A very public battle is raging over how ExxonMobil should face questions about long-term oil demand and prepare for a carbon-constrained world.
Driving the news: Investment group Engine No. 1, which is nominating board members it says are equipped to deal with these dynamics, this week gained new support.
- Two huge pension funds — California Public Employees' Retirement System and the New York State Common Retirement Fund — have thrown their weight behind it.
- It adds to prior backing from the California State Teachers' Retirement System, so now, per Pensions & Investments, the country's three largest pension funds back the effort.
Why it matters: The unusually high-profile shareholder battle is something of a microcosm (I'm feeling high school-y today) of larger questions about the future of Big Oil.
But it's also specific to Exxon, one of the world's most powerful companies, which has not sought to diversify as widely as its European peers (though oil-and-gas remains the dominant business for all of them).
What they're saying: Engine No. 1, in an 81-page presentation posted this week, says Exxon has "significantly underperformed and has failed to adjust its strategy to enhance long-term value."
The slide deck argues that Exxon has long been lagging its Big Oil peers by multiple metrics of investor returns.
The other side: Exxon, which has seen significant share price recovery over the last six months, has been striking back against the claims that it's poorly positioned and underperforming.
- Exxon yesterday posted its own detailed slide deck laying out the case for why its strategy will provide long-term value.
- It's the latest of recent moves including new board additions and vowing new emissions intensity cuts.
- The presentation delves into its investments in carbon capture while arguing that Exxon is well-poised to deliver strong returns in oil-and-gas, which it notes will remain immense markets for decades despite low-carbon energy growth.
- And one of its new board members, Jeff Ubben, defended Exxon's climate strategy in an interview with the Financial Times.
What's next: It comes to a head at Exxon's May 26 shareholder meeting.
Reuters reports that the hedge fund D.E. Shaw, which has pushed Exxon to change its approach, now intends to vote with the company.