Exxon Mobil Corp. has already upped its climate plans, only three months into an activist investor’s campaign to force change inside the company. Now the group, Engine No. 1, is pushing the oil giant to set a new goal: net-zero greenhouse gas emissions by 2050.
Engine No. 1 released a letter on Monday reiterating its call for Exxon to overhaul its board of directors by adding four new members who have the expertise to steer the company towards climate neutrality. That’s a goal already adopted by European oil producers such as BP Plc, Royal Dutch Shell Plc and Total SA. Exxon and fellow U.S. supermajor Chevron Corp. have resisted.
This is the latest salvo in Engine No. 1’s campaign against Exxon, which began in December. Unlike previous climate shareholder efforts that focused on getting the company to disclose environmental data or be more ambitious about cutting emissions, Engine No. 1 is now insisting that change will only happen if the board includes leaders with experience in the energy transition. Exxon currently produces virtually no renewable energy, and as Bloomberg Green reported last year the company had previously made long-range plans to expand fossil-fuel production and increase greenhouse gas output.
Until recently, apart from Chairman and Chief Executive Officer Darren Woods, none of the board members sported any expertise even in the oil industry. On Feb. 2, Exxon added Wan Zulkiflee, former head of Malaysian Petroliam Nasional Bhd., to the board.
Since Engine No. 1’s initial letter, Exxon has set a new goal to cut emissions, disclosed for the first time the magnitude of emissions from customers burning fossil fuels, and committed to spend $3 billion on carbon capture and other technologies. In a sign that the activist push might bring additional results, Exxon this month is reportedly considering a climate-minded investor, Jeff Ubben, as a new board member.
“What’s maybe most surprising is that Exxon actually acted off the back of Engine No. 1’s first letter,” said David Doherty, an oil specialist with BloombergNEF.
Engine No. 1 owns less than $50 million in Exxon shares, as of December 31. With support from Calstrs, the activist push makes up just about 0.2% of Exxon’s public holding. But the oil giant has proven newly responsive to investor demands. Exxon shareholders with trillions of dollars in total assets, including BlackRock Inc., Legal & General Group Plc and UBS AG, have joined the broader call for corporations to provide stronger climate disclosures.