Exxon investors warned by activist fund on climate risks: Financial Times

Exxon Mobil Corp. is being warned by activist hedge fund Engine No. 1 it faces an “existential business risk” by pinning its future on fossil fuels as governments move to slash emissions, the Financial Times reported, citing an investor presentation.

Exxon still has no credible plan to protect value in an energy transition, according to an 80-page investor presentation, the newspaper said. The San Francisco-based hedge fund also criticizes the company’s “value destruction” and “refusal to accept that fossil fuel demand may decline.”

The U.S. oil and gas producer “touts its efforts in areas like carbon capture and biofuels,” the report said, citing the document, but the efforts have “delivered more advertising than results.”

An Exxon spokesperson said the firm had previously responded to Engine No. 1’s concerns, including in an April 12 letter to shareholders, arguing the fund’s “vague and undefined plan,” would jeopardize the company’s future and ability to pay out dividends.

Additionally, the company’s low carbon solutions unit is already seeing positive reactions to its Houston carbon capture hub concept, and is developing a plan to identify large-scale projects that can simultaneously reduce emissions and generate shareholder returns, the spokesperson said.

Engine No. 1 disclosed a stake in Exxon in December and has nominated four candidates for the board. The fund has criticized the company over poor returns, weak environmental stewardship and has called for more aggressive emissions reduction targets.

© 2021 Bloomberg L.P.

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