A group of insurgent investors backed by the three largest pension funds in America is trying to force ExxonMobil to take climate change much more seriously — not just for the sake of the company’s viability but also for the sake of the planet.

The revolt is being led by a hedge fund, called Engine No. 1, which has charged the company not only with poor financial governance but with failing to come up with a viable strategy for dealing with the existential threat of climate change. Their campaign has built momentum by winning widespread backing from pension funds and shareholder advisory services for its proposal to install four new independent directors at ExxonMobil’s annual meeting next week over the objections of the oil giant’s management.

Engine No. 1 wants ExxonMobil to pledge to reduce its emissions to net zero by 2050, warning that this was “not just a climate issue but a fundamental investor issue — no different than capital allocation or management compensation — given the immense risk to ExxonMobil’s current business model in a rapidly changing world.”

The battle at the iconic ExxonMobil — a descendant of the powerful Standard Oil Co. monopoly that was broken up in 1911 — reflects a broader awakening among shareholders about the need for major corporations to take climate change into account. Shareholders have also filed resolutions at other major firms.

“What these campaigns suggest is we’re at a point in time where climate change is so fully part of the mainstream that you can’t separate financial performance from climate strategy,” Andrew Logan, senior director for oil and gas at Ceres, a nonprofit merging climate and financial activism, said. “They’re one and the same. A company not managing its climate risk properly is not managing its financial risk properly.”

The financial picture at ExxonMobil has been lackluster in recent years. Over the past decade, the company’s debt has grown ninefold to more than $60 billion, with about a third of it going to prop up dividends. Last November, the company wrote off assets worth between $17 billion and $20 billion, the result of a misguided purchase of the natural gas company XTO Energy. Recently the stock has rebounded sharply along with crude oil prices, but the share prices are no higher than they were in late 2005, even after tens of billions of dollars of stock buybacks.

“Even if the world were not changing, they have been a horrible performer,” Charlie Penner, managing member and head of active engagement at Engine No. 1, said of Exxon. “Given that the world is changing, they are doubly unprepared for making these decisions.”

Exxon, which last year lost its place in the Dow Jones industrial average, has been blanketing its shareholders with letters defending its performance. “Engine No. 1 doesn’t really have a plan for the business,” ExxonMobil chief executive Darren Woods said in an interview Thursday. “They have been very focused on what I would say is perceptions of the past.”

But the oil giant suffered a blow when Institutional Shareholder Services, the most influential proxy advisory firm, recommended that ExxonMobil shareholders elect three of the four candidates put forward by Engine No. 1. In a report sent to clients on May 14, ISS said Engine No. 1 had “made a compelling case that additional board change is needed to provide shareholders with sufficient confidence in the sustainability of [Exxon’s] business.”

Some key shareholders have joined the cause. Earlier, the three biggest U.S. pension funds — the California Public Employees’ Retirement System, the California State Teachers’ Retirement System and the New York State Common Retirement Fund, with more than $850 billion in assets — said they would vote against Exxon’s management at the company’s annual meeting on May 26.

“In order to effectively oversee the transition to a low-carbon economy, we believe the board would benefit from additional expertise in both its core business and in renewable energy technologies,” the California teachers’ fund said in a Securities and Exchange Commission filing.

Pavel Molchanov, analyst with the investment firm Raymond James, said, “These kinds of proxy fights over board representation always represent a test of shareholder power.” He said in an email that “whether adding four new members to Exxon’s board would transform the underlying business is highly doubtful. But symbolism matters too. Winning a high-profile proxy fight at the ultimate blue chip oil company would certainly embolden climate activists to go even further in their efforts.”

Engine No. 1 was founded in November by Chris James, who has three decades of experience as an investor in the technology sector; managing member Penner previously worked at a firm involved in “impact investing” that focused on social, environmental and financial returns.

The fund invested about $40 million in ExxonMobil stock late last year, and its stake is now worth well over $50 million. ExxonMobil’s market value, about $252 billion, dwarfs that. But Engine No. 1, which plans to invest $250 million in public firms and still more in private equity, has been able to rally investors to its cause.

Glass Lewis, another major advisory firm, urged shareholders to back two of the dissident directors. It also backed a resolution calling for an independent board chairman at ExxonMobil, rather than giving that post to the chief executive. Glass Lewis also supports a resolution asking for an audited report on a net zero emissions scenario. The firm said “audited climate reporting could provide actionable information for shareholders.

ExxonMobil has already come under broader scrutiny from activists and various law enforcement officials who have sued the oil behemoth for allegedly concealing from consumers and policymakers what it knew about the harm of climate change decades ago.

Confronting climate change poses an existential threat to oil, gas and coal companies. As the world strives to rid itself of greenhouse gas emissions, big international oil and gas companies such as BP and Royal Dutch Shell have said that they will have to shrink their existing businesses and search for new ways to make money.

BP chief executive Bernard Looney said in a Columbia University podcast that “it’s an enormous business opportunity. Trillions of dollars are going to get spent rewiring and replumbing the world’s energy system.” He said that “we have this strategy of moving from an international oil company to an integrated energy company.”

Exxon has insisted that there will be plenty of demand for ExxonMobil’s oil and gas, even if the world sticks to the 2 degree Celsius target set out by the Paris climate accord and abides by the forecasts made by the International Energy Agency.

Exxon said the IEA estimated that almost $12 trillion of investment will be needed to generate oil and natural gas supplies through 2040, “indicating a critical need for increased oil and natural gas investment versus 2020 levels.”

