Lucy Coutts, Investment Director, JM Finn commenting on the implication of this week’s Dutch court decision on Shell and ExxonMobile’s activist investors:
“This was undoubtedly a step change for the oil majors. It is unprecedented that courts can now dictate the corporate strategy of a major emitter of greenhouse gasses, with the court labelling Shell as “partly responsible” for climate change. These are incredibly strong words.
“The even bigger story relates to ExxonMobil. Once the world’s most valuable company, it now has been forced to give up two board seats to a small activist hedge fund investor with the potential for a third once all votes are counted. Engine No. 1, has made its intention clear; to push the company to look beyond oil and gas development, claiming that it is an existential risk. The investor owns a minuscule percentage of the company, but it is backed by Blackrock which owns a higher percentage, who supported having the activist members on board. It was notable that Darren Woods, the CEO of ExxonMobil, last week told shareholders not to vote for the activist investor for fear that it would derail the company’s progress, and dividend. Given that the company is laden with debt to pay dividends, he should probably listen to his shareholders a little bit more. To echo Larry Fink, climate risk is definitely investment risk, and yesterday was a very, very big day for this. “