ExxonMobil at crossroads of clean energy transition, climate crisis

On Jun 23, 2022

ExxonMobil is one of the most consequential and profitable companies in U.S. history. For more than a hundred years, the company’s oil and gas have helped power the global economy.

But the ExxonMobil of today faces the seemingly opposing priorities of supplying the world with abundant energy and also drastically reducing its carbon footprint to help stave off climate disaster. With unprecedented access to company executives, workers, and facilities, David Faber explores whether ExxonMobil is serious about taking on global warming and how its actions match up with its words.

A shareholder rebellion

For decades, ExxonMobil’s insular corporate culture helped keep the company somewhat shielded from outside influence. But in 2021, ExxonMobil chairman and CEO Darren Woods faced a rebellion from his board.

First, giant hedge fund D.E. Shaw got two new directors installed on the 12-person board. Then, a little known activist firm called Engine No. 1 waged a campaign for shareholders to vote in four new members. The campaign came to a head at ExxonMobil’s 2021 shareholder meeting when the company learned that some of its largest investors were siding with Engine No. 1. In the end, three of the four dissident candidates were voted onto the board. Since then, the new members have helped increase internal pressure on ExxonMobil to accelerate the greening of its operations.

Yet even with a revamped board, it is ultimately up to shareholders themselves to agree to larger investments in the energy transition, a point acknowledged by ExxonMobil board member Jeff Ubben.

“I’m talking to shareholders this week [May 2022],” said Ubben, founder of Inclusive Capital Partners and one of the board members installed after pressure from D.E. Shaw. “You just don’t get the mandate.”

Capital expenditure plans through 2027 show Exxon spending just $15 billion on emission reduction investments, despite the company having earned $23 billion in profits in 2021.

The home base of U.S. energy

As the Russian invasion of Ukraine continues to affect global energy markets, oil and gas companies are under pressure to pump more to increase supply and cool down prices.

“This is a time — not the time to sit on record profits,” said President Biden on March 31, 2022. “It’s time to step up for the good of your country, the good of the world; to invest in immediate production that we need to respond to Vladimir Putin; to provide some relief for your customers, not investors and executives.”

One of the locations where ExxonMobil plans to increase output is in the Permian Basin, an area about the size of Nebraska that stretches across West Texas and southeast New Mexico. ExxonMobil subsidiary XTO Energy is developing a massive new processing plant there.

Pumpjack in the Permian Basin

CNBC

The area was first drilled in 1920, and production grew until a peak in the 1970’s, followed by a sharp decline during which the area was thought to be on its last legs. “The shale revolution– which was founded on…