Climate Change Activists Notch Victory in Exxon Mobil Board Elections
HOUSTON — Big Oil was dealt a stunning defeat on Wednesday when shareholders of Exxon Mobil elected at least two board candidates nominated by activist investors who pledged to steer the company toward cleaner energy and away from oil and gas.
The success of the campaign, led by a tiny hedge fund against the nation’s largest oil company, could force the energy industry to confront climate change and embolden Wall Street investment firms that are prioritizing the issue. Analysts could not recall another time that Exxon management had lost a vote against company-picked directors.
“This is a landmark moment for Exxon and for the industry,” said Andrew Logan, a senior director at Ceres, a nonprofit investor network that pushes corporations to take climate change seriously. “How the industry chooses to respond to this clear signal will determine which companies thrive through the coming transition and which wither.”
The vote reveals the growing power of giant Wall Street firms that manage the 401(k)s and other investments of individuals and businesses to press C.E.O.s to pursue environmental and social goals. Some of these firms are run by executives who say they see climate change as a major threat to the economy and the planet.
Exxon’s top five shareholders include Vanguard, BlackRock and Fidelity, large mutual fund companies. BlackRock, the world’s largest asset manager, and Exxon’s second-largest shareholder with a 6.7 percent stake, has cast itself as a leader in efforts to reduce companies’ carbon dioxide emissions. This year, BlackRock’s chief executive, Laurence D. Fink, said that the coronavirus pandemic had “driven us to confront the global threat of climate change more forcefully.”
BlackRock backed three of four candidates nominated by the activists. The vote was not fully tabulated at the end of Wednesday, and there were still two seats undecided on the 12-person board. Eight of the people Exxon’s management nominated won seats.
The victory of the hedge fund leading this campaign, Engine No. 1, was a sharp rebuke to Darren W. Woods, Exxon’s chairman and chief executive. It 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 just last year.
Engine No. 1, which owns less than 1 percent of Exxon’s stock, began its campaign last December. But its victory has long been in the making. Over the last decade, European oil companies have increasingly invested in wind, solar and other new energy sources like hydrogen fuel cells, which produce water vapor instead of carbon dioxide and other greenhouse gases.
In another sign of change, shareholders of Chevron, the second-largest U.S. oil company, on Wednesday voted for a proposal to reduce emissions from the use of the fuel the company makes and sells to drivers and other customers. And in the Netherlands, a court required Royal Dutch Shell to reduce its emissions of planet-warming gases by 45 percent by the end of 2030 compared with 2019; the ruling applies only in Shell’s home country.
Exxon and other major American oil companies have strongly resisted taking the same approach as European oil companies, viewing renewable energy as a money loser that they have little expertise in. Exxon has invested heavily in recent years in deepwater exploration off the coast of Guyana and in shale drilling in the Permian Basin of West Texas and New Mexico.
Based near Dallas, Exxon has long been the oil industry’s leader, although until recently it was slow to invest in lucrative oil and gas shale fields. It has also made several losing investments, including oil sands in Canada. Poor returns have heaped pressure on the company’s management to retool its businesses.
In recent months Exxon has tried to head off the…