Why ExxonMobil CEO Darren Woods thinks net zero by 2050 isn’t going to happen

Listen to the episode or read the transcript below.

---

Transcript

Alan Murray: Leadership Next is powered by the folks at Deloitte who, like me, are exploring the changing rules of business leadership and how CEOs are navigating this change.

Welcome to Leadership Next, the podcast about the changing rules of business leadership. I’m Alan Murray.

Michal Lev-Ram: And I’m Michal Lev-Ram.

Alan, we had a very interesting guest on this week’s episode, Darren Woods, the CEO of ExxonMobil, and he sat down with us for quite a long time. What did you think?

Murray: Michal, in my four decades covering business, I would have to say that Exxon was at the very top of my list of press unfriendly companies. Of companies that did not want to talk to me regardless of the occasion. And I thought it was a sign of a real change that he was willing to sit down, talk to us about the energy transition, about Exxon’s role in it. Geez, the whole interview went almost an hour. We went in great depth. I don’t know that everyone will be satisfied with everything he had to say, but I was really impressed by his willingness to engage.

Lev-Ram: Absolutely. We got to ask a lot of questions. And yeah, like you said, I know a lot of people would like to see ExxonMobil make this transition faster than they’re making it. But we talked a lot about, you know, what they’re doing with carbon capture and lithium, which they’re really moving into. Not that lithium is completely clean or anything, but you know, they have been diversifying their business, and we got to hear quite a bit about all of that.

Murray: Yeah. And, you know, Exxon was in the news when Engine One [Engine No. 1] made an attack on their board, put up a group of directors to replace the existing directors. Those directors are now there. They have clearly played a role in changing the company. Not as fast as everyone would like. There’s been a lot of publicity around the smaller shareholders who were suing Exxon for not moving fast enough on climate, and Exxon is fighting back. Actually…

Lev-Ram: They’re suing them.

Murray: Yeah, they’re suing them. Yeah. Yeah, yeah. So that’s a classic Exxon move, right? They’re the Texas tough boys. But it’s a different company. It’s a very different company than it was two, three, five years ago.

Lev-Ram: Well, let’s listen to it, Alan. Here it is, our conversation with Darren Woods, CEO of ExxonMobil.

Murray: I want to start by asking you the big question, the kind of meta question. There are a lot of people out there who believe that an oil company like Exxon Mobil making hundreds of billions of dollars off of selling oil and gas, and a CEO like yourself who’s making tens of millions off of that business, can’t possibly be serious about addressing climate change. Tell me why they’re wrong.

Darren Woods: Sure. I would start with the premise that we’re an oil company. I think, as I’ve taken this job and focused on what’s made us successful over the 140 years that we’ve been in business, it’s come down to our ability to take technology and develop products that meet society’s needs. So at our heart, we’re a technology company, maybe a little different than some of the technology companies that are out there today, and that we basically focus our technology on transforming molecules and they happen to be hydrogen and carbon molecules. And so while today a large part of that technology goes to making products that are combusted, we also have one of the largest chemical businesses in the world that makes a variety of products that go into society that basically supports modern living. And so our view is our job is to basically take our capabilities in this space and address the needs of society. And as those needs evolve, so do our business.

I mean, one point I always make, Alan, is if you go back to the beginnings of our company, we started basically making kerosene to replace whale oil for lamps. Electricity came along, Ford Motor came along, started building cars. We started making gasoline during the war. We started making butyl rubber. And so as the needs of society have evolved, so has our company. And they all come back to our ability to manage these molecules, these hydrogen carbon molecules. And so as we look at the transition and the next wave of things that society needs, which is a lower emissions world, to decarbonize the society that we have today, the question that we’ve asked ourselves is how can we bring our capabilities and skills to bear on solving that problem? Today, you know, if you go back a little bit in time, the only answer was when solar and EVs, which clearly have a role to play and are necessary, but they’re not sufficient.

One of the things I’ve been pleased with the Biden administration is the recognition that there’s a broader set of solutions needed, a set of solutions that involve the molecule side of the equation as well as the electron side of the equation. Since we’re in the molecule business that opens the door for us in carbon capture and storage, biofuels, hydrogen, a number of opportunities in that space which we now can contribute to as that need grows and as the markets develop.

