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* ExxonMobil invested in projects it shouldn't have - Engine
No. 1
* ExxonMobil said it sees growth potential in low carbon
area
By Pratima Desai
LONDON, Dec 2 (Reuters) - A failing governance structure
propagated by a management without a strategy for the energy
transition was behind Engine No. 1's quest to bring independence
to ExxonMobil's board, Chris James, founder of the U.S. hedge
fund told Reuters.
Governments, companies and individuals are taking steps to
cut their carbon footprints and enable the energy transition
which includes electric vehicles and renewable energy such as
wind turbines and solar.
ExxonMobil has been an outlier in transparency and
accountability in its environmental impact, James said in an
interview at the Reuters Next Conference.
"This is a company that has lost its social licence ... It
needs to look at the energy transition as an opportunity to be
part of the solution instead of the problem."
Three of four people with energy transition experience
nominated by Engine No. 1 joined ExxonMobil's board earlier this
year.
Oil majors such as BP facing mounting pressure from
regulators and investors have moved to develop cleaner energy
and divest from fossil fuels, a primary source of greenhouse-gas
emissions that cause global warming.
ExxonMobil has instead invested in new projects in the oil
and gas arena that should not have been approved and wasted
capital, James said, adding that the company had some of the
most talented engineers in the world.
"Management has prevented these engineers from unleashing
the power they have to create value in the energy transition,"
James said, adding that ExxonMobil had outperformed Chevron
since Engine No. 1's intervention.
ExxonMobil's shares are up around 60% since November 2020
when Engine No. 1 bought them compared with roughly 30% for
Chevron.
In response to a request for comment ExxonMobil said: "We
evaluate our investments across a range of scenarios – including
net-zero pathways – and we look forward to sharing more details
in the coming months."
"There is significant growth potential in the low-carbon
opportunities where we can leverage our competencies in
technology, engineering, and project development," Exxon's
emailed response said. "This gives ExxonMobil an advantaged
position irrespective of the pace of the energy transition."
PLUG-IN HYBRIDS
Linking sustainability with profitability is a theme that
runs through Engine No. 1's portfolio, James said, which is why
the hedge fund took a stake in General Motors, where the
board is fully behind management's plans.
Battery powered electric vehicles, create an opportunity for
General Motors to win an enormous share of the market this
decade, James said.
"Japanese automakers have made a bet that plug-in hybrid
electric vehicles are the future, not battery electric vehicles,
and we believe that is a mistake by the Japanese automakers and
an opportunity for GM and Ford," he said.
"During my lifetime, GM haven't had the opportunity to gain
as much share as they will have in the next 10 years."
To watch the Reuters? Next conference please register at https://reutersevents.com/events/next/
(Reporting by Pratima Desai; Editing by David Evans)
