Some have pointed to the 2021 proxy fight at ExxonMobil as evidence that shareholders are willing to put environmental concerns ahead of profit. Engine No. 1 is a small hedge fund that purports to be focused on advancing EZSG issues, especially with respect to climate change. Engine No. 1 nominated a short slate—four director candidates—in opposition to the candidate slate put forward by the incumbent board. Three of Engine No. 1’s candidates were elected, which the New York Times proclaimed as a “major triumph” for climate activists. Matt Phillips, Exxon’s Board Defeat Signals the Rise of Social-Good Activists , N.Y. Times, (June 9, 2021), https://www.nytimes.com/2021/06/09/business/exxon-mobil-engine-no1-activist.html.
On closer examination, however, the ExxonMobil result actually supports the hypothesis that today’s investors remain focused on profit. Two of the successful three Engine No.1 were longtime oil industry executives. Engine No.1’s arguments were focused on ExxonMobil’s subpar financial performance, emphasizing that over the preceding ten years ExxonMobil had lost money while stock market indices had tripled. ExxonMobil was persistently investing in expensive projects that could only pay off if oil prices increased substantially and on a sustainable basis. Finally, Engine No.1 highlighted ExxonMobil CEO Darren Woods $75 million pay over the preceding four tears. In sum, the “fight wasn’t about being woke, it was about capitalists holding other capitalists responsible for results.” David Nicklaus, Exxon Board Fight, St. Louis Dispatch (June 6, 2021), https://www.stltoday.com/business/subscriber/article_53207bb5-a365-5642-b347-39ff623c030a.html (behind a paywall).
