Navigating the line between opportunity and uncertainty in the ESG boom
When Engine No. 1 succeeded in seating three new directors on ExxonMobil’s board in June 2021, the move was widely hailed as a David versus Goliath moment. And rightly so: The hedge fund, which launched in late 2020 with $250 million in assets, owned a mere 0.02 percent of the energy giant’s shares.
Engine No. 1 had waged a proxy campaign that savaged the company for its lackluster financial performance and lack of a clear path to a low-carbon future, ultimately gaining the support of ExxonMobil’s largest shareholders, including Vanguard and BlackRock. Since the election of its new directors, the company has declared its intention to achieve net-zero greenhouse gas emissions by 2050. By February 2022, its stock price had soared by more than 90% — roughly doubling competitors’ gains at a time when oil prices were booming.
This piece originally appeared in Stanford Business Insights from Stanford Graduate School of Business. To receive business ideas and insights from Stanford GSB click here: (To sign up: https://www.gsb.stanford.edu/insights/about/emails)