June 15, 2023
Exxon and Engine No. 1: A Lookback 2 Years Later
In the most high-profile proxy contest of 2021, Engine No. 1 succeeded in electing three directors to ExxonMobil’s board. It seemed like a major shake-up at the time, to say the least, with some predicting that the activist’s success would embolden other investors to launch similar E&S-related director election contests in the future. In a recent article, the NYT DealBook looks at how things have progressed at Exxon since Engine No. 1.
According to the article, climate activists largely felt that Engine No. 1’s efforts did not produce meaningful results and say that Exxon is still committed to fossil fuels, investing aggressively in expanding oil and gas production and not doing enough to address climate change. On the other hand, Engine No. 1 cited Exxon’s recent net-zero targets for certain operations, early-stage carbon-capture and hydrogen projects, and investments in lithium mining, all of which, it says, were not on the company’s agenda prior to the proxy contest.
Either way, it seems we haven’t seen a surge of similar successful director election contests premised on E&S issues — even in this first year of universal proxy — and the article notes that Engine No. 1 hasn’t waged a similar fight since Exxon. This year, as reported by Reuters, Exxon faced a number of shareholder proposals related to climate change, which had relatively low levels of support.
– Meredith Ervine