Investors raise pressure on ExxonMobil's net zero strategy

Organisations and investors are piling pressure on ExxonMobil after it published a net zero emissions progress report

Pressure is mounting on ExxonMobil after its progress update on plans for net-zero operational emissions by 2050 sparked major investor withdrawals.

UBS Asset Management and Nest, the UK's largest pension scheme, pulled out their investment and Imperial Oil, a Canadian refining firm primarily owned by Exxon, less than a month ago, cited insufficient progress in managing climate risks as the reason for their divestment.

Organisations and investors are piling pressure on US-based oil and gas major after it failed to set targets for Scope 3 emissions, raising questions about the firm’s efficacy - or even seriousness - in managing climate risk. 

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’s report on net-zero emissions progress state?

The report 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. 

It 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.

During the next six years, it plans to invest more than $15bn on initiatives to lower greenhouse gas emissions, and a significant share is focused on scaling up CCUS, hydrogen and biofuels.

Critics recoil at ExxonMobil’s decarbonisation strategy for net-zero

Exxon's 20-30% target, and its brief explanation of Scope 3 emissions, have been 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 730mn metric tonnes of CO2 in 2019 and has calculated 650mn 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. 

ExxonMobil completed the sale of most of its non-operated upstream assets in the UK central and northern North Sea to Neo Energy in December. The $1bn-plus sale price has additional upside of approximately $300mn in contingent payments based on potential for increase in commodity prices (click here).

• Join global business leaders and sustainability experts taking meaningful action at Sustainability LIVE, held at Tobacco Dock, London, 23-24 February 2022. Register to attend today! Click here to learn more.

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