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ExxonMobil has an “existential business risk” of consolidating its future in fossil fuels as the government continues to reduce emissions. A hedge fund activist will tell investors to review the supermarket board in the final push of its fight.
“ExxonMobil does not yet have a credible plan to protect value in the energy transition,” it says in an 80-page presentation seen by the Financial Times. Engine 1 eliminates the company’s “destruction of value” and “refusal to accept this fossil fuel”. demand may go down ”.
The document says the company is “making an effort to capture carbon and in areas like biofuels,” but the effort has provided “more publicity than results.”
Exxon has captured less than 1 percent of its emissions when pollution from the products it sold is included, according to Engine No. 1 document.
The No. 1 engine was recently launched by hedge fund manager Chris James, a well-known technology investor, and Charlie Penner, who previously served on Jana Partners against Apple and behind the Exxon campaign.
The Effort to correct Exxon’s board It’s been one of the most watched struggles of the U.S. shareholder proxy season over the years – and highlights a broader test of America and Wall Street as the risks of climate change increase investors ’agendas.
In December, Exxon announced plans to reduce the “intensity” of greenhouse gases by 15 to 20 percent by 2025, as a measure of pollution per barrel produced, along with plans to reduce methane emissions and explosions. The plans were “consistent” with the goals of the Paris climate pact, he said.
Engine 1 documents Exxon’s total emissions, including the products it sells, will increase between now and 2025.
“Arguing that the intensity of the emissions is reduced. . . ExxonMobil, meanwhile, continues to look for production growth and therefore increases overall emissions, puts it on the path to a “consistent Paris”, fails the basic test of logic, ”the document says.
Including institutional investors BlackRock and The avant-garde, Exxon’s two largest shareholders, have explained that climate is key to their investment strategies. Both have not made public their position on the Exxon battle.
In response to this, Exxon mentioned a last letter they warned shareholders “not to be fooled by an old month’s hedging fund” with a “vague plan” that threatened the company’s future. The company said it will continue to invest in “low-cost, high-yield” oil assets to protect the dividend, pay off debt and invest in new low-carbon plans.
Exxon’s $ 50 million stake in Motor 1 kicked off its representative fight in December, proposing four new board members at the company’s shareholders ’meeting in late May. It he won support Calstrs, a large pension fund and Church Commissioner to England.
Exxon has recently attracted a large portion of the public, announcing new board appointments (including social investor activist Jeff Ubben) has called for a low-emission line of business and the industry to demand a carbon price. In January, the company began disclosing 3 emissions from its reach: contamination of the products it sells.
The DE Shaw hedge fund also took an entrepreneurial stance at Exxon last year, calling for major spending cuts. Now he will vote for the company’s list in the AGM, based on what people who think he knows.
On Friday, the New York State Pension Fund, the third largest public pension fund in the country, announced that it would support the candidates for the 1st Motor Table.
“Exxon’s management needs innovation,” said New York State controller Thomas DiNapoli. “We remain deeply concerned that Exxon has failed to manage climate risk and is refusing to heed calls to move to a lower carbon future.”
The presentation for No. 1 engine investors also seeks to examine shareholders ’dissatisfaction with the company’s financial performance, including rising expenses over the years and rising debt.
When the pandemic hit the crude markets last year, Exxon – the world’s most valuable market capitalization company less than a decade ago – suffered four-quarter direct losses, the Dow Jones Industrial Average averaged nearly $ 20 billion in assets.
But the fund says Exxon destroyed $ 175 billion in value in the decade before the pandemic, and shareholder returns were 28%, compared to an average of 85% for Chevron, Shell, Total and BP.
The company significantly reduced its planned capital expenditure last year and has also announced slower production growth targets.
The company’s share price has risen about 35 percent since the start of the year, with both the S&P 500 and Exxon’s main counterparts.
While rivals like BP, meanwhile, have begun to focus on energy cleansing, the U.S. majors are looking to their future in large U.S. shale parcel oil projects, in Guyana and Brazil’s offshore oil fields, and in refining and petrochemicals.
Exxon believes that as the world decarbonizes, oil and gas will continue to play a key role in the global economy, rewarding investment in future production. It also remains skeptical of the commitments made by competing oil companies that are renewable and with zero net emissions. such as BP.
“What can we bring to those options other than a checkbook?” CEO Darren Woods told FT in March about renewables.
Last week he unveiled the idea of a $ 100,000 billion carbon capture project in the U.S. Gulf, but said the price of carbon would be necessary to make it work.
Engineers at No. 1 described the “theoretical” project as an “advertising blitz that had no real substance”.
“The whole concept is based on the concept of carbon tax, which currently has little chance of passing into the U.S., and doing so would reduce demand for oil and gas,” the fund document says.
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