Three major pension funds, CalPERS, CalSTRS and the New York State Common Retirement Fund have announced their support for a new slate of directors at energy giant ExxonMobil, proposed by sustainability-focused activist investment firm Engine No. 1.
Each of the pension funds are 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, and align their business strategies with net zero in order to help limit average global temperature rise to 1.5 degrees Celsius. The initiative recently launched the Climate Action 100+ Net-Zero Company Benchmark, providing detailed, comparative assessments of companies’ performance against the goals of reducing greenhouse gas emissions, improving governanceGovernance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights., and strengthening climate-related financial disclosures. According to Climate Action 100+, the benchmark indicated that ExxonMobil is not meeting investor expectations for long-term greenhouse gas emissions reductions.
In December 2020, Exxon announced a series of emissions reduction initiatives, it has yet to set a long-term net zero goal, and the company has met criticism for blocking a shareholder resolution asking it to report if and how it intends to bring its operations in line with the Paris Agreement’s goal of maintaining global temperature rise well below 2 degrees Celsius.
CalPERS indicated that Exxon’s progress on energy transition initiatives was a key reason behind its support for the new board slate. Simiso Nzima, CFA, Investment Director and Head of Corporate GovernanceGovernance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. at CalPERS, said:
“CalPERS is supporting additional board refreshment due to the long-term financial underperformance at ExxonMobil and the need for a greater depth of skill sets and experience on the board to address the significant challenges the company faces. In order to effectively oversee the transition to a low-carbon economy, we believe the board would benefit from additional expertise in both its core business and in renewable energy technologies.”
Engine No. 1’s proposed directors have significant experience across the energy sector, as well as in policy and strategy. The nominees include Greg Goff, former CEO of refining and marketing company Andeavor, Kaisa Hietala, Former EVP of Renewable Products at Neste, Andy Karsner, Senior Strategist at X (formerly Google X) and former U.S. Assistant Secretary of Energy, and, Anders Runevad, former CEO of wind turbine company Vestas Wind Systems.
Engine No. 1 said:
“We are pleased CalSTRS, CalPERS and New York State Common, the three largest U.S. pension funds, recognize that addressing the issues at ExxonMobil and positioning the Company for success in a changing industry and world requires new directors with decades of experience in value-creating, transformative change in the energy sector. We are thankful for their support in helping to ensure ExxonMobil is best positioned to deliver sustainable value to shareholders for decades to come.”
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