Environmentalists Who Changed Even ExxonMobil's Board of Directors

Securing at Least 2 of 12 Seats for Environmental Activist Funds... Shell Also Loses Climate Change Liability Lawsuit

Darren Woods, CEO of ExxonMobil [Photo by Reuters]

[Asia Economy Reporter Byunghee Park] As "eco-friendliness" emerges as a global issue, it is even influencing the management of major oil companies.

On the 26th (local time), ExxonMobil, the largest oil company in the United States, conceded board seats to individuals recommended by an eco-friendly activist fund at its shareholders' meeting. On the same day, Royal Dutch Shell, the largest oil company in Europe, lost a lawsuit in the Netherlands against an environmental organization.

According to The Wall Street Journal (WSJ), Engine No.1, an eco-friendly activist fund, secured at least two of the 12 seats on ExxonMobil's board. WSJ reported that although the vote count was not yet complete, all four nominees recommended by Engine No.1 could become ExxonMobil directors. WSJ stated that this vote will be recorded as a historic defeat for ExxonMobil and that the company's current investment strategy focused on fossil fuels is expected to change.

Engine No.1 holds only 0.02% of ExxonMobil's shares. However, by championing the cause of eco-friendly investment, it achieved a miracle. Engine No.1 argued that as the world reduces its dependence on fossil fuels, ExxonMobil must diversify its investments toward eco-friendly options.

ExxonMobil countered by stating that it is actively responding to climate change by establishing new carbon capture and storage facilities. Nevertheless, it maintained that demand for fossil fuels and plastics will remain strong for years to come and insisted on increasing fossil fuel extraction, opposing the nominees recommended by Engine No.1.

The two sides clashed sharply. ExxonMobil delayed the voting time by an hour and tried to persuade shareholders until the last moment but could not resist the era's trend of ESG (Environmental, Social, and Governance).

BlackRock, the world's largest asset manager holding 6.68% of ExxonMobil shares, announced support for three of the nominees recommended by Engine No.1, and it is known that many U.S. pension funds also supported Engine No.1. ExxonMobil CEO Darren Woods was re-elected as a director along with seven other Exxon nominees, but analysts suggest his position as CEO has become unstable going forward.

Coincidentally, on the same day, the eco-friendly nonprofit organization Friends of the Earth dealt a historic defeat to Shell. The District Court of The Hague in the Netherlands ruled in favor of Friends of the Earth in the lawsuit filed against Shell. The court held Shell responsible for climate change and ordered it to reduce greenhouse gas emissions by 45% by 2030 compared to 2019 levels. This is more than double Shell's own target of a 20% reduction by 2030.

Friends of the Earth filed the lawsuit arguing that Shell's production of oil and natural gas causes climate change and violates its own obligations to protect human rights. Shell's defeat is expected to set a precedent for similar lawsuits.

Shell expressed disappointment with the ruling and announced plans to appeal. Shell claimed it is investing billions of dollars in the eco-friendly energy sector and plans to rapidly expand its eco-friendly energy business. Shell also stated that at its shareholders' meeting on the 18th, its energy transition plan received support from 89% of shareholders.