Last year, Exxon Mobil, the oil giant, suffered from its first annual loss in decades as energy use plummeted because of the global pandemic. Energy prices fell and at one point, they even went below zero, causing the company to lose $22.4 billion. The company was forced to make drastic cuts to its investment plans and workforce due to the downturn. Exxon is also under pressure from climate-change activities and it said that it will be expanding its focus towards climate-friendly technology. It said that it was launching a new business that would be focused on using carbon emissions capture for reducing pollution, a strategy that Exxon uses for its own operations as well.
The company also announced that it was planning to invest $3 billion in the next four years in ‘lower emissions solutions’. Darren Woods, the chief executive at Exxon, said that last year had been an unprecedented event that had resulted in dramatic action in the industry as well as the company itself. As recently as 2013, Exxon had been ranked as the most valuable public company in America. In 2019, the company had reported a full year profit in excess of $14 billion. But, the collapse in energy demand and price last year due to the coronavirus crisis caused the company’s revenue to plunge by more than 30%, thereby settling at $181.5 billion.
The company had to write down the value of its shale business by almost $20 billion, cut down its spending by nearly $8 billion and also had to take billions of dollars in debt. The firm said that they would be able to reduce costs through additional cuts, including to workforce, by $6 billion per year by till 2023. The financial struggles faced by Exxon are not unique. Annual losses were also posted by the company’s rivals, Chevron and BP. However, the share price of Exxon has fallen in recent years and it is seen to be lagging behind other oil and gas companies in adapting to the pressure brought about by climate change.
Activist investors and environmentalists are targeting Exxon and calling for changes to its strategy and overhauling of its management. The current campaign is being led by activist firm Engine No 1, which said that the company’s plans will only allow it to succeed if there is not a shift in energy demand in the long-term. It also dismissed carbon capture and referred to it as poor long-term planning.
The firm said that the latest announcements by Exxon don’t change the company’s long-term trajectory and will not help it succeed in a changing world. The plans were defended by company leaders on Tuesday and they said that a range of investment strategies had been considered, depending on whether oil prices may drop once more. They also said that carbon capture and storage was a business opportunity, as governments all over the world are increasing their efforts to combat global warming. Mr. Woods said that carbon capture would be helpful in achieving the aims of the Paris Climate Agreement.
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