Expert, investor anger at ExxonMobil net-zero work continues
Investor patience is running out after a series of major divestments and activist board measures over anger at decarbonisation strategies.
Organisations and investors are piling pressure on US-based oil and gas major ExxonMobil after it published a progress report on its commitment to reach net-zero operational emissions by 2050. This followed a mammoth Scope 3 emissions for last year and has raised questions about the firm’s efficacy - or even seriousness - in managing climate risk.
UBS Asset Management and Nest, the UK's largest pension scheme, pulled out their investment from ExxonMobil and Imperial Oil, a Canadian refining firm primarily owned by Exxon, less than a month ago, citing insufficient progress in managing climate risks as the reason for their divestment.
Meanwhile, activist hedge fund and minority shareholder Engine No 1 managed to replace three members of the Exxon board with its climate-conscious candidates last year. Fellow activist shareholder Follow This has also reportedly filed a shareholder resolution to vote at Exxon's 2022 annual general meeting, hoping to make the company better plan its decarbonisation strategies.
What does ExxonMobil say in its report on net-zero emissions progress?
The report itself covers more than 150 possible actions Exxon could take to reduce its Scope 1 and 2 emissions with a plan to deliver net-zero by 2030 for its operations in the Permian Basin.
The report also reveals its new 2030 emission-reduction plans to achieve a 20-30% reduction in corporate-wide greenhouse gas intensity, a 40-50% reduction in upstream greenhouse gas intensity, a 70-80% reduction in corporate-wide methane intensity, and a 60-70% reduction in corporate-wide flaring intensity.
The company claims to have aligned these targets with the Paris agreement, the US and European Union's Global Methane Pledge, the US Methane Emissions Reduction Action Plan, and World Bank targets for Zero Routine Flaring by 2030.
Further, Exxon has simply stated that it would work with equity partners to tackle Scope 3 emissions.
Critics recoil at ExxonMobil’s flimsy decarbonisation strategy for net-zero
Exxon's 20% target and its brief explanation of Scope 3 emissions have been highlighted and criticised by experts.
The Intergovernmental Panel on Climate Change has recommended cutting at least 50% of global net emissions by 2030 to prevent the temperature from rising more than 1.5°C.
Oil and gas firms like ExxonMobil generate 80% or more of annual emissions from their Scope 3 alone. Exxon disclosed its Scope 3 emissions in its Energy and Carbon Summary earlier this year, revealing a staggering 730 million metric tonnes of CO2 in 2019 and has calculated 650 million metric tonnes in 2020 from petroleum product sales, higher than Canada's entire annual emissions.
These facts have caused tension among shareholders as PwC's latest research suggests two-thirds of 325 investor respondents want corporations to prioritise greenhouse gas emissions reduction in line with climate science.
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