Mean greens force Exxon to clean up

When we did, stone tools became worthless — even though there were still plenty on the ground. And so it will be with oil: The petroleum age will end because we invent superior technology that coexists harmoniously with nature. When we do, there will be plenty of oil left in the ground.

So be careful, wise producers tell themselves, don’t bet the vitality of your company, community or country on the assumption that oil will be like Maxwell House Coffee — “Good to the last drop” — and pumped from every last well. Remember Kodak? It underestimated the speed at which digital photography would make film obsolete. It didn’t go well for Kodak or Kodachrome.

Alas, though, not every oil company got the memo. One that most glaringly did not is the one that in 2013 was the biggest public company in the world! It’s ExxonMobil. Today, it is no longer the biggest. As a result of its head-in-the-oil-sands-drill-baby-drill-we-are-still-not-at-peak-oil business model, Exxon lost over $20 billion last year, suffered a credit rating downgrade, might have to borrow billions just to pay its dividend, has seen its share price over the last decade produce a minus-30 percent return and was booted from the Dow Jones industrial average.

But last week — finally — Exxon got the memo, in the form of a shareholder revolt in what was one of the most consequential weeks in the history of the oil and gas industry and shareholder capitalism. I’ve long argued that if environmentalists want to have an impact on the climate they can’t be “nice greens.” They have to be “mean greens.” They have to be as mean and tough, as diligent and vigilant, as the industry they’re trying to change.

Well, last week a little hedge fund called Engine No. 1 delivered an unprecedented master class in mean green using the tools of democratic capitalism. A plucky, purpose-driven investment fund, Engine No. 1 set out to force Exxon to improve its financial returns by getting much more serious about gradually transitioning — through innovation and acquisitions — into being an energy company, not just an oil and gas company. At Exxon’s annual meeting, Engine No. 1 offered up a slate for four new members of Exxon’s 12-member board. The four represent deep energy expertise and climate solutions. The slate committed to push the oil giant to a net-zero emissions strategy by 2050, more investments in clean energy systems and more transparency about Exxon’s energy transition, with metrics and milestones, as well as disclosure of its lobbying payments and partners, suspected of undermining the science around climate change.

Engine No. 1 and its allies are not playing around, and for good reason. As CNN reported a few days earlier, citing a newly published Harvard study, “For decades, ExxonMobil has deployed Big Tobacco-like propaganda to downplay the gravity of the climate crisis.”

“The study used machine learning and algorithms to uncover trends in more than 200 public and internal Exxon documents between 1972 and 2019,” according to CNN, which quoted this statement from the study: “These patterns mimic the tobacco industry’s documented strategy of shifting responsibility away from corporations — which knowingly sold a deadly product while denying its harms — and onto consumers.” But in a world where Ford just unveiled an all-electric version of its F-150 full-size pickup truck, one of its top-selling vehicles, and says that it envisages electric cars and trucks making up 40 percent of its production by the end of the decade, they think Exxon has got to stop betting that the good ole days of oil and gas profits will return — and start becoming a more diversified energy company.