Murray: We want to talk about all those things today. We want to talk about hydrogen, biofuels, what you’re doing in lithium, what you’re doing in carbon capture. But I do think part of the reason that people are a little skeptical or a lot skeptical about this conversation is because of the history that your company has before your time as CEO, obviously, but the history your company has in climate denial, misinformation. I’m old enough to remember Herb Schmertz and the information campaigns that he ran. How do you address that history?

Woods: Well, I think we’ve been very focused on going forward and what are the opportunities for us to contribute in that space. I think some of the perception out there we could spend a lot of time debating and arguing. That was 30 years ago. I mean, today the world has moved on. The understanding of this challenge has moved on. And I think for where we are today is how can we contribute to a solution set, not debate the past. And that’s basically what we’re trying to do is leverage our capabilities and solve for what society needs. It’s no different than what we’ve done over the last 140 years. We’re leveraging the same core competencies, same core capabilities, and figuring out how we can use those to advance products that society needs. And frankly, I think today our strategy is pretty robust to whatever the future holds, however quickly the world transitions. Our company is positioned to basically contribute.

Lev-Ram: So like a lot of other companies, of course, you’ve committed to net zero within a certain time frame. You have a shareholder group that is pushing you to do more, to move faster, to cut greenhouse gases. Can you talk a little bit about what you are doing and also why you’re pushing back against this particular shareholder group?

Woods: Sure. I would just start in terms of our pushback to the shareholder has nothing to do with the environment or ESG. That’s not the basis of our dispute with that shareholder. But I’ll come back to that in a minute. Frankly, what we’ve looked at is, again, with this view, we recognize the challenges associated with climate change. We recognize the need to decarbonize and reduce emissions. And we’re very focused on doing that. If you look at the progress that we’ve made and what we share in our proxy every year is the progress that we’re making with respect to reducing our own emissions, our scope 1, scope 2 emissions. We’ve committed to decarbonize, to get to net zero and our Permian operation, where we’re rapidly growing production, to demonstrate that in a world of growing production that you can reduce your own emissions.

And we’ve got a net zero commitment, a plan to get to it by 2030, get to net zero. As you know, we’ve announced an acquisition of Pioneer [Natural Resources] and we’ve committed to bring their net zero pledge in 2050 forward to a net zero plan by 2035. We have significantly reduced our methane emissions. We’re basically working around the world to reduce our own emissions, and then we’re providing products to help third parties reduce their emissions. So we’re starting a carbon capture and storage business. We have three commercial contracts with hard-to-decarbonize sectors: a steel company, an industrial gas company, and an ammonia production company. And we’ll capture 5 million tonnes per annum of their CO2. That is the equivalent of all the EVs sold in the U.S. to date. The impact of that reduction on just three deals that we’ve done, we’ve acquired Denbury, which is the largest CO2 pipeline in the U.S., to act as the spine to allow us to capture more CO2. And so we’re making significant progress there.

We’re building a biofuels plant up in Canada. We’ve got plans and are developing the world’s largest low-carbon hydrogen plant. That plant alone would basically meet 10% of the Biden administration’s low-carbon hydrogen ambition. And we’ve got plans out, and we’re working through on that; that will produce low-carbon hydrogen and ammonia to help third parties back out their emissions.

And as you pointed out, we’ve got a lithium business. Again, tapping into our capabilities to understand the subsurface drill, extract liquids, in this case water, extract lithium from the water and reinject that water. It’s a lower cost production of our lithium than exists out there today. And it’s a much, much lower environmental footprint than the current methods. And so we can have a domestic U.S.-supplied lithium source to go into this electrification effort that is more environmentally friendly and more cost effective. And so a number of things that we’re pursuing and as the markets develop, we are in a position to continue to lean into that and to bring our capabilities and skills to bear.

Murray: How much of this investment in alternatives is enough? Some people will argue that the European oil companies invest a larger share of their total investment dollars in renewables than ExxonMobil does. I mean, how do you decide what the right amount of effort is to drive this transition?

Woods: I think that’s a hollow argument. I think the first thing I would point to when you look at levels of investment is you’re comparing investments in wind and solar, which are technologies going into an established market with an established demand and an established pricing structure that’s regulated and people get returns. And so our view is we don’t bring any real capabilities to that space. Those are, that’s the electron solution that I mentioned. We don’t bring capabilities other than a checkbook, and so we don’t see the ability to generate above average returns for our investors. And so while we recognize the need for that, we don’t think it’s an appropriate use of ExxonMobil’s capabilities.

