Darren Woods is CEO of ExxonMobil, one of the world’s largest oil and gas companies. In this episode of Acts of Leadership, Jordan Greenaway and Sam Patchett discuss the company’s plans for the future, as Darren seeks to lead the way and show the world that ExxonMobil are ready for the energy transition.
Jordan Greenaway: Welcome back to Acts of Leadership, our new podcast from Transmission Private. Each episode we discuss a news story that is making headlines for the right reasons, whether it's a CEO leading the way, an investor rethinking how to make an impact, or a brand that is bucking the trends. I'm Jordan Greenaway, Managing Director of Transmission Private. Let's get started.
On this episode, we're talking about ExxonMobil, and its CEO Darren Woods. Today I'm joined by Sam Patchett again – our Head of PR at TP. So Sam, can you just give us a rundown on who Darren actually is?
Sam Patchett: Thanks Jordan. So Woods originally joined Exxon in 1992. He joined the refining side of the business, he was there for 24 years, and he became the CEO in January, 2017. He's number 34 on the Forbes list of the most powerful people in the world, and he has really ambitious growth plans for the company, including drilling in the Permian Basin of Texas and New Mexico, and in the Bakken Shale formation in North Dakota.
In 2017, he made headlines by urging President Trump to remain a party to the Paris Climate Accord. So, he has got a very established public profile, he's been with the company for a long time.
Jordan Greenaway: And he's highly associated with the gas and oil industry. I think we both agree with that. So that's why I think his comments in this particular interview are really, really interesting Sam. So today we're talking about a particular interview that he did with CNBC. Can you just take us through that interview quickly, Sam?
Sam Patchett: The interview is part of a new documentary: ExxonMobil at the Crossroads, and it explores the company today and their plans for the future. The company has faced issues with perception among shareholders and the public in recent years, and Woods is very much leading the way to show the world that they have an eye on the future and they're ready for the energy transition.
This interview in particular is a very good example of that. Especially his bold prediction that every new passenger car sold in the world will be electric by 2040.
Jordan Greenaway: Thanks Sam. Really kind of eye catching headline here – would we expect one of the most well-known, most profitable oil and gas companies to be predicting effectively their demise as an oil and gas producer? It brings back to mind for me, an interview I read a year or two ago, from one of the big tobacco companies, when they said that they were investing in bringing about a smokeless future.
This is kind of ExxonMobil and Darren himself getting ahead of the wave of discontent on the investor front, the consumer front, the market and geopolitical front, to say actually – we are part of the solution here.
Sam again, thanks for that outline. So now we've covered what he said, but why did he say it? Why is the CEO of ExxonMobil, one of the leading gas and oil companies, saying this?
Why would Darren Woods make these claims?
Sam Patchett: Let's just take a step back, and to me, if you say the word Exxon, you think fossil fuels – you think dirty polluting oil firm that's pumping the gas guzzling cars of Texan truckers. And in some ways they're refreshingly upfront about this – if you go onto the Exxon website, their main image is an oil rig. BP has a photo of a flash new solar panel, Shell has an image of a dad teaching his little girl how to ride a bike on their front page. So they're refreshingly honest about this, and all these gas legacy companies have a lot of catching up work to do, and they're all building this transition to renewable energy as a core part of their messaging and their positioning.
In the last two days, I've heard two Shell ads, one on the tube, one on a podcast I was listening to. They're taking a slightly different take, they're saying we're still producing oil and gas, but we're also generating renewable energy.
And I think it's really worth talking about the timing of these comments too, Jordan. What are your thoughts?
Jordan Greenaway: There's the nice, positive, non-sceptical take on it, and then if you dig beneath the headlines there might actually be some secondary reasons for these comments. So let's talk about the positive stuff first, and he touches on what you've just said there, Sam.
