Investors around the world are driving businesses to be more responsible about environment, social and governance (ESG) factors. Why are investors taking matters into their own hands and what can fossil fuel-dependent businesses do about it? Kaisa Hietala, who was recently appointed as a board member of ExxonMobil via shareholder activism, tells us.
I spent 20 years within the oil and gas industry, mainly working for an oil refining company called Neste here in Finland. I'm a geophysicist by training, which is directly linked to oil and gas exploration, but I'm also an environmental scientist. I spent 10 years learning the whole value chain, from upstream to downstream and refining. I then spent 14 years building the renewables business for Neste. I stepped down in 2019 and was contacted by a group called Engine No.1. They were running a campaign to find potential candidates for the board of ExxonMobil. And that's how I got involved.
This particular case is quite unique because it was not only about short-term profits and short-term shareholder value, but about the long-term role of players within the oil and gas industry. And Engine No.1 is a fund which took on the challenge and decided to start a campaign against Exxon.
I have always understood both sides. The traditional oil industry has created massive developments, bringing energy to the world and creating lots of jobs. But I also understand the criticism from the outside. I mean, this industry is responsible for very large projects and even natural catastrophes in the past. It is also providing or has been providing, fossil energy, which is the key reason and a driver for climate change.
But I still want to be part of the solution, rather than being part of the problem. So, to be part of the industry and trying to change it and really driving for change has been a key solution – how to balance the fact that we all need energy, but then at the same time, we can't continue emitting CO2 as much as we are doing today.
Nowadays, money is clearly looking for companies that have good sustainability credentials. And I think the fact that these investments are becoming more and more profitable will just keep directing the sort of big investments towards green investments. Nowadays, at least here in the Western world, it is sort of a baseline expectation that companies are operating in a sustainable manner. And those companies who can combine a good business into this, I think they have a great future ahead of them.
Well, that's why we are talking about transition. We need many solutions. Fossil energy has been such a large solution for such a long time and the world has developed a lot because of the abundance of energy. However, this source of energy is no longer the right one, unless we can start to take CO2 emissions away.
So, it is about the energy transition. But then the key questions are: what would be the fastest way to go forward in order to start to make an impact, how much time do we have, and how are the policymakers supporting this transition? All of these elements will shape the roadmap when going forward.
I think it starts from the board and top management. They really need to be willing and wanting to look to the future, even though sometimes it's not nice. If your company is a large fossil energy producer, and you see scenarios where fossil energy does
not necessarily play a large role any longer, it makes you worried and concerned.
But those companies who dare to look into the mirror and say, ‘okay, we believe we can navigate through this transition and be reborn as a new company and continue to exist, creating jobs for people’, I think eventually, they are in a better position. This is because they are building a culture that is tolerant of change – or even a culture supportive of change. I think that the role of the board and management alike is to create a North Star – the sort of long-term target and vision of where the company wants to go. Then, it is the people within those companies who are implementing that change.
This interview has been abridged. To hear the complete conversation, please listen to the podcast.