At least two nominees for the ExxonMobil board of directors put forward by activist investor Engine No. 1 have been elected by shareholders at the company’s annual general meeting on Wednesday, 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.

Engine No. 1 had proposed 4 new directors for the company, with significant experience across the energy sector, as well as in policy and strategy. Two of the nominees, former Andeavor CEO Greg Goff and former Neste EVP for Renewable products Kaisa Hietala have been elected to the board. The outcome of the vote is still too close to call for candidate Alexander Karsner, while the fourth candidate, Anders Runevad, was not elected.

The campaign to push for energy transition action at the board level at Exxon gained significant momentum over the past few months, as several high profile investors publicly backed Engine No. 1’s initiative, including CalPERS, CalSTRS and the New York State Common Retirement Fund, and BlackRock reportedly voting for 3 of the nominees. CalPERS, CalSTRS, the New York fund and BlackRock are all signatories to Climate Action 100+, an investor initiative that targets the world’s largest corporate greenhouse gas emitters to promote taking necessary action on climate change.

Commenting on the shareholder vote, Aeisha Mastagni, Portfolio Manager in California State Teachers’ Retirement System (CalSTRS) Sustainable Investment and Stewardship Strategies unit, said:

“We called for change at ExxonMobil, and change is coming. While the ExxonMobil board election is the first of a large U.S. company to focus on the global energy transition, it will not be the last. We believe change is necessary for companies that do not have a long-term strategy for a responsible transition to a net-zero emissions  economy.”

In a final attempt to dissuade shareholders from supporting the activist campaign, Exxon announced days before the AGM that it would commit to adding two new directors over the next year, including one with “climate experience.” Unimpressed with the last-minute tactic, Engine No. 1 filed its own proxy statement, indicating that Exxon’s board has refused to meet with any of the investor’s proposed nominees, and calling for the addition of “directors with experience in successful and profitable energy industry transformations who can help turn aspirations of addressing the risks of climate change into a long-term business plan, not talking points.”

In a statement after the vote, Darren Woods, Exxon Chairman and Chief Executive Officer, said:

“We welcome all of our new directors and look forward to working with them constructively and collectively on behalf of all shareholders.

“We’ve been actively engaging with shareholders and received positive feedback and support, particularly for our announcements relating to low-carbon solutions and progress in efforts to reduce costs and improve earnings. We heard from shareholders today about their desire to further these efforts, and we are well positioned to respond.”

The landmark vote comes as other oil and gas majors are facing increasing pressure to act on climate change, and prepare for the energy transition. At the Chevron AGM on Wednesday, a majority of shareholders voted for a resolution mandating the company to reduce Scope 3 emissions. Also Wednesday, a Dutch court issued a ruling against Shell, requiring the company to cut emissions by 45% by 2030.

Anne Simpson, Chair of Climate Action 100+ Steering Committee, Climate Action 100+ and Managing Investment Director, Board Governance & Sustainability at CalPERS, said:

“Investors are no longer standing on the sidelines. This is a day of reckoning. The votes for change by Climate Action 100+ signatories show the sense of urgency across the capital markets. Climate change is a financial risk and as fiduciaries, we need to ensure that boards are not just independent and diverse, but climate competent.”

“This is a day of reckoning. The votes for change by #ClimateAction100+ signatories show the sense of urgency. As fiduciaries, we need to ensure that boards are not just independent and diverse, but climate competent.” @AnneSimpsonUSA @CalPERS

— Climate Action 100+ (@ActOnClimate100) May 26, 2021

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