Companies are wanting to be part of the solution rather than part of the problem. And in fact, more than anything else, if they're not part of the solution, do they have a future in 10, 20, 30 years? So the optimistic read is that there are some savvy, thoughtful, strategic people sitting around a boardroom, looking in their telescope as to what the future looks like and saying, actually guys, you know: we've had a really successful company, in fact, ExxonMobil's been around for a hundred years, one of the few companies that have existed on the US stock exchange for so long – and saying, if we wanna exist in the 2030s we've got to change.
Complacency breeds to corporate death. So we've gotta reinvent ourself, and actually, rather than seeing our identity through the lens of an oil and gas company, let's reinvent ourself as an energy company more generally.
Before I go on to the kind of more sceptical read, I think it's also important to point out that we're in a global fight for talent, we're in a global fight for capital, and if you want money, and if you want the next generation of top employees joining your companies, then you can't get them in the boardroom at the interview and say: oh, this is all for show. You need to show them your vision and mission.
Actually this message is the important part of all components of the business, whether it's finance, marketing, HR – that's the positive read.
There's a more sceptical read. If you start to dig under the story here, you'll start to find that back in 2021, or maybe even back in 2020, DE Shaw, one of their hedge fund investors put two additional directors on the board and they were shaken awake and said: if you don't change now, we are gonna pull out our investment, or we don't think you have a future as a company. Then there was an activist investor in 2021 called NG number one, who said: we're investors, we have a purpose, we have a mission, we're a small investor in ExxonMobil, but we are gonna run an activist campaign against you to change the way that you work.
We don't think you're moving fast enough. So you better listen to us, otherwise we're gonna create a lot of havoc for you, in the media and investment circles. They were on a fairly successful, activist campaign, and I think they were trying to install four people on the board and I think they successfully got three extra people on the board.
So maybe, actually, if there hadn't been this kind of a activist investor clamour, maybe they wouldn't have done this. That's the sceptical take about why they're doing it now, because they've been forced to do it. But I would say actually, stepping back, whether it's the positive take or the more sceptical negative take, they've been forced to do it for one reason or other. So that's why I think they're doing it now, Sam.
Exxon – part of the solution, not the problem
Sam Patchett: Yeah, absolutely, and I just wanna jump in on a really good point you make about attracting talent, because when it comes to these old, legacy fossil fuel oil and gas companies – so often the focus in terms of how they're perceived is their relationship with shareholders, or their relationship with customers and the public, and policy makers as well.
Very often the attracting talent is actually really overlooked, and it's not just about attracting the best talent, it's about attracting the best young talent. And we know that the younger generation have much more awareness about climate action, about the effect that fossil fuels and energy has on the planet. Again, I think that's really overlooked by a lot of these big companies these days, so a really interesting point you bring up.
And I also wanted to touch on the common perception throughout all tracks of society that these energy companies aren't doing enough. I think Woods actually brings up a very, very interesting point when he says: an abrupt transition will be costlier in the long run, both financially and economically. I think the situation in Ukraine and the cost of living situation we have at the moment, that's really proven that we are still very reliant on oil and gas, and that's unfortunately, not gonna change anytime soon. People are starting to come to the understanding that it needs to be a gradual and sustainable transition – it's not gonna happen overnight. So it's about managing the expectations of the public, it's about managing the expectations of policy makers, of activists, of business partners.
It's a case of saying – there's a problem, it needs to be fixed, and we are committed to fixing it, but it's not gonna happen overnight.
Jordan Greenaway: I was thinking about the way he communicated this. One way, was to make a big, bold, eye-catching prediction about the future. In 2040, all cars are going to be electric. There was an alternative way he could have framed this – he could have framed it as – this is the right thing for the company to do from a moral perspective, but he's decided to instead of be seen as moralising, to make a big, bold, transformative prediction to the future.
So he's instead positioned this whole strategy in terms of what's actually financially good for the company as well in the long term. And I wonder Sam, if you've got any reflections on how that was framed, and using that quote rather than something else.
