The oil industry was rocked today as hedge fund minnow Engine No. 1 saw two of its nominees elected to behemoth Exxon Mobil’s famously insular board.
Engine No. 1’s victory, which came after a months-long fight with the Texas-based firm, could pile pressure on the company to speed up its diversification away from fossil fuels.
It came on a historic day for the industry, which also saw a Dutch court rule that fellow supermajor Shell was legally obliged to cut emissions by more than planned.
Engine No.1, which owns a stake of just $50m in the $250bn-valued Exxon, put four directors up for nomination to the firm’s board.
In a statement, chief executive Darren Woods, who had fought the election bid, welcomed the new directors.
“We welcome the new directors, Gregory Goff and Kaisa Hietala, to the board and look forward to working with them constructively and collectively on behalf of all shareholders,” he said.
Counting continues to see if the firm has lost any more seats to the activist investor.
Under Woods, Exxon, which incurred a loss of over $20bn last year, has dragged its feet on low-carbon investments.
He has argued that the firm should not risk its profits by moving investment away from new fossil fuel developments too soon.
Today’s vote was the first time that the make-up of an oil firm’s board has been under threat due to climate concerns.
“It’s a huge deal. It shows not just that there is more seriousness apparent in the thinking among investors about climate change, it’s a rebuff of the whole attitude of the Exxon board,” said Ric Marshall, executive director of ESG Research at MSCI.