a pointy rebuke to Darren W. Woods, Exxon’s chairman and chief govt. Some large pension funds, together with the New York State Common Retirement Fund and the California Public Employees’ Retirement System, have joined Engine No. 1, which was began final yr.
“We listen and we hear,” Mr. Woods stated in an interview during which he tried to take a conciliatory tone. “We don’t always agree, but we always understand there is an opportunity to improve.”
Exxon has argued that its investments in carbon seize and storage, together with a proposal to seize the emissions from industrial vegetation alongside the Houston Ship Channel, demonstrates that the corporate is altering in its method to climate change. This week, it introduced that later this yr it will add two new administrators to the board, together with a climate professional, however it has not dedicated to investing in renewable vitality.
Engine No. 1 dismissed Exxon’s proposal for 2 new administrators. “What the board needs are directors with experience in successful and profitable energy industry transformations,” the hedge fund stated in a press release. “This vote is too important to be influenced by this type of cynical, last-minute maneuvering.”
Energy analysts say the dissidents may win seats on the board, however that will not essentially change Exxon’s course considerably, no less than not instantly on condition that many of the board would nonetheless be made up of administrators picked by the corporate’s administration.
“I don’t expect a meaningful change in strategy such as large investments in renewables,” stated Allen Good, a Morningstar analyst. But he stated victory for the dissidents “would be a signal that shareholders don’t think current initiatives have gone far enough, and that could spur further change.”
There have been a number of challenges to Exxon’s administration through the years, however the dissidents gained energy final yr when the corporate didn’t enhance its dividend and lower its $200 billion funding program by a 3rd. And the corporate’s inventory dropped by practically half. Its share worth has regained a lot of these losses in current months however stays about 17 p.c decrease than it was in January 2020 earlier than the pandemic took maintain.