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A Major Shareholder Has Divested From Exxon

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One of ExxonMobil’s biggest shareholders, Legal & General Investment Management, has removed the company from its $6.3 billion “Future World” funds over its failure to respond to climate change. LGIM, among Britain’s largest asset managers, has divested Exxon from the funds, which include companies that are socially responsible. LGIM says it will use its remaining Exxon shares that aren’t in the Future World funds to vote against CEO Darren Woods' re-appointment as board chair in 2020. What does this mean for Exxon? Though LGIM is one of Exxon’s top 20 shareholders, its divestment puts only a small dent in Exxon’s equity -- LGIM owns about 0.6% of the company’s shares. Still: This is a fairly significant symbolic step. Big asset management companies or pensions like LGIM often pressure companies to better address their influence on climate change or make themselves more sustainable, but rarely follow through with divestment Why now? LGIM told Bloomberg it took the step to divest because of the risk climate change poses to long-term investing, and fund holders' inability to directly engage companies as investors: “People in the street who have their own pension that’s going to mature in 30 years time don’t get a chance to talk to Exxon themselves.” Bigger picture: It’s not just LGIM. A shareholder proposal to break up Woods’ dual role as chair and CEO received a considerable 41% of the vote at the company’s shareholder meeting this year. That followed a larger, well-publicized campaign to vote against Woods’ re-election after the SEC allowed the company to leave a climate change proposal off the ballot. ---Elizabeth Thompson Photo: REUTERS / LUCAS JACKSON