The huge shake-up at oil giant ExxonMobil

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.