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May 27, 2021 at 03:43 PM
What You Need to Know
- Both fund companies voted for a portion of a dissident slate of nominees to Exxon's board, two of which won.
- Morningstar's Jackie Cook says this is the first time she’s seen a proxy context waged over an ESG issue.
- BlackRock and Vanguard voted for new nominees to help Exxon be more aggressive addressing climate change risks.
BlackRock and Vanguard were among the major shareholders whose votes helped to install two new members on ExxonMobil’s board of directors, dealing the oil giant a major defeat in the election of board members at this year’s annual (virtual) shareholders meeting.
The two fund giants, which together own approximately 14% of ExxonMobil shares, according to reports, supported portions of a dissident slate of board nominees brought by a Engine No. 1, an activist, purpose-driven investment firm that sees ExxonMobil’s response to the global climate crisis as far too weak to help achieve net zero emissions by 2050, putting shareholder value at risk. Engine No. 1 put forth a slate of four nominees, all with experience in the oil and gas or renewable energy industry.
BlackRock supported three of the nominees. Vanguard supported two of them. State Street Global Advisors, another large institutional owner of ExxonMobil shares, did not respond to requests about their proxy votes.
In its Investment Stewardship Vote Bulletin, BlackRock, which has equated climate change risk with investment risk, said “more needs to be done in Exxon’s long-term strategy and short-term action in relation to the energy transition in order to mitigate the impact of climate risk on long-term shareholder value.”
It noted its support for Engine No.1’s advocacy for more investments to meet more ambitious long-term emission targets and the need for new board members with fresh perspectives and experience relevant to energy transition.
Vanguard, on its Investment Stewardship Insights website, noted that the lack of energy sector experience on Exxon’s board as well as questions about board independence and the “pressing need for Exxon to to better align its climate strategy with target setting in line with global peers and public policy efforts related to climate risks.”
Both firms also supported other shareholder proposals (not from Engine No. 1) disclosing Exxon’s lobbying payments and lobbying efforts, and BlackRock voted in favor of a proposal for analysis of the impact of the International Energy Agency’s Net Zero 2050 scenario on Exxon’s financial position and long-term strategy. The proposals on lobbying were approved by shareholders, according to preliminary results released by Exxon. The proposal connected to the IEA’s net zero scenario did not.
