Schroders has accused Exxon of using its retail investor base to undermine the voting choices of institutional investors.
The oil giant is rolling out a new system that automatically votes eligible retail shares in line with management, unless specified otherwise.
“This further risks consolidating board power and undermining shareholder oversight,” warned Schroders in a newsletter about the update, adding that “Exxon’s move must be understood against its track record of resisting shareholder influence and climate governance challenges”.
The firm has become a symbol of defiance against sustainability-related stewardship and engagement.
In 2021, it took part in a high-profile showdown with activist investor Engine No.1, which, against the will of its management, convinced fellow shareholders to elect three new members to Exxon’s board on the basis of climate-related competency.
It has also taken legal action against responsible investment bodies Follow This and Arjuna Capital over their attempts to file climate resolutions at the company. Both cases were dismissed.
More recently, Exxon has been in the headlines for its intense lobbying against the EU’s Corporate Sustainability Due Diligence Directive (CS3D).
The law, which has been plagued by delays, will require large companies operating in Europe to take responsibility for breaches of environmental and human rights that take place in their direct and indirect operations.
Last week, Exxon stated that CS3D was “one of the most egregious examples” of red tape in Europe, and would “impose unworkable burdens on global businesses, forcing companies to re-evaluate doing business in the region, and ultimately weaken EU industrial competitiveness”.
Exxon’s largest institutional shareholders include Norges Bank, Vanguard, State Street and BlackRock, according to data from Yahoo. Around 40% of its shareholder base is retail investors.
Exxon has said its new auto-voting platform would allow those shareholders to have a louder voice.
“But in reality, this is likely to result in increased management support,” argued Schroders. “In practice, if this auto-vote is adopted with default alignment with the board, it will mean vote results under 90% support for management become a rarity.”
“There were approximately 675 million broker non-votes at the 2025 Exxon AGM,” it pointed out.
“Converting them all to votes in favour of the board’s recommendation could significantly reduce the ability of investors to hold directors accountable using their vote. This may undermine institutional investor voices by further diluting potential dissent.”
As IPE has previously reported, the US is in the midst of a wave of capital market reforms that will give more power to company management at the expense of investors.
This includes making it harder to file proposals at annual meetings, and taking away shareholder rights around access to information and legal protections.
This week, the OECD published a report highlighting concerns over the concentration of power in capital markets – and not just by management.
Around 44% of listed companies around the world have more than half their listed equity in the ownership of just three shareholders, the report found.
In addition, 35,000 issuers have delisted from stock exchanges since 2005, far outstripping the number of firms to have listed. This gives institutional investors less control over companies in the economy.
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