ExxonMobil Resists

Real-world stuff has kept me away from the keyboard for the past month or so.  This will happen occasionally, but I have no intention of quitting the blog permanently.  If I do I’ll let you know, so please do keep checking back.

While I was away ExxonMobil came under pressure from a minority of shareholders to adopt various climate change policies:

After a long battle to even get on the agenda for ExxonMobil’s 2016 Annual Meeting, the company’s shareholders on Wednesday voted against four initiatives to address climate change, even while the company is facing an investigation for its climate denial activities.

Investors were hoping to force Exxon to add a climate expert to its board, to enact a policy to avoid 2°C warming, to increase capital distributions (with the understanding that continued investment in assets likely to be stranded is not a good long-term strategy), and to report on the impact climate change policies worldwide to the company’s bottom line.

Each shareholder proposal failed.

“We know the path that Exxon is on, and the business strategy as it exists today, and as it existed for the last 50 years, is not a business strategy that is going to work in the 21st century,” Natasha Lamb, Arjuna Capital’s director of equity research and shareholder engagement, told ThinkProgress after the meeting. “It is not in line with a low carbon scenario where we limit the burning of fossil fuels.”

This is something I don’t quite understand.  I remember years ago meeting a childless, middle-aged woman who worked as a freelance journalist in London complaining that England should be more like Germany and France in relation to social policy, labour laws, housing, foreign policy, approach to sex and alcohol, and a whole host of other criteria.  She spent half her life campaigning on behalf of fringe political parties who she thought might bring this about.  What I never understood is why she didn’t move to Germany or France.  That’s not to say I think anyone who disagrees with aspects of a country and prefers how things are done elsewhere should be invited to move in the first instance.  But if somebody wants to see wholesale changes such that their Country X becomes much more like Country Y, then why not simply move to Country Y?

I was reminded of this woman when I read the story of people – both investors and outsiders – clamouring for ExxonMobil to adopt various climate change policies.  But we already have major oil companies doing just that: Shell and Total, to name two.  They have already embraced the climate change narrative and are putting emissions at the centre of their corporate strategies, so why do those who are not happy with ExxonMobil’s strategy not simply sell their stock and invest in those majors who share their strategic vision?

I would have thought it would be better to have the majors pursuing several different strategies on climate change in order to spread risk and to properly ascertain which one turns out to be the most sensible.  If, for example, government-induced emissions targets and other climate initiatives prove to be extremely expensive, unpopular, and ineffective then ExxonMobil’s stubborn insistence on producing oil and gas in the most cost-effective manner might turn out to be the best approach, with other majors left wondering why they bet everything on the promises of politicians.  If people genuinely think ExxonMobil are pursuing a poor strategy, then switch to Total.  Simple.

But I don’t think this has anything to do with investors’ concerns for the value of their stock.  To me it looks more like a minority of activists wanting to browbeat ExxonMobil into conformity regardless of their financial performance, backed by larger groups (including politicians) who are concerned that ExxonMobil’s financial performance might outstrip those majors who have chosen to sink billions into what will probably be a highly expensive campaign of virtue-signalling and arse-licking.  If they can force ExxonMobil to adopt the same strategy, it will be a lot harder to blame the resulting mess on specific policies.

In other words, the last thing the elites and the environmentalists want is to see a competition: they want to put an equally heavy millstone around everybody’s neck.

“It’s for your own good.”

7 Responses to ExxonMobil Resists

  1. Graeme says:

    I am afraid that you are right, Jake. However, this idea that assets will be stranded is something that really bugs me. It bugged me when the Governor of the Bank of England, Mark Carney, allegedly an intelligent man, said it and it keeps on bugging me. I sit typing this reply on a keyboard made of plastic, linked to a monitor built mainly from plastics, attached to a PC built of plastic. I am surrounded by plastics of various kinds, utensils, CD boxes, packaging, drinking vessels, etc. Did they come from judicious harvesting of the plastic tree, a tree unknown to botany?

    And as to the accusation that Exxon knew more about AGW than the researchers into the subject back in the 80s….As far as I can tell, what Exxon published on the subject back then is still right in the mainstream of climate science. It is staggering how people can be so led astray by their anti-oil prejudices.

  2. Jake Barnes says:

    However, this idea that assets will be stranded is something that really bugs me.

    It wouldn’t surprise me at all if dingbat government policies leave assets uneconomical to develop, i.e. stranded. But exactly what ExxonMobil is supposed to do about it I don’t know: appointing “climate experts” to their board or investing in something else isn’t going to help with this any. Plus, I reckon those “stranded” assets would become unstranded pretty damn quickly once the increasing price of oil derivatives starts to hurt.

  3. Joe Wooten says:

    As a 35 year E-M shareholder, I proudly voted against those proposals.

  4. dearieme says:

    Years ago I had a chat with a Shell man about Catastrophic Anthropogenic Global Warming (as we then didn’t quite call it). He said he admired Exxon for rejecting the silliness. He could see the point of BP affecting to support the case. He was frustrated that Shell at that time seemed to have no policy.

    I was impressed that he simply assumed that BP was being insincere. Just business, I suppose.

  5. Graeme says:

    Given that climate science does not seem to have developed much over 30 years, despite all the funding, it is strange that hard headed businessmen play along with it other than to stop juvenile delinquents making scenes in public places.

  6. Adam says:

    This article today in the Aussie edition of the Guardian:

    http://www.theguardian.com/australia-news/2016/jun/06/election-2016-greens-want-fair-price-solar-power-better-access-grid-electricity-clean-energy

    So the totalitarian greens have realized that solar energy can’t compete and now want a “fair price”, in other words they want to be paid more than its worth. The climate change narrative is all about power, nothing more. It makes no sense in a free market economy. Therefore the free market economy must be destroyed. A few shareholders holding Exxon to ransom is merely one small aspect of this.

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