The House Judiciary Committee has released a report examining the role of environmental groups in reshaping the board of ExxonMobil, aiming to steer the company towards net-zero climate goals.
Just The News reported that an extensive investigation has uncovered efforts by climate groups such as Ceres and Climate Action 100+ to influence ExxonMobil's direction by pushing for board changes.
In 2021, climate coalitions, disparaged in the report as a "climate cartel," orchestrated a campaign to refresh the leadership at ExxonMobil.
The campaign was fueled by a desire to ensure the company made more substantial commitments toward emissions reduction. According to the report, the coalition coordinated their actions after identifying ExxonMobil's reluctance to decrease its emissions.
The report cites significant funding in 2020 for these efforts, with Climate Action 100+ receiving $4.7 million aimed at reshaping the board.
The campaign's goal was to elect members more aligned with climate initiatives. Engine No. 1, a small activist investor with only 0.02% of Exxon shares, was brought to the forefront of this effort. This group's investment equated to a $54.2 million stake, a relatively tiny piece of the company, yet symbolically significant for the campaign.
The climate coalition allegedly exerted pressure on larger investment firms, including BlackRock and State Street, despite concerns about antitrust law. These firms were purportedly key targets for gaining support. Their backing, along with that of Vanguard and advisor firms ISS and Glass Lewis, was pivotal in securing board changes.
May 2021 marked a pivotal moment as the coalition achieved its goal by successfully replacing three ExxonMobil board members.
This board overhaul was deemed a win for climate activists who wanted the company to focus more on sustainability. The new board's impact was swift, with ExxonMobil soon after making its inaugural net-zero commitments—a significant shift in its environmental strategy.
Critics, however, argue that these actions are not as grassroots as presented. Will Hild criticized such efforts as ultimately costly for consumers, warning of higher prices extending from gas to groceries. The changes, according to him, point to a broader climate agenda with far-reaching economic consequences.
In response to activist pressure, ExxonMobil has taken a firmer stance against such proposals. The company pursued legal action to manage shareholder proposals more effectively, although this lawsuit was not successful, being dismissed by a judge.
This legal battle underscores ongoing tensions between fossil fuel companies and environmental activists seeking to reshape corporate governance.
Previously, at a 2008 Exxon meeting, a proposal by Steve Milloy highlighted attempts to curb activist-driven shareholder moves, demonstrating that such conflicts have historical roots. The recent developments thus echo past clashes between corporations and climate-focused investors.
Engine No. 1 pushes back against claims that it opposes fossil fuels, instead emphasizing a balanced approach to energy transitions.
A spokesperson stated the firm's focus on energy transition bottlenecks rather than an anti-fossil fuel agenda.
Investigations surrounding the 2021 board shift have prompted deliberations among stakeholders, with some investors reportedly withdrawing from Climate Action 100+. The House Judiciary Committee aims to continue its inquiries into these coalitions to explore possible legislative solutions.
