XOM Stock: Climate Change Is Dire News for Exxon Mobil Corporation

XOM StockExxon Mobil Corporation (NYSE:XOM) stock got a slap in the face when descendants of oil baron John D. Rockefeller washed their hands of fossil fuel investments.

In a moment of enlightenment on Wednesday, the Rockefeller Family Fund concluded there’s “no sane rationale” for companies to explore for oil as governments contemplate cracking down on carbon emissions. (Source: “Rockefellers Dump Exxon Holdings That Made Family’s Fortune,” Bloomberg, March 23, 2016.)

The New York-based philanthropic foundation said it would divest from fossil fuels as quickly as possible and eliminate holdings of Exxon, saying the oil company associated with the family fortune has misled the public about climate change risks. (Source: “End of an Era as Rockefeller’s Heirs Divest From ‘Morally Reprehensible’ Exxon,Fortune, March 23, 2016.)

The non-profit trust called Exxon Mobil’s alleged efforts to cover up evidence of climate change “morally reprehensible conduct.” (Source: “Oil Baron’s Descendants Shame Exxon Mobil For ‘Morally Reprehensible Conduct’,Huffpost Business, March 24, 2016.)

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It was alluding to allegations that Exxon Mobil has hidden evidence that fossil fuels contribute to climate change.

“Evidence appears to suggest that the company worked since the 1980s to confuse the public about climate change’s march, while simultaneously spending millions to fortify its own infrastructure against climate change’s destructive consequences and track new exploration opportunities as the Arctic’s ice receded,” the fund said. (Source: Ibid.)

The charity will also divest its coal and Canadian oil sands holdings.

The move is especially notable because it comes from the heirs of the Standard Oil fortune, the mega-company from which Exxon Mobil first emerged.

Fossil fuel investments represent about six percent of the Rockefeller Family Fund’s $130 million in holdings, Bloomberg reported, citing Lee Wasserman, director of the foundation. (Source: Bloomberg, op cit.)

The day before the Rockefeller Family Fund’s announcement, the Securities and Exchange Commission (SEC) dealt the Houston, Texas-based company another setback.  The SEC ruled in favor of a group of shareholders who are pushing the company closer to disclosing its vulnerability to climate change and new government regulations. XOM stock fell from an intraday high of $84.59 on Tuesday to an intraday low of $83.52 on Wednesday.

Exxon was quick to dismiss the Rockefeller Family Fund’s claims: “It’s not surprising that they’re divesting from the company since they’re already funding a conspiracy against us,” Alan Jeffers, Exxon spokesman said on Wednesday. (Source: “Rockefeller fund dumping fossil fuels, hits Exxon on climate issues,” CNBC, March 23, 2016.)

New York State Attorney General Eric Schneiderman is said to have launched an investigation last fall into whether Exxon misled the public and investors about its internal research regarding climate risks. (Source: “Rockefeller Family Fund hits Exxon, divests from fossil fuels,” Reuters, March 24, 2016.) California Attorney General Kamala Harris is also reportedly looking into whether Exxon lied about climate change.

The probes followed a report by InsideClimate News, a non-profit news organization, claiming that Exxon sought to undermine scientific evidence that pointed to the growing threat of climate change.

Jeffers said the Rockefeller Family Fund provided financial support to InsideClimate News, which he said “produced inaccurate and deliberately misleading stories” about the company’s climate research.

In response to the divestment movement, many oil industry leaders have said millions of people in the developing world would be condemned to darkness and poverty if society were to halt the burning of fossil fuels before there is ample supply of cleaner energy sources. (Source: Ibid.)

As early as 2008, members of the Rockefeller family called on Exxon to increase spending on alternative fuels. In late 2014, another fund associated with the family, the Rockefeller Brothers Fund (RBF), said it would divest from fossil fuels.

XOM stock was trading around $83.84 on Monday, up 7.7% this year.