Sam Patchett: It's a very interesting point you bring up Jordan. To use as a bit of a mini case study in that sense is his criticism of the US withdrawing from the Paris Climate Accord. For a executive of a oil and gas company to make that claim is a bold statement, and whether or not it's helped his public image isn't actually the question we should be asking I don't think. Whether the US should be in the Paris Climate Agreement is a far more contentious issue than it should be for most people.
I think most Western countries think it's pretty clear-cut. I think the real question is whether it's rhetoric or whether it's actually meaningful, and whether he can back up a sentiment with doing their part of the deal. And people too often look to policy makers for climate action, when in fact it's largely industry that really hold the power in reducing emissions.
You know if we look to COP 26 – Alok Sharma – he broke down in tears and apologised for the lack of action. If we ever needed proof that policy makers are struggling to tackle the problem – I mean, that was it.
But there's also a trust problem with companies like Exxon. You really need to make sure that your actions are actually matching your pledges and your rhetoric. He can even go a step further and say, this is how we can work with government and have a meaningful impact on the transition.
I think one of the biggest public image problems at the moment is the disconnect between government and industry. People have lost trust in that relationship, and now is a good time for someone like Woods to step in and own the conversation.
Jordan Greenaway: Thanks Sam, and before we go onto the next section – you know in these podcasts, we discuss a lot around what these CEOs are doing, but I also think there's practical advice here. If you are a CEO and you're sitting down and you're thinking, God, I've gotta say something about my industry, I've gotta say something about the big trends that are taking place, but I don't know what it is, I don't even know where to start on what I should say. One good way to get into that discussion is to think about what your industry and what your company will look like in 2040.
How will it be different, and what role will your company be playing in bringing about the future of that industry? And if you've got a really interesting, crunchy, genuine, authentic answer to that, that is having the starting point of developing a perspective or differentiated point of view that you might want to consider communicating to the public at large.
Darren's obviously got these big, bold claims that he's pushing out in the media at the moment.
What do you think he might be saying next?
Predictions for the future of ExxonMobil
Sam Patchett: Really interesting question, Jordan. I think if we were to gaze into the future and predict what is gonna be said next, we also need to quickly look back at the last 20 years. We know that the oil and gas sector has an enormous reputation problem. And I think the tipping point for that was about 20 years ago when Al Gore released the Inconvenient Truth movie.
To me, that was a moment when the general public really started to take climate change and fossil fuels really seriously. To be honest, it's astounding that it's taken the industry this long to really catch up and really ramp up their commitment to addressing the problem.
I think in the last few years, they've really relied on the fact that as long as there's demand for oil and gas, which they're very much still is, then they'll stay in business. But now that's simply not good enough, and if we are to look forward and look in to what the next 10 or 20 years looks like – we've heard the rhetoric, we've heard the commitments, we've heard the promises – now it's all about action. It's about actually being able to show the evidence, show the projects, show the investment that's really gonna drive this energy transition.
Jordan Greenaway: Great point, Sam. I'm gonna go out on a bit of a limb here. If I searched Darren's name in a year's time, what would he be saying? I'm actually gonna make a bit of a prediction. Now, to date, we've heard about how ExxonMobil and Darren himself are gonna play a role in the energy transition, moving to renewables, moving to green technology, et cetera.
But I think the clamour for more action is not going to stop, and being part of the solution to that energy transition is not the same as actually trying to stop the bad stuff that you've been doing for the last 10, 20 years. So I think they're gonna go further. I think they're gonna be investing in new tech, like carbon capture, that's actually gonna try to reverse some of the negative impact that they've had on the world over the last 10, 20 years.
And on that note, thank you for joining us for this episode of Acts of Leadership. Tune in next time, for more discussion of how the leaders of today are making waves.
To find out more about Transmission Private and our work supporting entrepreneurs, CEOs, and investors with their personal profiles, go to www.transmission-private.com.
Thank you. See you next time.
Sam Patchett: Thanks, Jordan.