Things are changing in America and you either go with the flow or get left behind.
Exxon Mobile Corporation had a board election yesterday and at least two “rebels” were elected. These rebels aren’t members of the downtrodden masses. They were put forward by a hedge fund, Engine 1, in an effort to force Exxon to address climate change.
By the end of the day, Exxon had been shaken to its foundation — a foundation laid by John D. Rockefeller in the 19th century. Exxon CEO Darren Woods’ days may be numbered. Woods made the proxy fight the most expensive in company history and ended up losing big. Some analysts don’t see how Woods can survive the humiliation.
“We welcome all of our new directors and look forward to working with them constructively,” Mr. Woods said in a statement.
What else could he say?
Engine No. 1 sought four seats on Exxon’s board and argued the Texas oil giant should commit to carbon neutrality, effectively bringing its emissions to zero—both from the company and its products—by 2050, as some peers have.
It nominated four directors— Gregory Goff, Kaisa Hietala, Alexander Karsner and Anders Runevad —and Mr. Goff and Ms. Hietala were elected Wednesday, according to the preliminary tally. Mr. Goff is the former chief executive of Andeavor, which was one the largest U.S. refiners before being purchased for more than $20 billion by Marathon Petroleum Corp. MPC 1.32% in 2018, while Ms. Hietala is a former executive vice president of renewable products at Finnish refiner Neste Oyj.
Exxon shareholders have voiced concerns that the company was too wedded to fossil fuels. And since it appears the government of the United States is going to wean America from dependence on oil and gas — one way or another — Exxon isn’t moving fast enough to adapt to the new business realities.
The hedge fund called for Exxon to gradually diversify its investments to be ready for a world that will need fewer fossil fuels in coming decades. Exxon defended its strategy to expand drilling, saying demand for fuels and plastics will remain strong for years to come, and pointed to a new carbon capture and storage business unit as evidence it is taking climate change seriously.
Peter Bryant, a managing partner at business consultant Clareo, said Exxon was vulnerable because it hasn’t provided a good return from fossil fuels for years and doesn’t get credit from sustainability-focused investors because it hasn’t invested in renewable energy.
“It’s the worst of both worlds,” Mr. Bryant said.
Exxon has been pretending for years that it is on the front lines of the battle to halt global warming. Not too many people have bought it.
If you’ve ever seen an ad featuring ExxonMobil scientists handling beakers of green goo, the algae that will supposedly fuel the future, you’ve been the target of an oil company’s advertisement. Exxon isn’t trying to sell you a product, exactly — but it is hoping to sell you on the idea that it’s committed to a greener future.
Over the past 30 years, the world’s five biggest oil companies have forked over more than $3.6 billion for reputation-building ads like this one. “When we looked at the dollar amounts, we were sort of blown away,” said Robert Brulle, a visiting professor of environment and society at Brown University.
Despite the board elections, Exxon won’t exactly become a model green company anytime soon, which is good news. The company is planning on expanding drilling operations, citing the continuing strong market for fuel and plastics far into the future.
With the Biden administration determined to make you walk to work by jacking up the price of gasoline at the pump, it’s nice to know that at least one oil company will continue to serve the consumer and not their woke masters in Washington.