ExxonMobil Earns a “D-” on Mid-Term Report Card from Coalition United for a Responsible Exxon (CURE)
December 09 2021 - 8:00AM
The Coalition United for a Responsible Exxon (“CURE” or the
“Coalition”) has released a “Mid-Term” report card, six months
after the appointment of five new directors to the board of Exxon
Mobil Corporation (“ExxonMobil” or the “Company”) (NYSE: XOM).
The Company has earned an overall grade of D- for failing to make
tangible progress on the targets set by shareholders at the time of
the May 26, 2021 annual general meeting.
This first Report Card to assess ExxonMobil’s progress addresses
both shareholder concerns and science-based Corporate Net-Zero
Standards. It combines four independent scorecards, each with a
slightly different ranking methodology and scoring rubric,
including letter grades and point systems. The Report Card
normalizes and aggregates those scores into one overall “Report
Card” letter grade.
The four scorecards include expectations stated in:
- CURE’s “Recommendations to Improve ExxonMobil Corporation,”
published in May 2021;
- Engine No. 1’s Ask of ExxonMobil, published prior to the
Company’s 2021 AGM, on the Reenergize Exxon website laying out four
specific expectations of the new board;
- Say on Climate initiative’s “Road to Zero Emissions” assessment
developed to evaluate company progress against 23 Key Performance
Indicators (KPIs) across three pillars (to be published Q1 2022);
and
- Climate Action 100+ assessment using the Net-Zero Company
Benchmark’s 10 disclosure indicators.
Based on shareholder concern about the direction of ExxonMobil,
in January 2021, D.E. Shaw completed negotiations with ExxonMobil
that expanded the board to twelve seats and brought Michael
Angelikis, Jeff Ubben, and Wan Zulkiflee onto the board. At the May
26, 2021 AGM, broad support for the Engine No. 1 slate resulted in
the election of Gregory Goff, Kaisa Hietala, and Alexander Karsner
(and the removal of Wan Zulkiflee). In addition, three days prior
to the AGM, ExxonMobil made an SEC filing in which the Company
pledged, “Over the next twelve months, we will work with the Board
to secure two new directors, one with energy industry experience
and one with climate experience.”
“The five new directors added to the Exxon board this year have,
so far, been unable to shift Exxon’s trajectory,” said Andrew
Behar, CEO of As You Sow, a member of CURE. “The overwhelming
message sent by shareholders to the Exxon Board was that
business-as-usual was not acceptable; specific targets were set to
measure progress. The new five-year strategy announced by Exxon
does not address the most basic requirements expected by
shareholders of the leadership of the ExxonMobil board.”
CURE has seen little evidence of a change in company strategy or
philosophy since May. In fact, CEO Darren Woods was quoted by the
Financial Times as saying the Company did not plan “huge shifts in
strategy” when announcing the Company’s second quarter results on
July 30, 2021. While ExxonMobil’s “Corporate Plans to 2027” are an
incremental step forward, the targets identified do not constitute
a science-based, 1.5 degree Celsius aligned climate transition
plan. In addition, the plan focuses on intensity-based emissions
reduction goals and only provides an “expectation” that absolute
emissions will decrease. The plan fails to set segment-specific
reduction targets for the midstream and downstream businesses.
Even if Exxon achieves the goal of decreasing its absolute
emissions by 20% by 2030 (from a 2016 baseline) or a 1.4%
greenhouse gas emission reduction per year, this falls far short of
the Science-Based Target Initiative criteria, which states that
4.2% or more of emissions reductions per year are required to be
aligned with a 1.5 degree change. The planned reduction would not
even achieve the 2.5% or more annual decrease required to achieve
alignment with the well-below 2 degrees target.
Furthermore, the Company’s goals only cover Scope 1 and 2
emissions, failing to include Scope 3 emissions, which represent
89% of Exxon’s total emissions. By failing to cover all relevant
scopes of emissions and to decrease emissions at a pace consistent
with a 1.5 degree scenario, Exxon has failed to produce a
Paris-compliant emissions reduction strategy.
Finally, while the $15 billion budget for lower-emission
investments is welcome, at $3 billion per year this represents only
a tiny fraction -- 1.7% -- of ExxonMobil’s annual revenues (based
on 2020 figures).
CURE also notes that we have yet to see any implementation of
the shareholder resolution, which was passed in May, requiring the
company to develop a climate lobbying position aligned with the
Paris Agreement. This is highly important given the arguments that
ExxonMobil and other oil majors have been part of a concerted
campaign to spread disinformation about the role of fossil fuels in
global warming over the course of several decades, making issues of
transparency and ethics even more pressing.
Recommended Actions:
In order to demonstrate progress toward investor goals set for
the company, ExxonMobil must develop detailed strategies to improve
its capital allocation policy, develop and implement a plan to
decarbonize in alignment with the Paris Agreement, and accelerate
its governance improvements.
Toward these goals, CURE recommends the following actions be
taken immediately:
- Appoint an independent board chair;
- Replace the current CEO;
- Set a net-zero by 2050 target, establish a coherent
decarbonization strategy with 5% carbon emission reductions per
year over the next decade, and publicly disclose this plan with
milestones and annual reporting against these targets;
- Provide the new CEO and other key executives with an incentive
package to achieve 1.5 degree-aligned greenhouse gas (GHG)
targets;
- Align other climate disclosures and objectives with CA100+
benchmarks in order to remedy the business risk ExxonMobil
continues to face due to inadequate climate action;
- Halt all lobbying and dark money going to climate denial and
anti-clean energy legislation;
- In the selection of two additional directors, ExxonMobil must
disclose: (i) the criteria used to discern “energy industry and
climate experience” as referenced in the SEC letter, (ii) the names
of new board candidates, and (iii) appoint them no later than
February 1, 2022 so they can be evaluated by shareholders prior the
2022 AGM.
CURE has published the above recommendations in an effort to
enable ExxonMobil to serve all of its stakeholders responsibly and
enhance shareholder value in the emerging clean energy economy:
The full paper and additional information regarding the
Coalition United for a Responsible Exxon (CURE) can be found at
https://curexxon.org/
AboutThe Coalition for a Responsible
Exxon (“CURE”) represents a global spectrum of
stakeholders focused on sustainability and committed to delivering
long-term returns that account for the realities of a changing
climate and energy sector. As of May 3, 2021, CURE brings together
over 135 institutional members, who collectively represent $2.5
trillion in assets.
Media ContactDan Gagnier / Jeffrey
MathewsGagnier
Communications+1-646-569-5897CURExxon@gagnierfc.com
Exxon Mobil (NYSE:XOM)
Historical Stock Chart
From Jul 2024 to Aug 2024
Exxon Mobil (NYSE:XOM)
Historical Stock Chart
From Aug 2023 to Aug 2024