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At least two of ExxonMobil corporation’s slate of twelve “independent” directors were defeated at the company’s annual meeting yesterday — a majority of shareholders voted in favor of two of the challengers put forward by upstart hedge fund Engine No. 1. The Washington Post characterized it as a “resounding defeat for chief executive Darren Woods” and chalked it up to the shareholders’ (aka owners) dissatisfaction with “the way the company had been addressing climate change and its lagging financial performance.”
Why This Matters: It was a really bad day for big oil. Between the Dutch court’s order that Shell cut its emissions faster and the stunning and highly unusual loss for ExxonMobil at the hands of some of its largest institutional investors, the industry is likely feeling the heat and seeing the tide rising against them. Corporations are often challenged at their annual meeting by upstarts trying to make a point, but they very rarely win. If the company’s financials were stronger, this most likely would have had a different result. It is now clear that oil and gas companies that are not changing their business models to adapt to the new energy realities look increasingly like, well, dinosaurs. And we all know what happened to them.
Fred Krupp, president of the Environmental Defense Fund said the vote “sends an unmistakable signal that climate action is a financial imperative, and leading investors know it and are demanding change…This is a watershed moment for the oil and gas industry. It’s no longer tenable for companies like ExxonMobil to defy calls to align their businesses with decarbonizing the economy.”
Ben Cushing, Financial Advocacy Campaign Manager at the Sierra Club, said in a statement, “Make no mistake: the shareholder vote to shake-up Exxon’s board represents a seismic shift for the company. It’s a culmination of years of activist energy and a result of massive shareholder frustration with the company’s failure to change course on climate. However, change must come from the top as well. And with Darren Woods still in charge of Exxon, we question if the new board members will be able to change course quickly or drastically enough. Exxon needs to stop greenwashing, align with the goals of the Paris Agreement, and phase-out oil and gas production, starting now. Accountability starts at the top and Darren Woods should step aside.” — Ben Cushing, Financial Advocacy Campaign Manager, Sierra Club
Anne Simpson, managing investment director for board governance and sustainability at the California Public Employees’ Retirement System, said prior to the vote that “Investors are waking up…The sleeping giant maybe is stirring.”
It was not just ExxonMobil getting “the business” from its shareholders. The Post reported that Chevron investors voted “61 percent of shares in favor of a proposal asking the oil major to cut its total greenhouse gas emissions, including customers’ emissions, a category known as “Scope 3,” in addition to its own operations and supply chains, according to a preliminary count announced by Chevron at its annual general meeting.”
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