The questions about climate change for ExxonMobil Chairman and CEO Darren Woods came in rapid succession during Wednesday’s virtual meeting for shareholders. How does the company view a recent report saying the world doesn’t need new investment in oil exploration? Why isn’t the company jumping into renewable energy? And why is ExxonMobil investing in carbon capture and storage—which has been largely unprofitable to date?
Woods’ answers to these questions—on the call and in previous months—have failed to satisfy investors. A few minutes later, a preliminary vote count showed shareholders decisively rejected ExxonMobil’s management and elected at least two new board members committed to shifting the company’s direction on climate change. “Change is coming,” said Charlie Penner, an investor whose hedge fund Engine No. 1 led the activist campaign, on the investor call ahead of the vote.
The transition away from fossil fuels has come in fits and starts in recent years. On Wednesday, it took a giant lurch forward. At the same time that ExxonMobil investors met, a majority of Chevron investors voted to require that company to slash emissions from consumer use of the company’s products. A few hours earlier, a Dutch court had ruled that Royal Dutch Shell needs to cut its own emissions to align with the Paris Agreement.
These decisions—along with a slew of others in recent months—bring into focus the evolving answer to a simmering question: what does it mean to be an oil company in the time of climate change? For years, oil companies deflected and denied the science of climate change, using their vast public relations war chests and lobbying influence to deter anything that would reduce demand for their product. More recently, the companies have walked a tightrope, acknowledging that climate change is real while still insisting that they need to service a robust market for their products that will exist for decades. But Wednesday’s developments offer a taste of the blowback that may be coming as governments, investors and activists increasingly envision a different future—one where oil companies adapt or disappear.