ExxonMobil must plan for a world that does not need its barrels

ExxonMobil must plan for a world that does not need its barrels – Small Hedge Fund

May 29, 2021 News

Kaieteur News – Engine No. 1, the small hedge fund that successfully got two of its four nominees elected to ExxonMobil’s Board of Directors this week, has indicated that it will be pressing management of the oil giant to shift its output strategy.
In fact, Charlie Penner, the leader of the stunning proxy campaign against ExxonMobil told the Financial Times that the company “will need to cut fossil fuel production.” Penner further told the Financial Times that Engine No. 1 will give Exxon time to develop a new strategy, but cautioned that one ought to be cognizant that the energy transition is happening faster than expected thereby undermining Exxon’s assumptions about long-term demand for its oil. At the end of the day, Engine No. 1 said ExxonMobil going forward must plan for a world that does not need its barrels.
Since December last, Kaieteur News had reported that Engine No. 1’s challenge for board seats was rooted in its dissatisfaction with ExxonMobil’s emissions output. According to Bloomberg, the oil giant’s annual emissions from its operations are set to increase from 122 million metric tons in 2017 to 143 million metric tons in 2025. The investment firm was also concerned about the company’s decisions, which have led to its declining fiscal health.
In a statement to industry stakeholders, Engine No. 1 had said, “Investors increasingly want to see companies focused on the long-term and ExxonMobil is no exception. We believe that ExxonMobil’s Board needs new members who have proven success positioning energy companies for today as well as tomorrow, and who are sufficiently independent from the current Board to ensure a clean break from a strategy and mindset that have led to years of value destruction and poorly positioned the Company for the future.”
While ExxonMobil has recently taken incremental steps to improve its performance in the face of financial and shareholder pressure, Engine One said it is of the firm belief that a reactive short-term approach is no substitute for a proactive long-term strategy that addresses the threats and opportunities facing the company in a changing world.
Taking this into consideration, among other factors, the new investment firm had proposed four independent nominees – each of whom it said had brought a differentiated skill set that made them uniquely suited to help the Board chart a new value-creating path, including better long-term capital discipline, strategic planning, and management incentives. Its nominees that got elected to Exxon’s Board are Gregory Goff and Kaisa Hietala.

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