We’re focused on areas where there aren’t solutions, where we’re going to decarbonize, help decarbonize, hard to decarbonize industries where today they don’t have readily available solutions that wind and solar won’t be effective at meeting their needs. So we’re basically concentrating our effort in that space. We’re starting businesses from scratch.

So I think when you look at the investment level, you have to look at it in the context of what is the opportunity set that you’re investing in. We’re building businesses from brand new. It’s going to take time to get those businesses up and going, but somebody needs to do that. And so I think that the comparison with what we’re investing in businesses that don’t exist today versus people who are investing in businesses and sectors that do exist is a false comparison. Likewise, it’s false a comparison to say we’re going to look at the oil and gas industry, which is an enormous industry with enormous demand and look at what you’re spending in that space versus what you’re spending in an area where there’s basically nothing exists today. Again, a false comparison. With time, if the market develops and grows and replaces traditional energy system, my expectation is our investment will be just as big there. But we’re at a much earlier part of the development curve in that space, and that is reflective of the investments we’re making.

I’ll just give you one fact, Alan. If you look at what we are spending in reducing emissions, it’s the equivalent on an annual basis of one third of what the U.S. EPA spends to manage the environment for the whole of the U.S. I mean, that’s a substantial amount of money for a company going into a sector and a value chain, a business that doesn’t exist today.

Lev-Ram: And, Darren, just to go back real quick to the shareholder question, I know you wanted to address that. Can you explain a little bit from you said the pushback is—not because of the efforts and the plans to cut greenhouse gas, but explain what’s going on there?

Woods: So let me give you just a little bit of context for that. Over the last ten years, we’ve had 140 shareholder proposals submitted. About half of those are from activist investors or activist shareholders. And I would make the distinction between the activist versus investors in our company and the difference, the key difference, is the activists don’t have an economic interest in the outcomes that they’re proposing or in the returns that the company generates.

Of that, half of those proposals that have been submitted, roughly half of those have been submitted by just three activist groups. And so these individuals, while we talk about where we are, I would tell you as a company, very, very focused on shareholder rights. In fact, we like small shareholders. We’ve prided ourselves on the fact that our company has a very large base of small shareholders, and we work really hard to keep them engaged and to bring them to the table and to exercise their rights and to voice their concerns and their views. We have an extensive outreach program. We try to bring them into the annual meeting. So I would say that we recognize the importance of the shareholders’ voice and want to cater to the shareholders who are real investors who have an interest in seeing this company successful in generating return on their investments. We feel a huge responsibility to that.

We don’t feel a responsibility for activists that hijack that process, a legitimate process and frankly abuse it to advance an ideology that’s inconsistent with the well-being of the company. And I would tell you in this case, for Arjuna Capital and Follow This, first of all, both of those proponents have publicly expressed the desire to basically diminish ExxonMobil’s business and to stop the production of oil and gas. That’s contrary to the benefit of most of our shareholders. They have submitted this proposal in the past. This is the third time it was submitted. Last year when it was submitted, it got just over 10% of the vote. Under SEC rules, that proposal should be excluded if it didn’t have 15% of the vote. But the SEC’s interpretation of that has led to basically allowing these proposals to come in time and time again.

So the shareholders have reviewed that and have spoken on that topic. And their scope 3 target, their proposal, asked us to reduce scope 3, which is essentially the emissions of our customers. And the way that we would have to do that is to reduce the sales of oil and gas. So that’s getting right into the heart of what we’re doing. And Follow This has been very clear that their objective is to get us to stop selling oil and gas. That’s basically what we do as a business. And so you’ve got a proponent getting right into the heart of the business. SEC rules should exclude that as well, as ordinary business and it’s micromanaging. And so we’re taking issue with the fact that the SEC, its interpretation of the current regulation is allowing this abuse, and we’re looking for relief from that abuse, which we think is actually in the best interest of all of our shareholders.

Murray: And, by the way, the best interests of society. I mean…

Woods: Absolutely.

Murray: I mean stopping the sale of oil and gas is not not going to be good for the world at this point in history.

