The Climate Yawns at Exxon ‘Coup’

An activist fund wants an oil giant to stop producing oil—except if it’s profitable.

Wonder Land: More than 100 corporation leaders have done a Davos by laptop to vilify Republicans and validate their progressive credentials. Image: Getty Images/iStock Photo

Behold a pseudo-event. Last week a tiny hedge fund, with 0.02% of Exxon ’s stock, originally sought to name 40% of the company’s directors; a great victory in the climate wars was declared when a shareholder vote appointed two of its nominees to an expanded board of 12.

Except the hedge fund may not be what you think, operating on behalf of anonymous, profit-seeking investors. Its capital is supplied entirely by its founders of five months ago, led by the 30-year hedge fund veteran Chris James of San Francisco. And strangely unfiduciary was its pledge to spend $30 million in a proxy fight over an Exxon stake worth $50 million, which would tend to put its investors already severely underwater. Ditto the fund’s desire, as interpreted in many press accounts, for Exxon to exit the oil industry in favor of wind and solar, in which it has no expertise or advantage.

香蕉视频苹果下载Content-wise, Mr. James’s campaign makes a lot more sense as a variation on a familiar theme: activists substituting crowd-pleasing potshots at “big oil” for the climate policy victories they haven’t won. When you’ve failed to convince consumers to stop consuming oil, when you’ve failed to sway politicians to ban or even disincentivize its production, that’s when you go to oil company boards and insist that they voluntarily refrain from producing a legal product for which there is huge and inelastic demand.

香蕉视频苹果下载Of course the idea is absurd and Mr. James is not absurd. In the real world, the Biden administration has been in court many of the Trump administration’s pro-drilling actions, to the annoyance of environmentalists. It responded with five-alarm panic to the Colonial Pipeline shutdown, when voters on the East Coast couldn’t get gasoline. In the real world, oil shares are up sharply in 2021, after a rout in 2020 that had nothing to with Americans wanting to give up fossil fuels.

香蕉视频苹果下载Mr. James’s new activist fund, Engine No. 1, named after a San Francisco firehouse, is a repository of a mere $250 million, which I’m guessing is a fraction of his net worth—notably, the assets under management of his previous firm, Partner Fund Management, fell by a $4 billion last year around the time Mr. James’s stepped away.

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