Pressure Builds on Exxon as $2.5 Trillion Investor Group Targets Company on Climate, Governance
The Coalition United for a Responsible Exxon (CURE), a group consisting of 135 institutional and private investors representing AUM of more than $2.5 trillion, announced the publication of a paper highlighting a series of sustainability-related issues at energy giant ExxonMobil, and recommendations for the company to follow to improve its ESG profile. The paper focuses primarily on governance and climate issues, and urges Exxon to establish a Paris Agreement-aligned energy transition plan.
Today’s announcement comes as Exxon faces increasing shareholder pressure on a range of ESG issues. Last week, ESG Today reported that several major pension funds, including CalPERS, CalSTRS and the New York State Common Retirement Fund, announced their support for a new slate of directors at Exxon, with lack of action on energy transition cited as a key issue driving the initiative.
According to the CURE paper, poor high level oversight at the company have led to deteriorating financial performance, as Exxon’s board has sanctioned high cost, low return investments, and acquisitions that significantly diluted its return on capital,
CURE’s letter makes a series of governance-related recommendations for the company, including splitting the CEO and Board Chair positions, broadening board and management expertise by appointing multiple new directors and senior executives with energy and climate experience, and aligning CEO and executive compensation more directly with total shareholder return and GHG reduction performance metrics.
On the climate front, the group urges Exxon to set an enterprise-wide net zero by 2050 goal, including short- and medium-term targets and a detailed decarbonization strategy. Additionally, CURE advocates for a Paris-aligned climate lobbying position, disclosure of scenario analysis including carbon price assumptions and asset-level detail, and for the company to provide regular updates on its compliance with climate targets.
The group stated that at Exxon’s upcoming AGM, members will vote in favor of proposals for an independent Chairman, and for reporting on scenario analysis and climate lobbying.
Josh Zinner, Executive Director of Interfaith Center for Corporate Responsibility and a member of CURE, said:
“Once the largest public company in the world, Exxon’s current market capitalization is half the size of its peak in 2007. As investors committed to energy transition, we can no longer stand by idly watching Exxon continue on its current path of seemingly reckless value destruction. CURE’s 135 members recognize that change is desperately needed at Exxon and applaud our fellow shareholders who are campaigning for meaningful progress. We believe that bold changes in governance and strategy are necessary to steer the company into the sustainable, decarbonized economy we need for the future.”