Feb 12, 2021 Editorial
Kaieteur News – Limping American oil giant, ExxonMobil, is facing a new challenge from a different source. This is what was covered in an article by Bloomberg on January 26, that was captioned, “Exxon, Shell face Ratings Cuts on Greater Climate Risk, S&P says.” There is now this spectre of a possible credit score cut for Exxon, among others, due to “greater industry risk” associated with climate change. We would not go so far as to say that this might be a case of poetic justice but, given the arrogant and risky manner in which Exxon has conducted its oil exploration and production activities in Guyana, this is not altogether surprising.
Exxon has seen to it that our political leaders are shackled and severely limited in their will to police our oil business and associated environmental exposures in a more constructive manner, and one that would be nationally healthy and reputable. From what appears to be less than tightly managed gas flaring at the wells, to the continuing release of pollutants in our natural habitats, and to the seemingly little restraint manifested by Exxon with its Guyanese operations, the company has done more than enough to earn that undesired distinction of a polluter of the first order.
The pressures on Exxon have been building for a while, given the company’s less than stellar record, and from a growing variety of powerful sources. At the top of the list of those who should not and cannot be ignored or played games with (like Guyanese political leaders) is the new President of the United States, Joe Biden, who has put, according to the Bloomberg article, “climate change at the center of his agenda.” He is not a force to be tampered with, and unless Exxon decides to get serious and quickly, it can be in for a long day of reckoning in the days to come. The American president should not be mistaken for the Guyanese one. As much as he may want to go a little easy on Exxon, there are very strong forces that are pushing for more action, more compliance with climate change requirements, and more accountability in every facet of its operations.
In addition to that, which is what some of Exxon’s large shareholders are concerned about, there are those who are working hard to bring some influence to bear through applying the squeeze on the company where it counts. That is, by having seats on the board of directors. This is what came from KN on January 28, in the article titled, “Dissatisfied shareholder to challenge ExxonMobil for board seats -deeply concerned about company’s carbon emissions.” There are those undying beasts again – carbon emissions, climate change, and the company’s record – those bones in the throat for Exxon that refuse to go away and die quiet deaths. Engine One is the concerned investment firm that is seeking to get four of its nominees appointed to the company’s board of directors.
From what KN furnished, the four names submitted are all individuals with industry histories that speak volumes about their knowledge, long experience, and competence in the energy sector. These people on a board can prove to be thorns in management’s flesh, and be difference makers’ best listened to; company executives ignore them at their peril. They can incite shareholder dissent into open revolt, and derail the headstrong attitudes of management, while rechanneling the visions of its members.
Engine One has the Church of England and one of America’s most powerful pension funds: the California State Teachers’ Retirement System (CalSTRS) in its corner to lend support (“Exxon is in crisis. Angry shareholders are rebelling” CNN, December 15, 2020). Also, from that same CNN article was the mention of another name that Exxon should have cause to fear greatly. It is that of activist hedge fund, D.E. Shaw, which “has built a larger Exxon stake than the one held by CalSTRS and Engine One” and is pushing for change. Those are not people with which Exxon should wish to mess. They are not weak or compromised Guyanese political leaders, rendered largely ineffective by the invisible ties that link them to Exxon, to the detriment of or environment and our prosperity. Guyanese may not count to local leaders, but those investment managers are answerable to the people who give them money.
Clearly, Exxon is under the gun to improve its terrible record on climate change, which is long overdue. That S&P ratings cut warning, if it comes to pass, would increase the company’s cost of capital, by pushing investors to demand higher returns for the risk they take by placing confidence and cash in the company. This oil major that is ruling the roost so unhindered in this country, is vulnerable and under siege. Guyanese leaders would not have a better time to seize the moment and get more for us than today, by making Exxon pony up with meaningful cash eases, and by performing as it should (and could) with much needed environmental protections, including insurance coverage, for here. Given what has been the local reality, we are not so naïve as to hold our breath.
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