The Church of England has joined a growing investor campaign demanding sweeping changes at ExxonMobil, saying it was backing calls for the appointment of new directors and for the oil supermajor to develop a pragmatic strategy for the transition to cleaner fuels.

The Church Commissioners for England, who manage the CofE’s investment fund, said on Thursday they were “pleased to lend their support” to proposals from new investment fund Engine No 1 designed to “re-energise ExxonMobil”.

The announcement came a day after news that US hedge fund DE Shaw had acquired a sizeable stake in ExxonMobil and was pushing for the company to cut costs, adding another source of shareholder pressure on management.

New York-based DE Shaw, which has in recent years become more prominent as an activist shareholder, told Exxon it was concerned the company’s spending could put its dividend at risk, said people familiar with the matter.

The hedge fund is also concerned Exxon is underperforming rivals such as Chevron, which has managed to weather the industry’s crisis significantly better, the people said.

Energy groups are struggling to cope with the fallout from the coronavirus pandemic and historically low oil prices.

DE Shaw’s move emerged days after Engine No 1 launched its activist campaign against Exxon, at one time the world’s biggest oil company, and named four people it wanted to nominate for board positions at the supermajor.

The activist pressure has been building amid perceptions that Exxon remains wedded to a business model of increasing fossil fuel production, despite mounting doubts about long-term oil demand and deepening concerns about climate change.

Thursday’s backing from the Church Commissioners, which has previously campaigned for reform at Exxon, adds momentum to the effort. Bess Joffe, head of responsible investment for the church fund, said action was “urgently needed for the company to improve its ability to create long-term sustainable value and pivot its strategy to support the energy transition”.

Exxon has dialled back spending since the pandemic and a Saudi-Russia price war prompted a historic crash, sending US oil prices negative in April and leaving producers across the country reeling.

It said last week it would write off up to $20bn worth of assets in North America and Argentina.

The company has also announced plans to slash spending next year, to $16bn-$19bn, before rising to $20bn-$25bn a year until 2025. It originally planned to spend $30bn-$35bn a year. Exxon plans to sack 14,000 workers, about 15 per cent of its workforce, by the end of 2022.

Despite the fallout, the group has rebuffed pressure to sacrifice its dividend. This year was the 37th in a row in which the company raised the payout.

The exact size of DE Shaw’s stake in Exxon, first reported by Bloomberg, has not been divulged. The hedge fund has been active in the energy sector, acquiring a stake in natural gas producer EQT in 2017.

Engine No 1 holds $40m worth of Exxon stock and its campaign for change at the company was backed by the California State Teachers’ Retirement System, the second-biggest US pension fund, which has a $300m stake in the company.

Engine No 1 published a letter to Exxon’s board calling for “much-needed change”, including an overhaul of management compensation, greater capital allocation discipline, and a “strategic plan for sustainable value creation”, as well as new board members.

The fund said its proposals were designed to help the company “secure” its dividend.

Letter in response to this article:

Why markets tell real story of Exxon’s activists / From Neil McNaughton, Editor, Oil IT Journal, The Data Room, Sèvres, France