Exxon Faces More Pressure to Go Green
This week, we talk about the pressure Exxon Mobil is feeling from shareholders to invest in renewable energy.
Welcome to our weekly chat about the environmental and social issues that influence the way we work, spend our money and live our lives. We're your hosts, Maitane Sardon and Dieter Holger. Want to get our newsletter every Wednesday? Hit the subscribe button in the upper right corner and please share with your friends!
Hi, Maitane! Exxon Mobil, one of the world’s biggest oil companies, is facing pressure from shareholders who want it to invest more in renewable energy and cut costs to keep its dividend payout to investors.
It’s the latest effort by investors to make companies go greener. Engine No. 1, a new investment firm, sent a letter Monday urging Exxon to appoint independent directors with renewable energy experience, cut investments especially in oil and gas that are unlikely to break even, create a plan to grow renewables and change pay incentives for management. An Exxon spokesman said the company received and is reviewing the letter.
The letter has won support from the California State Teachers’ Retirement System, the U.S.’s second-largest pension fund. Engine No. 1 and Calstrs together own $340 million worth of stock in the company, which is valued at more than $178 billion according to FactSet. How bigger investors like BlackRock, State Street and Vanguard react will be key to the outcome.
This isn’t the first time investors have targeted Exxon on climate change. In 2017, 62% of shareholders who cast ballots at its annual meeting voted for the company to disclose more information on how climate change and regulations could affect its business. And in August, Norway’s largest private money manager, Storebrand Asset Management, divested $12.3 million from Exxon over concerns with its lobbying on climate change. Exxon has told investors it will share more details on its lobbying.
Other oil companies are also under pressure to shift their business away from fossil fuels. Climate Action 100+, representing 545 investors and around $3.15 trillion in assets under management, is encouraging big polluters to act on climate change and is backing certain shareholder resolutions.
Interesting! We’ll keep an eye on oil majors’ next steps. Anything caught your attention in the finance world recently, Dieter?
One thing I’m watching is the rise in prices of industrial metals like copper and nickel, which are widely used in construction. The companies that produce these materials and the exchange traded funds that track them are also doing well as investors are betting that the coronavirus vaccines and stimulus programs will boost manufacturing activity. For example, the Global X Copper Miners ETF has attracted tens of millions of dollars in recent weeks, according to FactSet.
What am I looking at? The chart above shows the performance year to date of copper and iron ore, the main ingredient of steel. Because these materials are key to making just about anything from cell phones to houses, economists say a rise in their prices is a sign the global economy may be starting to recover. China’s manufacturing sector consumes around half of the world’s copper, so the price of this metal is especially sensitive to the country’s factory activity. Both in China and the U.S., production is gradually increasing, which has been a boon for metals and mining-related companies likeFreeport-McMoRan Inc. and Century Aluminum Co.
It will be interesting to see if President-elect Joe Biden’s green stimulus plans also help boost copper prices. Remember the industrial metal is widely used in electric cars and renewable-energy systems. One wind turbine can contain between 2.5 and 6.4 tons of copper per megawatt, according to the Copper Development Association.
Now let’s open it up to our readers: Do you think oil companies are moving in the right direction when it comes to climate change?
Share your thoughts below, email us or catch us on Twitter. Your words could appear in our next edition! Have a great week and remember to wash your hands. 👋
Meet the team:
Elevate the Conversation is produced by the editorial teams of The Wall Street Journal and Dow Jones Newswires. Here's a little bit more about us, along with our contact information. We'd love to hear from you.
Dieter Holger, Reporter: I have a knack for uncovering values-based investing trends and I’m obsessed with spreadsheets and charts. I really enjoy ‘80s music, skateboarding and yoga (but I’m bad at both). dieter.holger@wsj.com @dieterholger
Maitane Sardon, Reporter: I have a passion for amplifying the voices of those at the center of stories. I love running on Barcelona’s beaches and binging on chocolate ice-cream to compensate (it’s all about balance). maitane.sardon@wsj.com @sardonmaitane
Catherine Lindsay, Editor: I like breaking down complex ideas and explaining them. On the weekend, you’ll find me wandering the city with my film camera at the ready. catherine.lindsay@wsj.com @CathsLindsay
Tammy Lian, Designer: As a visual producer, I'm always excited by the challenge of creative problem solving. In my spare time, you can usually find me taking care of my ever-growing collection of plants and drinking tea. tammy.lian@wsj.com @violian.tammy