Texas-based oil giant Exxon Mobil Corp. saw a major shakeup in the boardroom last week, with a new activist investor group called Engine No. 1 grabbing two spots on the company’s board of directors. The hedge fund has been targeting Exxon since December with its “Reenergize Exxon” campaign, pushing the company to rethink its business strategy in a time when green energy and climate activism is becoming increasingly mainstream.
While climate advocates are hailing this move as a victory for the environment, Exxon is unlikely to change easily or quickly, says Matt Smith, director of commodity research at ClipperData.
“The new board members are going to be two of a dozen board members; they’re not likely to have any radical sway,” Smith told Texas Standard. “That said, their appointment is more symbolic than anything, and it’s just highlighting the momentum behind efforts here, not just on U.S. oil companies but on oil companies everywhere, to be more climate-focused.”
On the same day that Exxon had its annual general meeting electing the new board members, a court in the Netherlands issued a landmark ruling ordering Royal Dutch Shell PLC to speed up its plan to cut emissions. The company has until 2030 to cut carbon emissions by 45% of 2019 levels.
“There is this big thrust about [the Environmental, Social and Governance Movement], you know, socially responsible investing, being focused on the environment,” Smith said. “Another member of ‘Big Oil,’ Total, is changing their name to Total Energies, as a start, and … they’re aiming to be carbon neutral in terms of their energy production by 2050.”
Yet even with the growing momentum toward green initiatives, including among major corporations, it will likely be very difficult to reach “net-zero” emissions by 2050 – a goal set in a recent International Energy Agency report. Smith says that’s because much of our infrastructure, transportation system and more still rely on carbon-based fuels.
“Part of that report says that if we want to reach net-zero energy-related carbon emissions by the middle of the century, then there can be no new investment in fossil fuel projects after this year,” Smith said. “Now, that’s all well and good if electric vehicles were prevalent … [if] we had renewable energy sources for the power side of things running the majority of the grid, but that just isn’t the case.”