Shareholder revolt against ExxonMobil mounts
– The world’s biggest money manager is demanding more climate change disclosure
By Kiana Wilburg
ExxonMobil CEO Darren Woods
Kaieteur News – American oil giant ExxonMobil is facing an unprecedented rise in shareholder pressure. Its investors are not only worried about the recent steep decline in profits, but more specifically, whether ExxonMobil’s spending is in line with the global aspiration of zero greenhouse gas emissions by 2050.
This concern, which has sparked a revolt among deep-pocketed shareholders, has led to a riot about a change in Board Directors and more importantly a change in the way management at ExxonMobil conducts businesses.
In particular, the world’s largest money manager and Exxon’s second largest investor, BlackRock, announced in a latest update that there would be a change in the way it engages with corporations.
Blackrock CEO Larry Fink
BlackRock, which manages US $ 8.67 trillion in global assets, said it would be more inclined to vote in favor of shareholder decisions, and against boards of directors at companies.
In his update, BlackRock CEO Larry Fink said, “… Given how central energy transformation will be to each company’s growth prospects, we ask companies to unveil a plan for how their business model will be zero-economy compatible. net – that is, one where global warming is limited to well below 2ºC, consistent with a global aspiration of net greenhouse gas emissions by 2050. We ask you to reveal how this plan incorporated into your long-term strategy and reviewed by your board of directors.
We appreciate that disclosure can be cumbersome and that the variety of reporting frameworks creates further complexity for companies. We strongly support moving to a single global standard, which will enable investors to make more informed decisions about how to achieve durable long-term returns. Because better sustainability disclosures are in the interests of companies as well as the interests of investors themselves, I urge companies to move quickly to publication rather than wait for regulators to enforce them… ”
Other ExxonMobil shareholders, who have advocated for more market climate action, saw the fund manager’s statement as representative of the movement for change. (https://www.blackrock.com/corporate/investor-relations/blackrock-client-letter)
NOT THE FIRST RECYCLING
But the rebellion against ExxonMobil, which traces from late 2020 to 2021 had been crippling since 2017.
In May 2017 for example, ExxonMobil’s control was defeated by shareholder revolt over climate change issues, as investors with 62.3 percent of shares voted to direct the oil giant to report on the impact of global measures designed to keep change climate to two degrees centigrade.
The shareholder revolt at the 2017 ExxonMobil annual meeting in Dallas was led by large financial advisory firms and fund managers who have traditionally played passive roles. Although voter identities were not disclosed at the time, a source familiar with the vote had told the Washington Post that the large financial advisory firm BlackRock had cast its shares in opposition to Exxon’s control. (https://www.washingtonpost.com/news/energy-environment/wp/2017/05/31/exxonmobil-is-trying-to-fend-off-a-shareholder-rebellion-over-climate-change/) (https://www.cnbc.com/2020/12/13/climate-change-a-7-trillion-warning-from-markets-biggest-investor.html)
In its report on the issue, The Post had said that the vote against Exxon’s management marked an important step for groups that have been seeking to force corporations to adopt greater disclosure and transparency over the financial consequences of climate change.
He also recalled that BlackRock, which since 2017 said climate disclosure was one of its top priorities, warned on its website that “our patience is not infinite.”
MORE BACKLASH
Since that major victory, the revolt against ExxonMobil has swung to an unprecedented proportion.
Last month, Kaieteur News would have reported that investment firm Engine No 1, backed by the California State Teachers’ Pension Fund, had joined calls for change at ExxonMobil, as it called for fresh blood to its table. The New York State pension fund also followed threats to divert its stake in the company unless it moved away from fossil fuels more quickly.
This announcement would also indicate that a group of 135 investors have formally confirmed their intention to bring massive changes to ExxonMobil by launching, “The United Coalition for a Responsible Exxon” (CURE). To date, over 135 CURE members collectively represent over US $ 2.2 trillion in assets.
In its launch letter, CURE raised urgent concerns about Exxon’s current direction, which he says is based on outdated assumptions about high oil prices, demand and margins that are incompatible with the reality of climate change and transition inevitable sources of renewable energy. Once the most innovative leaders in the industry and a pillar of the Dow Jones (DJ), CURE said Exxon is today lagging behind other oil giants who have adapted their strategies to lead the transition global energy.
The coalition urgently demanded change at Exxon, starting with the Board, and a renewed commitment to a financial, competitive and environmentally sustainable future for the Company, its shareholders, and all stakeholders.
Under its current strategy, CURE said Exxon continues to mitigate assets by making huge capital investments in upstream projects that destroy shareholder value. The Company said, rationalizing these investment decisions through unrealistic expectations of future oil and gas prices and demand. In addition, CURE said Exxon’s poor decision-making led to the highest debt levels in the Company’s history, with the worst operating net debt-to-cash ratio among its peers. He also said Exxon’s operational inefficiencies also greatly boost profitability.