ExxonMobil off 2050 net-zero target, activist firm says

Activist firm Engine No. 1, which has nominated four independent director candidates to the ExxonMobil board of directors, has sent a letter to Exxon claiming that it was falling short of what was expected regarding reaching climate goals set by the company.

Engine No. 1 analysed ExxonMobil’s recent claims regarding Paris Agreement consistency, emissions reductions, and carbon capture investments.

In each case, Engine No. 1 said, scrutiny of ExxonMobil’s claims revealed that the company’s efforts fall short of what is needed to position ExxonMobil for “long-term value creation in a rapidly changing world, and highlights the significant long-term risks associated with the company’s current business model”.

In its letter, Engine No. 1 notes that while ExxonMobil has gone from dismissing emissions reduction goals as a “beauty competition” to claiming repeatedly this month that its emissions reduction plans are consistent with the Paris Agreement, ExxonMobil’s methodology omits the majority of its emissions.

Furthermore, the activist firm believes that ExxonMobil falls far short of targeting net-zero emissions by 2050 and that the company’s investments in carbon capture are highly unlikely to allow ExxonMobil to avoid the need to evolve its business over the long-term.

In the letter, Engine No. 1 said: “None of the company’s new claims change its long-term trajectory which would grow total emissions for decades to come. This is not consistent with, but rather runs directly counter to the goals of the Paris Agreement.

“We also continue to believe that without new members of the board with the necessary expertise and experience, ExxonMobil will have little choice but to continue seeking to create the appearance of transformative long-term change, rather than working to make it a reality.

“This is not just a climate issue but a fundamental investor issue – no different than capital allocation or management compensation – given the immense risk to ExxonMobil’s current business model in a rapidly changing world”.

Engine No. 1 also stated that Exxon board refreshments were not accompanied by a new direction or material progress on environmental issues.

“We believe that enhancing the Company’s long-term future requires a clean break with the past, and we look forward to continuing to make the case for real change at ExxonMobil”, Engine No. 1.