ESG madness as investors attack the ExxonMobil board delivering record results

[Note: This story is also published at The Telegraph]

As a general rule, nothing positive can come from the mixing of corporate management priorities with crass political considerations. But that toxic mix appears to be at the centre of a looming proxy fight mounted by activist investors, led by pension funds in a handful of big population “blue” states, which will come to a head at ExxonMobil’s annual meeting tomorrow.

By any measure, ExxonMobil has experienced extraordinary financial success in recent years. Under its current management and Board, the company has recorded record profits over the past two years. Its stock price hit an all-time high in April, and the company’s market capitalisation is also at a record high following the closing of its $60 billion takeover of Permian Basin giant Pioneer Natural Resources.

Despite the current Board’s focus on carrying out its fiduciary duty to maximize returns to investors, it now finds itself under attack by public pension fund managers in the Blue states of California, New York, and Illinois, along with several other activist investors. These shareholders are not concerned with stock price or market cap: they want to see Exxon reduce its greenhouse gas emissions.

The activist investors include Arjuna Capital and Follow This, who have sponsored a proposal which would compel Exxon to accelerate its reduction of greenhouse gas emissions so as to reach net-zero emissions by 2050. Exxon management filed suit in federal court in January to quash what it regards as nuisance resolutions.

Arjuna and Follow This are allied with the Interfaith Center for Corporate Responsibility (ICCR), a self-described “coalition of faith- and values-based investors” which contends that “corporations must look beyond the next earnings report to account for the full impact of their businesses on society, and must view the well-being of all of their stakeholders – including their workers and the communities where they operate – as integral to their long-term value”.