ExxonMobil faces a “wind of change” as the climate war reaches its board of directors

ExxonMobil, a US corporate giant, will face a critical moment this week, as its unparalleled shareholders have expressed their views on critics’ inadequate response to climate change-induced earthquake changes.

On Wednesday, the most watched War of agency After a few years, it will finally be decided by a vote who is a member of ExxonMobil’s board of directors. The company is trying to withstand the challenge of the first engine of upstart hedge funds. After a series of recent recognitions, activists believe that victory is a foregone conclusion.

Anne Simpson, head of board governance and sustainability at Calpers, a U.S. pension fund that supports retirees, said: “This will cause repercussions.” “The wind of change has swept companies that are unwilling, afraid or unsure of how to act. [on climate]. “

This battle has been going on since December last year. At that time, First Engine nominated four new directors of Exxon’s board of directors and called for “a purposeful repositioning of the company to achieve success in the field of decarbonization.”

The once infamous shareholder Exxon has been in a listening and responding mode since the threat of activists emerged Appointment of new directors And announced a new emission plan.

Chief Executive Darren Woods told the Financial Times that he is ready to lead the board shareholder election.

He said: “We will cooperate with the results of the annual meeting.”

Voting will be Controversial agency season Shell, ConocoPhillips, BP and other fossil fuel producers have faced investor criticism of their climate strategies. Chevron’s board of directors will also face emissions-related shareholder resolutions at its annual meeting, starting with Exxon Mobil on Wednesday.

Calpers, Calstrs, and the New York State Pension Fund, the three largest pension funds in the United States, will all support Engine 1’s proposal, as will the legal and general investment management and church commissioners in England.

In contrast, Norway’s huge sovereign wealth fund has conducted extensive discussions on this. Climate riskSaid that it would retain the right to vote on Woods, but support the rest of the management.

The vote will depend on BlackRock, Vanguard and State Street—the three major funds collectively hold more than 20% of ExxonMobil’s stock—and the super giant’s large retail investor base, which accounts for almost half of its outstanding shares.

The three major funds did not disclose how they will vote, but they all emphasized the increasing importance of climate change to their investment decisions.

BlackRock Group President Larry Fink (Larry Fink) caveat The CEO stated earlier this year that companies that are not prepared to switch to clean fuels “will see their business and valuation suffer.”

The combatants were trapped in a battle, and they portrayed the battle as a battle between David and a giant that will reveal the true climate of Wall Street.

Fred Krupp, the president of the Environmental Protection Fund, urged shareholders to “advance with the times” by supporting the movement, noting that “great changes in clean technology, government regulations, and consumer preferences.” . . Require stronger strategic countermeasures”.

However, even Wall Street stock analysts believe that the activist movement is feasible because of the fund’s four board nominees with experience in the energy industry and the pedigree of the First Engine Company.

“It’s not just your average $200 million hedge fund,” said Sam Margolin, managing director of Wolfe Research, referring to the support of large pension funds. “The reputation of the people [it] The nominated person is very powerful. ”

Earlier this month, the two largest acting consultants in the United States, Institutional shareholder services And Lewis (Glass Lewis) respectively approved three and two nominations for the first engine.

Although the rights activists talked about “There is a risk Composed by Exxon Mobil Focus on oil and gasIn recent years, they have also made investors frustrated with ExxonMobil’s financial performance.

Exxon was the world’s most valuable company ten years ago. Start from Last year’s Dow Jones Industrial Average, when it also lost its gold-plated AAA credit rating, and endured for four consecutive quarters loss.

Under pressure from investors this year, the company has shown rare flexibility. It cut capital expenditure plans, paid off some debt, and restricted the industry’s most aggressive oil production growth plan.

The implied dividend yield has almost halved since it soared above 11% last year, when the market cut the price of one of Wall Street’s most treasured expenses.

ExxonMobil’s stock price has risen about 40% this year, outperforming competitors, although some analysts attribute it to the participation of activists.

In response to climate pressures, the company began reporting the “Scope 3 emissions” of its products this year, announced a low-carbon business line and released new products. Upstream emission targetAnd recently floated US$100 billion in carbon capture and storage (CCS) concept in Texas.

The super giant also appointed three new board members, including activist investor Jeffrey Ubben (Jeffrey Ubben).

Woods told the Financial Times that the board of directors focuses on formulating strategies to “respond to a low-carbon future and the challenges it brings,” while “providing products needed by society.”

But Exxon Mobil will not follow the European super giants’ commitment to achieve net zero emissions, which is Uben’s recent goal. Described as “irresponsible”.

For some financial analysts, Exxon Mobil’s actions are too little, it is too late.

Cowen director Jason Gabelman believes that Exxon still needs to do more to “prove the future of its business” and that its carbon plan is still too modest.

In his agency proposal, Glass Lewis believes that a technology critical to ExxonMobil’s plan, CCS, does not have the “scale and economic feasibility” of “as the core of the energy transition strategy”.

At the same time, the International Energy Agency (International Energy Agency) this week challenged the company’s belief that the growing global population will always need more ExxonMobil.

The agency said that if the world is to reduce emissions sufficiently to prevent global overheating, no new oil and gas projects are needed.

Glass Lewis said: “Long-term risks continue to grow, threatening the company’s existing business model.”