Exxon board ouster marks turning point; why shipping emissions can't be ignored

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After years of escalating their engagement with oil majors on climate change, investors last week carried out their threat to begin replacing board members of companies that fail to tackle the issue in a comprehensive fashion. At Exxon Mobil's annual meeting, shareholders replaced at least two directors with ones put forward by an activist investor. The vote shows that just having a climate plan is not necessarily enough to satisfy investors.

In this week's newsletter, we dive into the implications of shareholders flexing their board booting muscles at the Exxon meeting. And we examine an oft-ignored area of companies’ supply chains that will play an important role in decarbonization goals — the maritime shipping industry. We also take a look at new research that finds female CEOs may be leading the way in showing how companies can embrace leadership geared toward a diverse range of stakeholders — from shareholders to employees to local communities.

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Exxon board ouster marks tipping point for investor climate engagement

Exxon's board member ouster was not the only blow to oil majors last week: A Dutch court ordered Royal Dutch Shell PLC to accelerate emissions reductions and cuts its carbon footprint by 45% globally by 2030. And an investor vote called on Chevron Corp. to come up with a plan for curbing emissions at the customer level. Oil majors cannot ignore the possibility that investors will escalate their engagement tactics and vote against uncooperative board members. The vote should put companies on notice to take threats of votes against board members more seriously and to move quickly to address climate change.

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Your climate change goals may have a maritime shipping problem

The international cargo and container shipping industry plays a central role in global supply chains, but until recently it has made few inroads toward decarbonization. That needs to change if the world is going to achieve net-zero emissions by 2050. Moreover, unless the industry changes course quickly, many supplies that other industries need to support their low-carbon transition — everything from wind turbine blades to lithium-ion batteries for electric vehicles — will be transported on cargo and container ships fueled by fossil fuels.

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Podcast

Carrot and stick: Why companies like Chipotle are linking executive pay to ESG targets

What do Chipotle, an air conditioning company and one of the world's largest activist investors have in common? They are all tackling the challenge of how to incentivize executives to advance corporate sustainability goals. We talk with officials from two companies that have tied annual executive incentive bonus to ESG goals as well as a European activist investor that is pushing companies to make those incentive metrics more robust.

Listen on SoundCloud; Listen on Spotify; Listen on Apple Podcasts

New research shows women CEOs exemplify leadership style needed in tough times

The unprecedented challenges of the COVID-19 pandemic and growing emphasis on stakeholder capitalism have created an exceptional need in the global business community for adaptive leadership geared toward a diverse range of stakeholders — from shareholders to employees to local communities. Women CEOs may be leading the way in demonstrating such leadership, even as they remain small in number, according to research from S&P Global and Paris 2 Panthéon-Assas University. Our report shows that CEOs who are women demonstrated different leadership styles than men during the COVID-19 crisis.

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New methane rules could cut key risk for oil, gas sector amid energy transition

As the oil and gas industry faces increased pressure to curb its climate impacts, the Biden administration is preparing to issue new methane emissions rules that some industry observers say could better position the sector in a decarbonizing world. The Obama and Trump administrations issued, repealed and rewrote methane emissions rules for the sector, fighting through multiple industry and environmental court challenges along the way. Now, as the U.S. works to hit emissions-reduction commitments under the Paris climate accord, methane is one area where the nation can make significant progress with near-term impacts.

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