ExxonMobil Softens Tone on Climate amid Shareholder Pressure

May 29, 2008
The company insists that oil and gas, not alternative fuels, are the near-term solution to global energy demand.

ExxonMobil took a more conservative approach on environmental responsibility and the need to invest in alternative energy sources on May 28 in the face of strong opposition from shareholders. But the company insisted that oil and gas remain the near-term solution to global energy demand.

ExxonMobil CEO Rex Tillerson said the company was focused on "safely and reliably meeting the growing energy demand while working to reduce our impact on the environment." But he cautioned that while the use of alternative energy such as wind, solar or biomass power is expected to grow dramatically, it will nonetheless only account for about two percent of global energy demand by 2030.

Tillerson faced a minor uprising on May 28 from shareholders claiming the oil titan is failing to live up to its responsibility as a corporate citizen and needs to find more environmentally friendly energy solutions. Shareholders pressed for greater accountability in terms of executive pay, political contributions, nomination of directors and environmental impacts. They also asked ExxonMobil to set goals to reduce greenhouse gas emissions and to develop more alternative energy solutions, during a contentious four hour meeting. All 17 resolutions were voted down, but several garnered the support of more than a third of investors, including a proposal to separate the positions of chairman and chief executive officer. That proposal and several others were supported by a majority of Rockefeller family members, whose ancestor John D. Rockefeller created Standard Oil, the main forerunner of the current company. "The Rockefeller family believes now is precisely the time for ExxonMobil, with its strong financial performance, to take the long-term steps to increase shareholder value," family spokesman Peter O'Neill told the meeting. "All of ExxonMobil's acknowledged strengths are no guarantee that it will remain flexible and visionary in light of the changing energy realities that lie ahead."

Several investors expressed frustration with the activist shareholders. "These poseur shareholders view Exxon as a means to advance their anti-people, anti-business, and anti-Exxon social and political agenda," said Steven Milloy, portfolio manager of the Free Enterprise Action Fund. "For those shareholders who don't like the oil and gas business, get out," he said. "The rest of us will be quite happy to purchase your shares and enjoy the profits of true social responsibility."

Tillerson's remarks were a departure from last year's meeting, when he essentially told shareholders they should look to competitor Royal Dutch Shell if they wanted to invest in alternative energy. "At ExxonMobil we recognized that as we meet the energy requirements of the world's economies and societies we must be relentless in our efforts to protect the environment for future generations," Tillerson told shareholders at the annual meeting in Dallas, Texas. "The way to deliver meaningful environmental improvements in the short and medium term is to fund ways to improve the efficiency with which we use traditional fuels and develop and deliver technologies that will substantially reduce their environmental impacts."

Tillerson highlighted the company's investment in reducing flares during refinement, limiting oil spills to just a teaspoon per million barrels transported, and working with automakers to develop more fuel efficient vehicles through use of hybrid batteries, lighter materials, and better engine oil and tires.

Copyright Agence France-Presse, 2008

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