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The Little Engine That Won an Environmental Victory Over Exxon

Chris James’s activist firm gained shareholder support by arguing that addressing climate change would be good for the oil giant’s bottom line.
An Exxon gas station in Houston.

An Exxon gas station in Houston.

Photographer: Callaghan O'Hare/Bloomberg

Chris James pulled off a feat that for years had eluded the Rockefeller family, giant pension funds, and money managers. In just six months—and after staking his own money—James’s tiny investment startup, Engine No. 1, won a victory over one of America’s most iconic companies. Its acrimonious six-month proxy battle against Exxon Mobil Corp., centered on its flagging performance and resistance to preparing for a low-carbon future, resulted in three dissident directors being elected to the company’s 12-member board.

The victory not only stunned the oil world and corporate America at large, but it also marked a coming of age for socially conscious investors who’ve long pressed companies to improve their environmental policies, often with mixed results. Engine No. 1’s proxy campaign may usher in a new age for them. “It opens up a new strategy,” says Timothy Smith, director of ESG shareowner engagement at Boston Trust Walden Co., who’s been speaking with companies and filing shareholder resolutions for 50 years. “There’s never been a case of directors being unseated for ESG issues,” he says.