Woods: You’re absolutely right. If you think about what we sell, we sell LNG [liquefied natural gas]. Every tonne of LNG, we sell basically backs out of coal burning somewhere in the world. Typically we’re selling our LNG out to Asia. And so, you know, today there is an advantage to the products that we sell. And by the way, the money that we’re using there and the capabilities that we’ve built doing that we’re now using for the transition. And so they’re working a supply issue when the problem is in the demand side of the equation. And we’re trying to balance the two, be the most responsible operator so that as long as the world needs these products, you’ve got a company that you can rely on to do it as environmentally friendly as possible, as we continue to work for opportunities to diversify and decarbonize.

Murray: So you’re saying that Follow This and Arjuna are very different than, say, Engine One. I mean, Engine One was referred to as an activist when they came after your board.

Woods: Yeah, I think again, that’s another, I’d say kettle of fish, so to speak. Engine No. One basically was out to make a name for itself. It did not have a specific agenda for ExxonMobil and change at ExxonMobil other than to bring new directors on to the board. I would point out, Alan, if you look at Engine No. One, while they were successful at bringing three directors onto the board, those three directors came in without an Engine One agenda, but more of an agenda to make sure that the company could be as successful as possible as we spent the year that they came in, getting them briefed up on our strategy, the basis of our strategy, why we were making the decisions that we were making. When it came time to approve our plan that year in November, all three of those activist investors endorsed our plan 100%. And as we reviewed the strategy and rolled our strategy out, that was endorsed. And so I would tell you, maybe contrary to the perception out there, bringing those investors, those board members on that were keenly focused on making sure ExxonMobil was doing all it could to be successful and having them conclude that, yeah, we were, and that the plans that we had in place and the strategy that we had developed was exactly doing that, basically strengthened our board and their resolve for us to continue down the path that we were on. And so it’s been a benefit to the company to reinforce the path that we are on, contrary to maybe what many people thought out there.

Lev-Ram: And we should note, I think some of these same groups are also pushing for similar things at other companies. It’s not ExxonMobil specific, it’s also at Shell and others.

Murray: Let me ask you a question that draws on your technical expertise and your analysis. Because you’re now heavily invested in all sides of this transition. You see what’s happening in hydrogen. You’ve made this big investment in carbon capture and storage. You’re now an investor in lithium, so you’re part of the electrical economy. How long is this going to take? Is 2050 anywhere near a realistic goal? And if it’s not 2050, when is it going to happen? What does your analysis show?

Woods: So I’ll start with the end and work my way forward with your question. Now, I’m frankly, I don’t know when the end is going to come. I think 2050, from what you see today, what’s being done today, the infrastructure investments that are being made, we’re not on the path to 2050. I think most objective analysis would tell you that. We’ve waited too long to open the aperture on the solution sets terms of what we need as a society, start reducing emissions, and we’re not investing nearly enough in the technology. Today’s technology will not solve this problem. And the reason is there’s a cost issue here. And if you look at the solutions being offered, you know, the dirty secret and nobody talks about is how much is all this going to cost and who’s willing to pay for it. And if you look at the policies that are being put out, the way the governments are advancing this, the cost is very implicit. It’s not an explicit cost. We have tabled proposals with the U.S. governments and governments around the world that there are mechanisms to get out there and start down this path using existing technology. But you need to make the cost transparent, and the people who are generating the emissions need to be aware of and pay the price for generating those emissions. That’s ultimately how you solve the problem.

The issue today is it’s too expensive, people can’t afford it, and they know, governments around the world rightly know that their constituents will have real concerns with that. And so we’ve got to find a way to get the cost down, to grow the utility of the solution set, make it more available and more affordable so that you can begin this transition. And so today I would tell you we’re not on that path. The policies that are being put in place aren’t aggressive enough and don’t incentivize the right kind of actions to be successful here.

Murray: But if not 2050, when? I mean, what do you what path are we on?

Woods: Tell me, Alan, when are people going to be willing to pay for carbon reduction? Because today we have opportunities to make fuels with lower carbon in it, but people aren’t willing to spend the money to do that. There own businesses aren’t willing to spend it. We could make sustainable aviation fuel for the airline business, but the airline companies can’t afford to pay for what it would cost to make sustainable aviation fuel. And so the challenge today is…

Murray: But when when will it be economic? Are you saying never.

