Exxon AGM & Shell ruling major victories for climate activists
May 28, 2021
Activist hedge fund Engine No 1 gained shareholder backing to install two new board members at Exxon at its annual meeting on 26 May. The two directors are the first in the history of ExxonMobil to not be directly appointed by the company.
Exxon CEO Darren Woods said in a statement that the oil major was “well positioned” to respond to investors’ demand for action on climate change risks and the transition to a low-carbon economy. A notable statement after increased pressure from investors in recent years.
The two nominees elected – out of four put forward by Engine No 1 – are Gregory Guff, a former executive at Marathon Petroleum, and Kaisa Hietala, a former Neste Oyj executive. Each are expected to disrupt the insular culture of the ExxonMobil board, with Guff known for his prudent risk taking and Hietala supporter of renewables.
A third Engine No 1 nominee, Alexander Karsner, was still in the running for one of the two remaining positions with votes still being counted as of 26 May, Exxon said.
On its website, the hedge fund states: “The energy industry and the world are changing. To protect and enhance value for shareholders, we believe ExxonMobil must change as well. We believe that for ExxonMobil to avoid the fate of other once-iconic American companies, it must better position itself for long-term sustainable value creation.”
Following the AGM, Woods said: “We’ve been actively engaging with shareholders and received positive feedback and support, particularly for our announcements relating to low-carbon solutions and progress in efforts to reduce costs and improve earnings.
“We heard from shareholders today about their desire to further these efforts, and we are well positioned to respond.”
Meanwhile, a Dutch court has ordered Royal Dutch Shell to take stronger action to tackle its carbon footprint by reducing net emissions by 45% by 2030. This goal is compared to 2019 levels on an absolute basis in line with the goals of the 2015 Paris Climate Agreement.
The company’s initial plan was to cut the carbon intensity of its fuel products by 20% by 2030, and to target net-zero emissions by 2050.
However, the judge in the district court in The Hague ruled that Shell had violated a duty of care obligation in relation to the human rights of people affected by climate change.
The case was brought by the Netherlands arm of Friends of the Earth, Milieudefensie. Shell has already pledged to appeal the ruling.
Thom Wetzer, head of the sustainable law programme at Oxford University, told the Financial Times that the ruling was “legally, economically and societally” significant. He claimed that “all companies in the energy industry and all heavy emitters will be put on notice” following the result of the case.Last Updated: 28 May 2021