But the IEA on Tuesday released a stunning report setting out a global road map to the net zero emissions goal and said that there was no need to invest in exploration for new oil and gas reserves.

“The real question is how long is that going to take. Ten years? Ten years is a pretty short time in this industry given the scale of the energy system, but we are definitely evolving the business,” Exxon’s Woods said. He said the IEA’s forecast was based “on condition of some very significant transformations happening in the existing economy, which today is not happening.”

Engine No. 1 and ExxonMobil each has a list of complaints about the other. Exxon says Engine No. 1 made no meaningful effort to meet with Exxon executives or directors. The hedge fund sent and publicized a letter on Dec. 7 outlining four areas for improvement. A week later, Exxon put out its own letter on emission reduction efforts. After a flurry of meetings in January, Exxon stuck with its own slate of directors, and Engine No. 1 put forward its list of four candidates.

An Exxon board committee “found that none of the Engine director candidates meet the standards or needs of the Company’s Board.” Exxon said they lacked executive experience and understanding of how to overhaul a large business.

“We’ve got one of the strongest boards in corporate America, one we have been refreshing fairly regularly,” Woods said in an interview Thursday.

But Engine No. 1 says its list is stronger. Two of the four candidates are former chief executives, and the others have extensive experience in the energy sector. The hedge fund’s list includes Alexander Karsner, who oversaw the multibillion-dollar research and development program at the Energy Department under President George W. Bush and is currently senior strategist at X, formerly known at Google X; Gregory J. Goff, former chief executive of Endeavor, a major oil refiner; Kaisa Hietala, former executive vice president of renewable products at Neste, a petroleum refining and marketing company, and currently a consultant to companies on climate issues; and Anders Runevad, former chief executive of Vestas Wind Systems, a leading maker of wind turbines.

Since Engine No. 1′s first letter, Exxon has announced several initiatives. On April 19, it unveiled a “bold plan” of building a huge $100 billion carbon capture and sequestration project in Houston, sucking up carbon dioxide spewed forth by nearby refiners and other industries and burying it in the vast unused reservoirs offshore.

But many analysts fear that ExxonMobil will fail to scale back its oil and gas production if it can simultaneously capture and bury carbon dioxide, or worse yet use it mainly to enhance the oil recovery of old wells.

Moreover, the expensive Houston project costs money, and Exxon isn’t putting up its own. Joe Blommaert, president of ExxonMobil Low Carbon Solutions, wrote on one of the company’s online sites: “It will need government and private-sector funding, as well as enhanced regulatory and legal frameworks that enable investment and innovation.”

This week Exxon executives have been paying visits to lawmakers in Congress, looking for a radical expansion of the 45Q tax credit that can provide subsidies to carbon capture projects. Woods said he also met with White House special climate envoy John F. Kerry, Energy Secretary Jennifer Granholm and National Economic Council Director Brian Deese.

So far, the Biden administration hasn’t nibbled.

ExxonMobil’s vice president for low carbon solutions, Guy Powell, also said that the company already has captured 40 percent of the carbon dioxide ever captured. But Powell acknowledged that those figures go back nearly 35 years and include figures for carbon dioxide injected for enhanced oil recovery.

Shareholder groups worried about climate change have also sponsored resolutions at other companies.

The New York state retirement fund has filed 148 shareholder resolutions related to climate change since 2008, and it has reached 72 agreements with companies in its portfolio, including measures such as setting reduction targets for greenhouse gas emissions and establishing renewable energy and energy efficiency goals.

At the May 11 ConocoPhillips meeting, 58 percent of shareholders voted for a resolution that called for reductions all of its emissions, including those produced by motorists who use gasoline made from oil the company produces. ConocoPhillips recommended a “no” vote, citing actions it has already taken as the first U.S. oil and gas company to commit to reducing targets to net zero by 2050 for its own operations (known as scope 1) and its supply chain (known as scope 2).

On May 12, a majority of shareholders at Phillips 66 voted in favor of two resolutions, one requiring cuts in greenhouse gas emissions and the other requiring changes in company lobbying for goals set in the Paris climate accord.

Kimmeridge, a private equity firm, won a shareholder resolution that installed new directors at Ovintiv, a shale oil and gas exploration and production company.

Much of the outcome of the ExxonMobil proxy fight rests with the big fund managers. BlackRock has called for corporate action on climate change, but neither it nor other big fund managers such as State Street, Vanguard and Fidelity have indicated whether it will vote for Engine No. 1′s resolutions.

Anne Simpson, the Calpers managing investment director for board governance and sustainability, said “I think this annual meeting is a day of reckoning not just for Exxon. It is also a day of reckoning for the investor community.”

This is not the first time ExxonMobil has faced a revolt by some of its biggest and most mainstream shareholders, including major financial advisory firms and fund managers who traditionally have played passive roles. In 2017, 62.3 percent of shares voted to instruct the oil giant to report on the impact of global measures designed to keep climate change to 2 degrees Celsius.

But many pension funds and advisory groups feel the company hasn’t followed through on that. Exxon has recognized emissions from its own operations and supply chain. But they say that Exxon has not added up the 90 percent of its emissions from the people who burn their fuel in automobiles, and petrochemical and industrial plants — known as scope 3 emissions.

“That is partly why this board campaign came about,” Logan of Ceres said. “Exxon lost that vote then didn’t do a lot in response. Investors realize that with a recalcitrant company like Exxon a shareholder proposal is not enough. You need structural change in the company.”