Exxon Heeds Activists: Announces Green Sustainability Unit

The climate tsars have spoken…and, big energy is taking note.

A major energy company just announced its intention to pony up some serious dough to invest in the future of green energy alternatives.

Exxon Mobil Corp revealed its newest division Monday…a business unit devoted to developing technologies to lower carbon emissions. Exxon says it will spend an estimated 3-4% of its total expenditures budget on a new project.

A Knee-Jerk Reaction or…a Sustainable Sustainability Project?

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Exxon’s move is seen, in part, as a reaction to both government and Wall Street pressure to create sustainable energy products for the future.

Between activist investors and the world’s biggest asset manager, BlackRock, saying it’s time to go green, Exxon seems to be reading the handwriting on the wall.

The BlackRock Effect

The CEO of BlackRock, Larry Fink, warned in a letter to investors last year that climate change would be “a defining factor in companies’ long-term prospects.”

“We are on the edge of a fundamental reshaping of finance,” Fink wrote.

This year, Fink took his theories a step further, writing in his annual letter to investors that he was calling on all companies “to disclose a plan for how their business model will be compatible with a net-zero economy.”

Given that BlackRock manages $9 trillion dollars in assets–or roughly half the size of the country’s GDP–that’s a call most companies must heed. Especially considering the former head of BlackRock’s global sustainability division is now head of the Biden Administration’s National Economic Council.

Low Carbon Solutions

Exxon’s new “low carbon solutions” business unit will invest $3 billion between now and 2025 on lower energy technologies, primarily projects to to capture carbon emissions from industrial processes (or from the air) and then store them underground.

Chief Executive Darron Woods noted the company’s robust R&D department that has been investing in “carbon capture” for years saying that, “With our demonstrated leadership in carbon capture and emissions reduction technologies, Exxon mobil is committed to meeting the demand for affordable energy while reducing emissions.”

Exxon Mobil will report earnings on Tuesday and is expected to announce a fourth straight quarterly loss.

Exxon Mobil — An Activist Target

Exxon Mobil has struggled amid the increasing pressure for clean energy and a challenging economic environment. Some activist investors have urged the company to pursue a investment in new technologies to help it reduce its carbon footprint. D.E. Shaw and Engine No. 1 LLC are said to be two activists allegedly pushing the company to make changes. As such, Exxon may reportedly announce changes to its board in an effort to help ensure sustainability efforts.

According to a report in the Wall Street Journal, the heads of Exxon and Chevron discussed a possible merger last year. The discussion are said to no longer be active.


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