It’s easy, even reflexive, to dismiss ExxonMobil as a villain in the climate narrative. For many responsible investors, the name conjures anger – a natural reaction to decades of documented disinformation campaigns underwritten by fossil fuel interests that questioned climate science and delayed global climate action. If you’re invested – figuratively and emotionally – in a low-carbon future, that anger is justified.
But in polarizing times, we shout over one another, unwilling to listen to the “other side.” Guilty as charged. So, I made it a point to listen to ExxonMobil CEO Darren Woods on the recent podcast Zero: The Climate Race, hosted by Bloomberg reporter Akshat Rathi’s.
Exxon in the Mirror of Accountability
Let’s start here: ExxonMobil’s role in delaying action on climate change is a matter of record. That said, companies are run by people, and people, boards, and priorities evolve. Trust is not given to companies but instead to the individuals shaping their current strategies. Dismissing Exxon out of hand risks missing an opportunity to engage critically with the present and potentially influencing its future trajectory.
ExxonMobil’s singular focus remains on maximizing shareholder – not stakeholder – value. Woods makes no apologies for this and arguably shouldn’t. In the U.S. market, this approach aligns with its legal obligations and shareholder expectations. The boardroom calculus is straightforward: ExxonMobil’s responsibility is to deliver returns, not champion global decarbonization.
Contrast this environment with Europe, where regulatory frameworks and market structures tilt toward stakeholder-oriented governance. European oil majors like Shell and TotalEnergies are often more willing – or pressed – to embrace climate-forward initiatives. Expecting ExxonMobil to mirror European peers overlooks its fundamentally different playing field.
More of the Same… and More
A good portion of the interview was more of the same. Delay and deflect. For example, Woods claims the world needs a product-focused carbon accounting system to align emissions tracking and reduction efforts. That sounds nice, but it’s largely nonsense. We already have one – the GHG Protocol. While it isn’t perfect (double counting exists), the framework is globally adopted and sufficient for guiding emissions disclosures and reductions. Every accounting system operates on assumptions, and standards vary across jurisdictions. Woods’ insistence on the need for a new system feels more like a delay tactic than a genuine proposal for progress.
“Writing off ExxonMobil entirely cedes influence in areas where it can tangibly contribute to climate solutions, albeit incrementally and well short of the goals set forth in the Paris Agreement.”
But parts of the interview were not more of the same. Greenwashing claims aside, ExxonMobil is investing a material percentage of its free cash flow in low-carbon solutions, as its TV ads suggest. Woods made it crystal clear that ExxonMobil’s strategy is to prioritize low-carbon investment only in areas where it sees competitive advantages that will increase shareholder value. This rationale drives its focus on technologies like carbon capture and hydrogen, areas where ExxonMobil believes it can leverage its scale and technical expertise. It also explains ExxonMobil’s support for parts of the Inflation Reduction Act (IRA) and advocacy for consistent climate policies. For all its criticism of regulations, ExxonMobil benefits from many of the IRA’s incentives and recognizes the financial and operational risks if president-elect Trump were to dismantle the IRA or withdraw the U.S. from the Paris Agreement.
Engagement Without Illusion
For investors who believe that companies like ExxonMobil have a responsibility to drive meaningful climate action, Woods’ comments reaffirm what we already know – ExxonMobil will prioritize shareholder returns over decarbonization. Yet, writing off the company entirely cedes influence in areas where it can tangibly contribute to climate solutions, albeit incrementally and well short of the goals set forth in the Paris Agreement.
For investors purely focused on maximizing risk-adjusted returns, ExxonMobil’s strategy merits consideration. The company’s return to more disciplined capital allocation, combined with its ability to leverage its global scale and invest in technologies like carbon capture and hydrogen, provides exposure to emerging transition solutions without abandoning its core cash flows. From a financial perspective, ExxonMobil argues that it is built to thrive in a world of incremental change.
Final Thoughts: Pragmatism Over Idealism
Ultimately, one’s judgment of ExxonMobil inevitably reflects one’s values. Some investors will never forgive the company’s role in delaying climate action while continuing to produce fossil fuel products, the primary driver of global warming. While it may seem counterintuitive, investors concerned about climate outcomes should approach ExxonMobil with critical and unemotional analysis. Through continued engagement, investors may push the company to take meaningful steps – though modest and incremental – that align its profitability with a decarbonizing world.
ExxonMobil isn’t pretending to be a climate hero, nor does it aspire to lead the transition, (or, frankly, want to see it happen). Nevertheless, one cannot ignore the company’s selective investments in climate technologies, its measured support for IRA provisions, and its advocacy for the U.S. to remain in the Paris Agreement. Woods’ statements reveal a corporation that is acutely aware of its position in a decarbonizing future.
Chris Ito
CEO
FFI Holdings