Exxon XOM 0.63% Mobil Corp. is considering a pledge to reduce its net carbon emissions to zero by 2050, according to people familiar with the matter, in what would amount to a significant strategic shift by the oil company. In March 2020, Exxon Chief Executive Darren Woods described ambitious carbon reduction targets made by some European rivals as nothing more than a “beauty competition,” saying the pledges lacked tangible plans to achieve them.
Mr. Woods and others on Exxon’s board are now giving the same idea serious debate, the people said. Mr. Woods is facing pressure from investors to demonstrate a bolder path to reducing emissions. Following a bruising proxy fight this year, an activist hedge fund elected three new members to the company’s board.
The Irving, Texas, company hasn’t made a final decision on a “net zero” pledge, according to the people. It plans to unveil a series of strategic moves on environmental and other issues before the end of the year, the people said.
Exxon spokesman Casey Norton said the company is committed to working to decarbonize high-emitting sectors and supports regulation that will spur that.
“As the board goes through its deliberations regarding future plans related to the company’s energy transition activities, we routinely evaluate our work and commitments and will update our shareholders and the public as those plans evolve,” Mr. Norton said.
Mr. Woods has said Exxon supports the goals of the Paris climate agreement, an international accord that aims to limit the increase in the global average temperature to less than 2 degrees Celsius above preindustrial levels and pursue efforts to limit the increase to 1.5 degrees. He has stopped short of committing Exxon to a net-zero plan.
To date, Exxon has instead pledged to reduce its so-called carbon intensity, or emissions as a proportion of total energy produced. It is unclear exactly what a new Exxon net-zero pledge would entail, but what is currently being considered would apply to the emissions directly produced by Exxon’s assets and stemming from the energy the company uses, the people said. That is known in climate disclosure as scope 1 and 2 emissions.There is no standard definition for how companies define net-zero emissions, and specifics often vary, which has led some to dismiss the pledges as exercises in modern-day image management. Such goals generally aim to reduce a company’s carbon footprint to neutral in the future.
Exxon lost three seats on its board of directors at its annual shareholder meeting in May to the hedge fund Engine No. 1, which argued that the energy company needs to act faster to remake itself and invest in clean energy.
Senior executives within the company now believe it needs to act urgently to refine its strategy to navigate the energy transition, and some of Exxon’s largest shareholders have told executives recently that they need to set more- ambitious climate-change targets or risk further alienating investors, the people said.
Meanwhile, some on Exxon’s board have expressed support for a carbon neutrality pledge, according to the people. In particular, Alexander Karsner, one of the Engine No. 1 candidates elected to Exxon’s board and an executive at Alphabet Inc.’s innovation lab, has pressed Mr. Woods to reposition the company to address climate change, the people said