Sustainability's David Versus Goliath Moment
May 15, 2025
Engine No. 1 is an investment fund named after the oldest firehouse in San Francisco. They are the star in sustainability's favorite David versus Goliath story.
Coming into 2021, Exxon had just posted a $22 billion loss and been dropped from the Dow Jones Industrial Average, a group of 30 companies deemed to represent the economy, after 92 years.
Historically, activist investors bought stakes in companies to demand cost cuts, then sold their shares after stock prices rose, pocketing profits and moving on.
Engine No. 1 was a new iteration, blending financial arguments with climate activism. They had a list of demands for Exxon to help them prepare for a hotter world, starting with refreshing the board of directors with energy experience.
Despite owning a tiny 0.02% of the company, Engine No. 1 began building a coalition with the three financial giants BlackRock, Vanguard, and State Street, which controlled nearly 20 percent of Exxon's voting shares. Large pension funds from California and New York added their support.
It all came together in May 2021 when Engine No. 1 won three board seats at the company's annual meeting after a grinding campaign.
Since the campaign, Exxon announced emissions reduction targets for its Texas and New Mexico operations, investments in carbon-capture and hydrogen projects, and saw a rise in the stock beating its closest competitor, Chevron.
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