With little chemical corporate news of note, we will focus on ExxonMobil today. The shareholder activism may be high but it is unclear to us what the activists hope to achieve, even if they are successful at the annual meeting. The ESG investment group has largely given up on energy and even if ExxonMobil changes strategy and agrees to spend more on carbon abatement it is unlikely that new investors will show up, especially if the new strategy is more costly. Despite all of its directional change and rhetoric, bp has underperformed ExxonMobil since Mr. Looney took the helm in early 2020. If ExxonMobil were to follow the bp playbook, it is not clear that shareholders would benefit.
Source: Bloomberg and C-MACC Analysis, 2021
We still believe that the most value-creative move ExxonMobil or any of the other majors could make would be large scale M&A, aimed at driving synergies, some of which would be returned to shareholders and some of which would be added to a ramp-up in capital spend to dramatically lower the carbon footprint of the business. It is still not clear whether shareholders would care unless “improving ESG” funds become as popular as regular ESG funds.