Engine No. 1’s campaign to ‘refresh’ the board of Exxon has resulted in at least two of the activist fund’s four nominees winning board positions at the US oil giant, in an historic moment for investor action on climate change.
Both Kaisa Hietala and Gregory Goff were elected to the board by shareholders, according to preliminary results announced at the end of Exxon’s annual general meeting today.
Another of Engine No. 1’s ‘climate competent’ nominees, Alexander Karsner, could still also be appointed, but that will not be known until all the votes have been certified – a process that could take some time, Exxon's spokesperson said, given the “contested nature and complexities” of this year’s meeting.
Kaisa Hietala, who was backed by proxy advisor ISS in its voting advice, was formerly Executive Vice President at Neste, overseeing the Finnish refiner’s renewables business. She is now a partner and co-owner of sustainable business consulting firm Gaia Group.
Goff is a well-respected oil industry veteran, who stepped down from his role as CEO of Andeavor after the US petroleum refiner was sold to Marathon Petroleum in 2018.
Private equity specialist Karsner, who could still make the cut, was previously an advisor to Tesla and served as US Assistant Secretary of Energy from 2005 to 2008.
Both Karsner and Goff were supported by ISS and its rival Glass Lewis in their voting recommendations to shareholders.
Engine No.1’s campaign, which started in December, sought to replace four of Exxon’s board with new members chosen for their ability to steer the firm through the energy transition. It has gained unprecedented support from major US pension funds and proxy advisors. The world’s largest asset manager, BlackRock, also reportedly supported some of its slate of directors.
Anders Runevad, the former CEO of Danish wind turbine manufacturer Vestas, and Engine No. 1’s fourth nominee, was not elected. Neither ISS nor Glass Lewis supported him in their advice – although the reason is not clear.
“His only flaw as far as we can tell was that he was the easiest to sacrifice for the sake of moderation by at least some investors who are serious about getting companies to commit to a net zero trajectory but worry about rocking the boat too much at ExxonMobil”, said Engine No.1’s Head of Active Engagement, Charlie Penner, in his speech at the meeting.
In another major blow to oil majors today, a Dutch court ordered Shell Group to reduce emissions from its suppliers and customers by 45%, compared with 2019 levels, by the end of the decade.
The landmark ruling, which is the result of a lawsuit from a coalition of campaign groups, means that Shell will have to overhaul its corporate policy to decarbonise faster than it planned. The Anglo Dutch giant previously planned to reduce emissions by 45% by 2035, rather than 2030.
Although the court acknowledged Shell's existing strategy, it said, “the policy is not concrete, has many caveats and is based on monitoring social developments rather than the company's own responsibility for achieving a CO2 reduction. The court finds that there is an imminent breach of the reduction obligation.”
Judge Larisa Alwin also concluded that companies are responsible for protecting human rights throughout by limiting CO2 emissions throughout their value chains.
“This statement is going to change the world,” said Roger Cox, who represented non-profit Milieudefensie, which co-filed the lawsuit with six others including Greenpeace, and more than 17,000 co-plaintiffs. “People around the world are ready to sue oil companies in their own country, following our example. And not only that: oil companies will become much more reluctant to invest in fossil fuels.”
Last week, the International Energy Agency made headlines when it concluded that the transition to a Net Zero economy by 2050 would require an immediate end to investments in new fossil fuel production.
Shell said today that it would appeal the ruling.
“We are investing billions of dollars in low-carbon energy, including electric vehicle charging, hydrogen, renewables and biofuels. We want to grow demand for these products and scale up our new energy businesses even more quickly. We will continue to focus on these efforts and fully expect to appeal today's disappointing court decision,” a spokesperson told The Independent.