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ExxonMobil faces “existential business risk” in setting its future for fossil fuels as governments reduce emissions, an activist hedge fund will tell investors in the final push of its battle to review the board of surface administration.
“ExxonMobil does not yet have a credible plan to protect value in an energy transition,” says an 80-page presentation to investors, seen by the Financial Times, in which the No. 1 engine exacerbates the company’s “destruction of value.” “the refusal to accept this fossil fuel” demand may decline. ”
The company “highlights its efforts in areas such as carbon capture and biofuels,” the document says, but the efforts “have yielded more publicity than results.”
Exxon has captured less than 1% of its own emissions, once pollution from its products sold is included, according to engine document no. 1.
The No. 1 engine was recently launched by hedge fund manager Chris James, better known as a technology investor, and Charlie Penner, who previously campaigned against Apple while at Jana Partners and is behind the Exxon campaign.
He effort to revise Exxon’s advice is one of the most watched battles of the season by representatives of American shareholders in recent years, and highlights a broader test for companies in America and Wall Street, as the risk of climate change raises the agenda of investors.
In December, Exxon announced plans to reduce its “intensity” of greenhouse gases by 15 to 20% by 2025, a measure of the pollution per barrel produced, along with plans to curb methane emissions. and the flames. The plans were “consistent” with the goals of the Paris climate pact, he said.
But engine document no. 1 states that Exxon’s total emissions, including the products it sells, will increase by 2025.
“Argue this reduction in the intensity of emissions. . . while ExxonMobil continues to pursue production growth and therefore increases global emissions, putting it on a “coherent Paris path,” fails the basic test of logic, ”the document says.
Institutional investors included BlackRock i Vanguard, Exxon’s two major shareholders, have expressed their vocation about making the climate central to their investment strategies. Neither has publicly revealed his position on the Battle of Exxon.
In response, Exxon cited recent letter to shareholders who warned them not to let themselves be “fooled by a hedge fund of a few months” with an “inaccurate plan” that threatened the company’s future. The company said it would continue to invest in “low-cost, high-yield” oil assets to protect its dividend, pay off debt and invest in its new low-carbon plans.
The No. 1 engine, which has a $ 50 million stake in Exxon, began its representative battle in December, proposing four new board members for election at the company’s shareholders’ meeting in late December. May. That gained support of Calstrs, a large pension fund, and of the Church Commissioners for England.
Exxon has engaged a large audience recently, announcing new board appointments, including Jeff Ubben, an activist social investor, a low-emission line of business, and supporting industry demands for a carbon price. In January, the company began disclosing its scope 3 emissions: pollution from the products it sells.
The DE Shaw hedge fund also took an activist position at Exxon last year, calling for sharp spending cuts. He will now vote for the company’s board at the AGA, according to people familiar with his thinking.
But on Friday, the New York State Pension Fund, the third largest public pension fund in the country, announced it would support candidates for the No. 1 engine board.
“Exxon’s board needs a review,” New York State Controller Thomas DiNapoli said. “We continue to be deeply concerned about Exxon’s failure to manage climate risk and its refusal to address calls for the transition to a lower carbon future.”
The presentation for motor investors no. 1 also wants to take advantage of shareholder discontent over the company’s financial performance, including years of heavy spending and rising debt.
As the pandemic shattered crude oil markets last year, Exxon, the world’s most valuable stock market by capitalization less than a decade ago, posted four consecutive quarterly losses, pulling off the Dow Jones Industrial Average and amortized nearly $ 20 billion in assets.
But the fund claims that Exxon destroyed $ 175 billion in value in the decade before the pandemic, while total shareholder performance was 28%, compared to an average of 85% for Chevron, Shell, Total and BP. .
Last year, the company drastically reduced its planned capital expenditure and has also announced slower production growth targets.
The company’s share price has risen about 35% since the beginning of the year, surpassing both the S&P 500 and Exxon’s major large partners.
But while rivals like BP have launched an axis toward cleaner energy, the U.S. surface is betting on its future in major oil projects in the U.S. shale slate zone, at marine oil fields in Guyana and Brazil, and refining and petrochemicals.
Exxon argues that even as the world decarbonizes, oil and gas will continue to be crucial to the global economy, rewarding its investments in future production. It also remains skeptical about the commitments of renewable emissions and zero net emissions assumed by rival oil companies, such as BP.
“What can we bring to these opportunities other than a checkbook?” chief executive Darren Woods told FT in March, referring to renewable energy.
Last week he came up with the idea of a $ 100 billion carbon capture project in the U.S. Gulf, but said a carbon price would be needed for it to work.
Engine inverter cover no. 1 described the “theoretical” project as an “advertising bombardment” that “had no real substance”.
“The whole concept is based on the concept of a carbon tax, which currently has little chance of approval in the United States and would decrease the demand for oil and gas if it did,” the fund document says.
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