REUTERS NEXT-ExxonMobil governance structure fails energy transition -Engine # 1


Band Pratima Desai

LONDON, December 2 (Reuters)A failing governance structure propagated by management without an energy transition strategy was behind the No.1 engine’s quest to bring independence to ExxonMobil’s board of directors, Chris James, founder of the ExxonMobil, told Reuters. American hedge fund.

Governments, businesses and individuals are taking measures to reduce their carbon footprint and enable the energy transition that includes electric vehicles and renewable energies such as wind turbines and solar.

ExxonMobil XOM.N has been an outlier when it comes to transparency and accountability in its environmental impact, James said in an interview with the Reuters Next Conference.

“This is a company that has lost its social license … It must see the energy transition as an opportunity to be part of the solution rather than the problem.”

Three of four people with energy transition experience appointed by Engine No. 1 joined the ExxonMobil board earlier this year.

Oil majors like BP BP.L Faced with increasing pressure from regulators and investors, they decided to develop cleaner energy and to move away from fossil fuels, a main source of greenhouse gas emissions that cause global warming.

Instead, ExxonMobil invested in new oil and gas projects that shouldn’t have been approved and wasted capital, James said, adding that the company has some of the most talented engineers in the world.

“Management has prevented these engineers from unleashing the power they have to create value in the energy transition,” said James, adding that ExxonMobil had outclassed Chevron since the intervention of the No.1 engine.

ExxonMobil shares have risen around 60% since November 2020 when Engine No.1 bought them, compared to around 30% for Chevron CVX.N.

Responding to a request for comment, ExxonMobil said, “We are evaluating our investments in a range of scenarios – including zero net trajectories – and look forward to sharing more details in the months to come.”

“There is significant growth potential in low carbon opportunities where we can leverage our technology, engineering and project development skills,” said Exxon’s email response. “This gives ExxonMobil an advantage regardless of the pace of the energy transition.”


Tying sustainability to profitability is a theme running through Engine No. 1’s portfolio, James said, which is why the hedge fund took a stake in General Motors. GM.N, where the board fully supports management’s plans.

Battery-powered electric vehicles create an opportunity for General Motors to gain a huge market share this decade, James said.

“Japanese automakers have made a bet that plug-in hybrid electric vehicles are the future, not battery electric vehicles, and we believe this is a mistake by Japanese automakers and an opportunity for GM and Ford. FN,” he said.

“In my life, GM has not had the opportunity to gain as many shares as they will in the next 10 years.”

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(Reporting by Pratima Desai; editing by David Evans)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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