European companies such as BP, Royal Dutch Shell and Total have been falling over themselves to espouse carbon-lowering strategies. But American giant Exxon Mobil, long the bête noire of Big Oil for climate campaigners, has remained unrepentant about its addiction to crude.
That’s why the successful attempt by Engine No 1, an upstart New York hedge fund, to put “green-tinged” directors on the board at Exxon’s shareholder meeting is such a significant moment for the burgeoning ranks of ESG (environmental, social and governance) activists. The Economist called it “the biggest rebuke to the firm’s management in living memory”, while the FT said the vote would be “a verdict on the future of the oil industry”.
The result was the culmination of months of pressure on Exxon shareholders such as BlackRock and the CalPERS and CalSTRS pension funds. The issue has sparked a lively debate on climate-friendly rhetoric and what drives healthy returns. “Even if the dissidents do not win outright,” says The Economist, “there are reasons to think that [Exxon boss Darren] Woods is unlikely to emerge from the proxy battle as brashly self-confident as he and his predecessors have from previous dust-ups.”
Granting board seats to climate-friendly directors might not bring “a meaningful change in strategy such as large investments in renewables”, says financial analyst Allen Good, but it’s a signal that Exxon’s shareholders “don’t think current initiatives have gone far enough”.
And they are not alone. This week an investor resolution at Chevron, the second largest US oil producer, called on the company to set tougher pollution targets. And a court in the Netherlands has ordered Royal Dutch Shell to reduce its 2019 emissions levels by 45% before 2030. Big Oil, it seems, is finally on the defensive.
The Wall Street “woke-lash”
Is “woke capitalism” on the retreat? The Telegraph’s Matthew Lynn hopes so, having spotted a “woke-lash” on Wall Street: one pressure group pushed back against companies that put left-wing politics over consumer interests, and another is planning a grilling at AGMs for chief executives “overtly supporting” woke causes. American money, he claims, is “pouring into tracker funds that invest in companies broadly supportive of traditional values”.
The problem is that the activists are a tiny, unrepresentative clique who “speak for no one”. “Time fussing over gender issues, deferring to extremist elements of Black Lives Matter, forcing managers on to diversity courses and fretting over [the] colonial past” is a distraction for large companies.
Citing the M&S “LGBT sandwich”, the Co-Op’s “gingerbread person”, LGBTQ Lego and The Beano’s removal of the name Fatty in favour of Freddy, Lynn calls for a British equivalent of the recently launched American Conservative Values ETF, a fund that deliberately avoids liberal companies such as Twitter, Nike and Facebook. “Business has always had a very simple ‘social purpose’: making and selling a decent product at a fair price and paying staff and suppliers on time. It is not as easy as it sounds – and anything that takes attention away from that is a dangerous waste of time.”
At last, some sparks at M&S
Do you go with the critics or follow the money? Marks and Spencer, which reported a £200m loss for the year to 3 April, has sorely tested investors’ patience over the past 20 years, with “turnaround” promises and false dawns repeatedly dashed by disappointing performance. So this week’s claims by veteran M&S chairman Archie Norman that the pandemic has finally provided the impulse for change, and that the bellwether retailer is again set to become a growth business, were taken with a pinch of salt in some quarters.
The quality of the company’s clothing range, continuing doubts about its appeal to the young and suggestions that it remains behind the online curve were among the laments from sceptical Times readers contributing to the newspaper’s online comments section. But this week’s jump in the share price suggests other investors may be prepared to give M&S the benefit of the doubt. Paul Summers of The Motley Fool is one such, although he points out that better options are available in the market: “I’d wait to see signs of real progress before adding shares to my portfolio.”