Feb 03, 2021 News
– Shareholders represent over US$2.2 Trillion in Assets
– To pressure company for better response on climate change
Kaieteur News – A group of 135 investors formally cemented their intention to bring massive changes to ExxonMobil by launching yesterday, “The Coalition United for a Responsible Exxon” (CURE).
Kaieteur News understands that CURE represents a broad spectrum of stakeholders who are focused on sustainability and delivering long-term returns that account for the realities of a changing energy sector. As of today, CURE’s over 135 members collectively represent over US$2.2 trillion in assets.
In its launching letter, CURE raised urgent concerns about Exxon’s current direction, which it said is premised on outdated assumptions about high oil prices, demand, and margins that are incompatible with the reality of climate change and the inevitable transition to renewable energy sources. Once the most innovative leaders in the industry and a pillar of the Dow Jones (DJ), CURE said that Exxon today finds itself lagging behind other oil majors that have adapted their strategies to lead the global energy transition.
The coalition urgently demanded change at Exxon, beginning with the Board, and a new commitment to a financially, competitively, and environmentally sustainable future for the Company, its shareholders, and all stakeholders.
Under its current strategy, CURE said that Exxon continues to strand assets by making massive capital investments in upstream projects that destroy shareholder value. The Company it said, rationalizes these investment decisions through unrealistic expectations of future oil and gas prices and demand. Further to this, CURE said that Exxon’s poor decision-making has led to the highest debt levels in the Company’s history, with the worst operational net-debt-to-cash ratio among its peers. It said too that Exxon’s operational inefficiencies are also exacting a toll on profitability.
Additionally, CURE argued that structural change is needed at Exxon, rather than the patchwork of minor adjustments put forth on its February 2 earnings call, while adding that these piecemeal, cosmetic half-steps to stave off real change are too little, too late. Further, the coalition believes that shareholders should not find the Company’s proposal to potentially invest US$600 million per year on carbon capture and sequestration technology credible, after it “delayed indefinitely” its leading carbon-capture project just 10 months ago.
The coalition said, “Exxon’s current myopic and entrenched Board and leadership team are not equipped to undertake the change necessary to turn around the Company’s decline over the last decade. Nearly every senior leader has spent his or her entire career inside of Exxon, and until February 2, the Company did not have any independent directors with energy industry experience on its Board.”
Further to this, the group of investors said that Exxon lags its peers in transparency and has consistently resisted efforts by shareholders for greater disclosure, especially related to the sustainability of its operations. This it said, only makes it more difficult for shareholders to know how the business is performing on metrics that matter to the Company’s owners.
Finally, CURE said that Exxon’s record of emissions and safety failures is far worse than other energy majors – a gap that has grown in recent years. There are currently over 20 lawsuits in process alleging that the Company deliberately promoted a misinformation campaign calling climate change a hoax.
Given the substantial risk to Exxon’s dividend and competitive viability, the members of CURE have come together to advocate for refreshed leadership and a new vision for the future at Exxon.
BELOW IS THE FULL TEXT OF CURE’S LETTER
Coalition United for a Responsible Exxon (CURE)
February 2, 2021
Exxon Mobil Corporation
5959 Las Colinas Boulevard
Irving, TX 75039
Dear ExxonMobil Board of Directors:
The undersigned are a group of ExxonMobil Corporation (“Exxon” or the “Company”) stakeholders, including Seattle City Employees’ Retirement System, Dana Investment Advisors, and Members of the Interfaith Center on Corporate Responsibility, that have been disappointed with Exxon’s lack of financial performance, poor capital allocation decisions and failure to capitalize on business opportunity of the clean energy transition. Together, we are the Coalition United for a Responsible Exxon (CURE) and represent 138 organizations that collectively manage more than $2.27 trillion in assets.
For many years, Exxon has ignored both the desires of its key stakeholders and the financial risks and opportunities of the transition happening in energy markets toward cleaner, more sustainable forms of energy. This is no longer tenable for current shareholders, all stakeholders, the financial future of the Company, and future generations. Exxon has lost $250 billion in market value since 2014, was removed from the Dow Jones where it had been a “blue chip” since 1928, and has lost 25% of its market-cap over the past 12 months. Without a change in leadership, the Company is positioned for much greater losses in the future.
As key stakeholders in Exxon, we urge the Company to embrace change with the ingenuity and rigorous analysis for which it was once known, ensuring that Exxon will not only survive, but will lead through this inevitable transition. In years past, Exxon led the world and was the most valuable company on the planet. But no longer.
Change is required.
We are pleased to see three shareholders – D.E. Shaw, the California State Teachers Retirement System (CalSTRS), and Engine No. 1 – urge the Company to reform its priorities and operating goals, with an eye toward much-improved financial performance, responsible growth in the clean energy transition, and improved environmental stewardship. We hope the Company will address these concerns substantively and engage with those owners, CURE, and all stakeholders, with an earnest desire to improve Exxon for the benefit of all.
We intend to offer our views, both publicly and privately, to drive Exxon to become a responsible energy company – one that all of its stakeholders, as well as our children and future generations, can be both proud of and benefit from. We would be pleased to meet to discuss the steps we believe Exxon should take to leapfrog its peers and move to a sustainable business model with long-term competitive advantages. Exxon should again lead the world.
Coalition United for a Responsible Exxon (CURE)
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