Exxon Mobil Corp. shareholders installed two new members to the oil giant’s board on Wednesday, a dramatic move led by activist investors that could force the company to better address climate change and ultimately transition away from fossil fuels.
The move is a remarkable blow to Exxon’s leadership, which had until Wednesday largely selected its own directors for the company’s 12-member board. The new board members were pushed by a small, activist hedge fund, Engine No. 1, that garnered the support of some of Exxon’s biggest investors in calling for U.S. energy companies to shift their business models as climate change intensifies.
Shareholders voted to install Gregory Goff and Kaisa Hietala, who both have experience in the energy industry, to the company’s board. Votes had not yet determined one other Engine No. 1 board candidate pushed by the activist firm, and eight of Exxon’s choices won seats, according to preliminary results.
The votes were still being tallied Wednesday evening.
The New York Times notes that Engine No. 1 owns less than 1% of Exxon’s stock but began its push for new board members in December, the latest initiative by activists to force oil companies to address climate change linked to the burning of fossil fuels. The publication added that the European energy companies have spent the last decade beginning to invest in renewable energy sources, but U.S. companies have so far resisted such changes, calling them unsustainable and bad for business.
Environmentalists and investors, however, have long argued against that stance.
“This isn’t really about ideology, it’s about economics,” Chris James, the founder of Engine No. 1, told the Times on Wednesday.
The outcome is a defeat for Exxon Mobil CEO Darren Woods, who had called the board’s previous makeup “among the strongest in the corporate world.”
“We welcome all of our new directors and look forward to working with them constructively and collectively on behalf of all shareholders,” Woods said in a statement shortly after Wednesday’s vote.
Bill McKibben, the founder of 350.org, called the decision part of a slate of “good news” for environmentalists.
“I think they’re signs that a decade of battering away by activists is finally taking a real toll,” McKibben told MSNBC’s Rachel Maddow on Wednesday. “Exxon is still powerful, but it’s now on the ropes in all kinds of ways. As of tomorrow, they’re that much less powerful.”
The vote played out amid a multimillion-dollar battle from both sides to determine the makeup of the oil behemoth’s leadership council. Exxon Mobil said it had spent $35 million to counter Engine No. 1’s own $30 million campaign.
Exxon was just one of three major oil companies to face blows this week.
In a court ruling in the Netherlands, Royal Dutch Shell was ordered to cut its carbon dioxide emissions 45% below 2019 levels by the end of the decade. Later Wednesday, shareholders at Chevron Corp. voted to force the company to make a plan to cut the emissions generated by its products.