Why oil majors are reluctant to move away from fossil fuels
Green energy and ESG initiatives (Environmental, Social, and Corporate Governance) are seemingly falling out of favor as Big Oil producers double down on traditional fossil fuels amid large mergers.
Yahoo Finance Senior Reporter Ines Ferré highlights the energy sector pushback to carbon emission proposals.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
RACHELLE AKUFFO: Interest in green energy has gone up overall. But it appears that big oil is lagging behind others in the area. Major oil producers like Exxon and Chevron have been fighting activist investors in the boardrooms and doubling down on fossil fuels with acquisitions since last year. Let's get to Yahoo Finance's Ines Ferre to learn more. Hey, Ines.
INES FERRE: Hey. Yeah, that's right. On Friday, two impact investors, two impact shareholders dropped their climate proposal after ExxonMobil had filed a lawsuit for that proposal not to go forth in front of its shareholders-- in front of a shareholder vote, with ExxonMobil basically saying that these funds have extreme agendas and that they're diminishing the company's existing business.
In a statement to follow this, one of the impact fund said, "Given Exxon's preference to fight a battle in court rather than allow shareholders the freedom of a vote at its annual meeting, we decided to withdraw-- to withdraw the climate proposal."
Bottom line is that the oil companies have been themselves announcing pledges and initiatives when it comes to green energy. But activists-- green activists feel that this isn't enough. And you do have sort of both sides of-- both shareholders who want more green initiatives. And then you've got shareholders who want companies to scale back on some of their green initiatives and to keep the profits flowing.
You'll recall that last year, for example, the two US majors, Chevron and ExxonMobil, reported profits, their second largest profits in 10 years. And that's despite oil coming down about 10% last year.
Nevertheless, for example, BP, you had a hedge fund last week which said to BP that it needs to scale back some of its green scale initiatives because BP is-- it's depressing BP's share price. Now, a BP spokesperson said in a statement that the company continues to receive support for its strategy from shareholders.
I also spoke with a senior lecturer from Harvard Business School who wrote a case study on ExxonMobil basically saying there's no real good answer here because they're trying to sort of go towards both types of shareholders.
And there is one that's winning here according to Mark Kramer from Harvard Business School. He believes that the shareholders who want profits now are sort of winning this battle as opposed to shareholders that want more green initiatives which require more capital.
AKIKO FUJITA: Yeah, points to bigger challenges ahead for those oil majors. Ines Ferre, thanks so much for that.
INES FERRE: Thank you.
