Mar 08, 2021 News
By Shikema Dey
Kaieteur News – At ExxonMobil’s recently held Investor Day conference, a detailed outline was given of the company’s plans through 2025 to increase earnings and cash flow, reduce debt, and fund advantaged projects. The oil giant also unveiled its strategy to commercialize lower emission technologies in support of the Paris Agreement.
Such statements however, did little to quell the concerns of its investors.
One of ExxonMobil’s largest shareholders, Engine Number One, a new investment firm that seeks to enhance long-term value through active ownership, believes the oil giant’s plan is one that risks continued long-term value destruction and lacks serious diversification efforts.
It said that while there are “no easy answers” on where the future of the energy industry is going to be, what is not to be debated is that capitalizing on the opportunities and managing the risks created by rapid technological, policy, and market changes will require successful and diverse energy experience on the company’s Board.
It should be noted that Engine One has already positioned itself to transform ExxonMobil into a more environmentally conscious oil company with the nomination of four highly qualified, independent director candidates to the Corporation’s Board. Kaieteur News had reported that this challenge was born out of dissatisfaction with ExxonMobil’s emissions output and its declining fiscal health.
To further bolster its plan, Engine One announced the release of a white paper, which gives an in-depth analysis of the risks and opportunities facing ExxonMobil in a rapidly changing industry.
The analysis, which was done by a leading energy market and policy expert, David Victor, details an evolving energy industry that requires a significant long-term business model and innovation to improve and protect shareholder value.
The analysis, Engine One believes, underscores the necessity for new Board members with transformative energy industry experience to help ExxonMobil better position itself for the future.
Another major ExxonMobil investor; CURE (The Coalition United for a Responsible Exxon) – with over 140 members and $2.5 trillion in assets – also detailed its displeasure recently with the company’s future outlook.
CURE stated that ExxonMobil “demonstrably failed” over the past decade to deliver long-term shareholder value against the wider market and among its peers.
And while it noted that ExxonMobil appears to be taking a step in the right direction, CURE stated that the company needs to commit to a deeper, long-term shift of its capital allocation strategies which would allow it to be consistent with a 2050 net zero greenhouse target that must include renewable energy, clean hydrogen and carbon capture.
ExxonMobil, according to CURE, also needs to address its corporate governance issues including ensuring its corporate and trade association lobbying is aligned with the aims of the Paris Agreement, and adopting a uniform system of accountancy to meet basic tests of transparency.
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