A hedge fund invests its way onto the board of ExxonMobil in order to push the firm toward cleaner energy. At the same time, a Dutch court ordered Royal Dutch Shell to cut its carbon emissions faster.
STEVE INSKEEP, HOST:
You know, I'm looking here at a list of the biggest corporations based on their market capitalization, what the company is worth overall. Exxon ranks 33rd, which is pretty big. It's a big company. But it used to be No. 1. Exxon is worth a fraction of what some big tech companies are these days. In fact, Exxon is worth a lot less than Exxon used to be worth. It faces big uncertainties because of climate change. And that is the context for a meaningful shareholder move. A tiny hedge fund managed to place two new directors on Exxon's board, and maybe more, in an attempt to shift Exxon's business strategy toward renewable energy. It's one of many oil companies under pressure. So we're going to discuss this with NPR's Camila Domonoske. Good morning.
CAMILA DOMONOSKE, BYLINE: Good morning.
INSKEEP: What happened to Exxon?
DOMONOSKE: Well, a brand-new hedge fund started last year with the express purpose of putting new members on Exxon's board over the intense opposition of Exxon's current leadership. This hedge fund argued that, one, Exxon had made bad investments. That's part of the reason why they are not the corporate titan that they used to be, like you mentioned. They also said, fundamentally, that Exxon doesn't have a good plan for preparing for a world that's tackling climate change.
And I'll emphasize here, these are investors making a financial argument to other investors, right? They're not saying Exxon needs to stop burning oil because it's bad for the planet. This argument is that, look; the world might stop buying oil because of concerns over climate change. So Exxon better have something else to sell them. It'd be bad business not to prepare for that. And this tiny fund persuaded enough other shareholders to join them that they actually won at least two of these seats in this election.
INSKEEP: And I guess they're still doing a little bit of counting on the third seat that could go that way. It is interesting - we've covered on this program big automakers saying we're transitioning over to electric cars. At some point, we're not going to be doing gasoline-powered vehicles. But what does Exxon have to say about all of this?
DOMONOSKE: Yeah. Exxon is deeply skeptical about how quickly this transition away from oil and gas can happen. Everyone agrees that right now, the world is not currently on track for a rapid enough move away from oil and gas to meet the need that scientists are calling for, right? Laws would need to be changed. A ton more renewables need to be built. People need to fly and drive less and, like you mentioned, switch to electric vehicles and do it really, really quickly. Exxon looks at all of that and says, it's just not going to happen any time soon. People are going to be buying oil and gas for decades to come. And we're going to be there to sell it to them.
INSKEEP: Yeah.
DOMONOSKE: And what this remarkable vote shows is that investors are increasingly pushing back on that and saying, no, your assumptions that the future will look like the past might be fundamentally wrong.
INSKEEP: How does Exxon's experience fit in with other oil companies right now?
DOMONOSKE: Yeah. So they come under particular scrutiny in part because of their history on climate. But you have this happening across the board. There were climate proposals at Chevron and ConocoPhillips this spring, where investors called for these companies to change their business practices. It wasn't as confrontational as what happened at Exxon, not as dramatic as this board struggle. But we are seeing mainstream investors adopting arguments that used to be the province of just eco-activists.
INSKEEP: There is one company, Shell, that has said, hey, we're going to get on top of this. And yet Shell is in trouble.
DOMONOSKE: Yeah. It's really interesting. This Dutch court is telling Shell that they need to cut their emissions faster than planned. And this is a company that, compared to the American oil companies, is very progressive on climate. It just shows things are moving really rapidly in this area. And for an oil company, the bar keeps moving up for what it takes to tackle climate.
INSKEEP: Camila, thanks for keeping us up to date.
DOMONOSKE: Yeah. Thanks, Steve.
INSKEEP: NPR's Camila Domonoske.
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