Exxon Rejected Net Zero Pitch After Proxy Loss, Citi Banker Says



David Wethe and Kevin Crowley
Thu, September 30, 2021, 

(Bloomberg) -- Exxon Mobil Corp. rejected a pitch from a Citigroup Inc. senior investment banker to commit to a target for net zero emissions even after shareholders staged a revolt over the company’s climate policy.

Stephen Trauber, co-head of the bank’s newly created natural resources and clean-energy transition group, said he met with the oil giant’s executive committee right after it lost three board seats in June. Activist investor Engine No. 1 ran a successful proxy campaign as it pushed for a net zero target. Trauber said he urged the oil giant to reconsider its position.

“They looked at me and said, ‘That’s great, but we don’t know how we would get there. We can’t commit to that if we don’t have a plan to get there,’” he said Thursday during the webcast of an event hosted by Rice University’s Baker Institute for Energy Studies and law firm Baker Botts LLP. “I assured them most companies today who have committed to net zero don’t have a plan on how to get there, but they’re working to get there.”

Trauber’s comments offer a rare glimpse inside Exxon’s inner sanctum as it grapples with intense external pressure to follow the example of European rivals Royal Dutch Shell Plc and BP Plc, which have pledged to eliminate on a net basis not only their own emissions of greenhouse gases but those of their suppliers and customers as well.

Asked to respond to Trauber’s account, Exxon said in a statement that it routinely evaluates its climate pledges and will provide updates on its strategy “to reflect the changing landscape.” The company hasn’t committed to any net zero goals but has previously announced various emission-reduction plans including the reduction its so-called methane intensity by as much as half by 2025.

According to Bloomberg’s Environmental scores, Exxon scores 3.5 out of 10 on greenhouse gas emissions management, which measures performance on metrics including gas flaring and emissions from its own operations. A score of 10 indicates the highest possible performance. Bloomberg’s environmental, social and governance scores are based on company-reported data.

Trauber also criticized the divestment of assets by major oil companies in order to achieve lower emissions. He said the largest companies have the lowest cost of capital and thus are best equipped to tackle the lowering of emissions from those operations, rather than just passing on the problem to another owner.

“There’s lots of dialog about should we create ‘Good Co’ and ‘Bad Co,’ like the banks used to do after the financial crisis,” Trauber said, describing a possible way in which oil companies could manage their dirtiest assets.

“Greenhouse emissions and carbon emissions don’t go away just because you sell off that asset,” he said. “I think we need to find other ways to do this where we’re not pushing the burden to companies that least are able to handle that burden.”

(Updates with comments from Trauber in last paragraph)

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