Exxon Mobil to Square Off With Climate Change Activists
Shareholders elected at least two of the four directors nominated by a coalition of investors that said the oil giant was not investing enough in cleaner energy.
Climate activists win at least two seats on Exxon Mobil’s board in a first.
Exxon Mobil storage tanks in Rotterdam. Shareholders say the oil giant should invest more heavily in renewables like wind and solar energy.Credit…Peter Dejong/Associated Press
May 26, 2021, 8:22 a.m. ET
Shareholders of Exxon Mobil dealt the company’s management a defeat on Wednesday by electing at least two of four candidates activist investors had nominated to its board — the first time that has happened, according to analysts who follow the company.
The election of the remaining seats was too close to call, according to preliminary results announced by the company.
A coalition of investors concerned about the environment had argued that Exxon had not invested enough in cleaner energy, which will hurt its profits in the future. And a majority of the company’s shareholders appeared to at least partly agree with that position, according to the preliminary results.
The investors have argued that the company should follow European oil companies like BP and Total that have begun investing heavily in renewables like wind and solar energy. Exxon has said it does not make sense for it to pivot to renewables and that it is addressing climate change by focusing on capturing carbon from industrial facilities and storing it deep underground in perpetuity.
The hedge fund leading this campaign, Engine No. 1, was seeking to defeat the election of four of the company’s director candidates and had proposed four of its own. Its victory is a sharp rebuke to Darren W. Woods, Exxon’s chairman and chief executive, and is the culmination of years of efforts by activists to force the oil giant to change its environmental policies and approach. Some big pension funds, including the New York State Common Retirement Fund and the California Public Employees’ Retirement System, had joined Engine No. 1, which was started last year.
“We welcome the new directors,” Mr. Woods said at the meeting. “While there is still more to do, we are proud of the progress we have made to reduce emissions and clear plans for further reductions.”
The two directors nominated by Engine No. 1 who won are Gregory Goff, a former chief executive of Andeavor, a refinery company, and Kaisa Hietala, a former executive at Neste, a Finnish energy company that produces renewable versions of petroleum products, including diesel and jet fuel.
The company’s share price jumped after the preliminary results were announced and were trading about 1 percent higher at 1:30 p.m.
Exxon has argued that its investments in carbon capture and storage demonstrate that the company is not ignoring climate change and has a plan for a lower-carbon future. This week, it announced that it would add two new directors to the board, including a climate expert, but it has not committed to investing in renewable energy.
Engine No. 1 dismissed the move, saying, “This vote is too important to be influenced by this type of cynical, last-minute maneuvering.”