The huge shake-up at oil giant ExxonMobil

After losing a shareholder vote, ExxonMobil now has 2 green-friendly directors on its board who will push for carbon reduction.

June 1, 2021

ExxonMobil is the largest direct descendant of John D. Rockefeller’s Standard Oil…and it is being forced to go green.

ExxonMobil just lost a huge boardroom battle.

At a shareholder meeting last week, 2 green-friendly directors — who will push for a lower carbon future — were voted onto the energy giant’s board of directors.

According to The Economist, it is “extremely rare” for a company of Exxon’s size to have even a single dissenting voice on the board (translation: things are going to change).

With climate change concerns…

… more pressing than ever, Big Oil is facing pressure from all angles (governments, consumers) to clean up their energy production.

The most aggressive moves have come from green-friendly Europe:

  • BP has plans to reduce the carbon intensity of its products by 50% in the next 3 decades
  • Shell will be carbon neutral by mid-century

While ExxonMobil has carbon-reduction plans in place, critics want more. To wit: The company’s current spending plan calls for $3B on green projects in the next 5 years (vs. ~$100B for its other projects).

A defeat has been years in the making

In 2013, ExxonMobil was the world’s largest company. Today, the company’s value has fallen ~40% from its peak and — last year — it recorded a $22B loss due to the pandemic.

A small activist hedge fund named Engine No. 1 started agitating for change in December.

It was backed by 2 massive California pension funds (CalPERS, CalSTRS). While they own <1% of ExxonMobil, the funds’ combined $700B of assets make them very influential, per The Economist.

To be carbon neutral by 2050…

… the world must stop all new oil and gas projects, according to a report from the International Energy Agency (IEA) released in mid-May.

While there is much work to do, ExxonMobil’s stunning board defeat is one step toward reaching that goal.

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