Exxon Announces its First Net Zero Commitment
Following years of shareholder pressure and proxy battles, energy giant ExxonMobil announced a net zero commitment last week, pledging to target net zero greenhouse gas emissions for operated assets by 2050.
Darren Woods, ExxonMobil Chairman and CEO, said:
“ExxonMobil is committed to playing a leading role in the energy transition, and Advancing Climate Solutions articulates our deliberate approach to helping society reach a lower-emissions future. We are developing comprehensive roadmaps to reduce greenhouse gas emissions from our operated assets around the world, and where we are not the operator, we are working with our partners to achieve similar emission-reduction results.”
While marking a significant step for the company, the goal does not encompass ‘scope 3’ emissions, which make up the most significant source of the company’s climate impact. Other energy majors, such as Shell, bp and TotalEnergies have included Scope 3 emissions targets in their climate strategies.
Exxon’s new scope 1 and 2 net zero goals follow a high-profile proxy battle involving the company last year, which saw activist investor Engine No. 1 win three seats on the company’s board, marking a major victory for investors pushing the oil and gas giant to act on the emerging global energy transition to clean and renewable sources of energy. The campaign benefited from the participation of several major investors including CalPERS, CalSTRS and the New York State Common Retirement Fund, and BlackRock.
According to the company, the new ambition builds on its recently announced emissions reduction targets and initiatives, which included accelerated near term emissions goals, 2030 greenhouse gas reduction plans, and $15 billion earmarked over the next six years for investments in emission-reduction projects.
Exxon stated that it has identified more than 150 potential steps and modifications that can be applied to assets in its upstream, downstream and chemical operations, to help achieve its new net zero goal, including power and steam co-generation and electrification of operations, using renewable or lower-emission power.
Although the new target does not include scope 3 emissions, including those derived from the use of its products – which constitute the majority of the company’s value chain emissions – the announcement marks a significant change for the company, following Woods’ description of peer company carbon pledges as a “beauty contest” at an analyst day in 2020. Nevertheless, sustainable investment groups note the significant progress still ahead for the company to align with global climate goals.
Andrew Logan, Senior Director of Oil and Gas at non-profit sustainability-focused organization Ceres, said:
“Given Exxon’s long history of dismissing the idea of a net zero commitment, this announcement is the clearest evidence yet that the new directors are having a tangible impact. While the new commitment only covers a portion of the company’s emissions, it is a logical and necessary next step in what will hopefully be a more comprehensive approach to decarbonization. Yet until Exxon addresses life cycle emissions, it fails to meet the urgency of the climate crisis.”