Woods: This is the issue. This is I think this is the value of the IRA [Inflation Reduction Act], which is you got to start down. You’ve got to start with something. You have to catalyze the work, catalyze the investment, get started on the technology curve to see if you can innovate, evolve the technology and get the cost down. And I can’t predict if we’ll be successful in that space or not. What I can say is we haven’t, society as a whole hasn’t been doing enough of it. And frankly, society and I’d say the activist, the dominant voice in this discussion, have tried to exclude the industry that has the most capacity and the highest potential for helping with some of these technologies. And so how quickly will the technology discoveries come, the innovation comes? How quickly can we scale those things? How low can we get the cost? I frankly can’t answer that. But I do know there’s a lot of work that needs to be happening today to make that give us a chance of success here. I’ll give you one example. We’re investing in direct air capture. We’re using the technology that we have, this molecule expertise that I talk to you about to figure out if there’s new ways, new technologies that we can use to directly capture carbon from the air. We’ve just built a pilot plant or prototype that we’re working on trying to cut the cost in half, which, by the way, will still be too expensive. But we want to get down on that curve. And there are a lot of companies out there trying to advance the technology in this space. How quickly will they succeed? I don’t know the answer to that.

Murray: You mentioned the IRA. You know, I don’t think that’s got nearly the attention that it probably deserves in this debate. You’re getting huge subsidies to do that, aren’t you?

Woods: The way that the government is incentivized in trying to catalyze investments in space is through subsidies. And the challenge, you make the point, there are huge subsidies because the cost of doing this today is high. And if you’re going to drive significant investments at a scale that even gets close to moving the needle, it’s going to cost a lot of money. And so I think the government today is trying to incentivize that to get things moving. But I would tell you, building a business on government subsidy is not a long-term sustainable strategy. We don’t support that. We have committed ourselves to use the IRA to try to get started on that. But at the same time, we’re advocating to move to market and market forces either through regulation and prices on carbon. There are different mechanisms out there today. The challenge with all those solutions, that is the cost that ultimately bears its explicitly bears itself and the price of products out there. And that’s where the challenge comes in. So today you can…

Murray: You’d rather just have a straight tax on carbon?

Woods: I think if you price carbon, put a carbon price out there or regulate the carbon intensity of products, that that will drive the markets to start innovating and find solutions rather than having the government craft unique policy to incentivize different levels of investment in different technology spaces. I think, you know, I’ve accepted that as a bridge to getting to an ultimate solution. But ultimately the markets have to work in this space. If we don’t get the markets to work in this space, we will not be successful as a society to decarbonize.

[Music starts.]

Murray: I’m here with Jason Girzadas, the CEO of Deloitte U.S., who had the good sense to sponsor this podcast. Jason, thank you very much for joining me.

Jason Girzadas: Thank you, Alan. It’s a pleasure to be here.

Murray: Jason, the majority of Fortune 500 companies have made commitments to reach net zero to address climate, but it’s still unclear how they actually get there. What’s the role of technology in meeting those ambitious goals?

Girzadas: There’s a broad recognition that the cost of climate change is far greater than the cost of not investing in it. Organizations will continue to utilize technology to move on the journey towards a decarbonized future and a more circular economy. We’re already seeing the benefit of technology through an increase in alternative energy sources. The advances in battery and storage technology are evident. You’re seeing the growth and increased performance of EVs at lower price points. So the impact and value of technology is being felt already, and that’s only going to continue. It’s pretty clear that climate change requires innovations that don’t exist today, but we do think that there will be new opportunities for innovation to be further accelerated through the development of ecosystems around emerging technologies.

Murray: There’s clearly a lot to do on this front. You talk to a lot of CEOs about this. Do you feel there’s a real sense of urgency on meeting these commitments?

Girzadas: The urgency is there. The call to action around climate change and the path to sustainability is there. And the impact of climate change is real. I think the narrative is shifting one from it being a cost and an inconvenience to decarbonize our economy to one where it’s actually an opportunity. The client organizations that we serve are in their own way, charting a path to a sustainable future.

Murray: Jason, thanks for your perspective and thanks for sponsoring Leadership Next.

Girzadas: Thank you.

[Music ends.]

Lev-Ram: Let’s talk about an area where we have seen consumer behavior shift somewhat. The EV space and I know you guys, we mentioned earlier, you mentioned a few times you’re in the lithium business now. There has been a slowdown in demand, though. So what do you see going forward in the EV space and how does it impact you?

Woods: First of all, from our perspective, I don’t have a…I don’t have a bias one way or the other. Again, it comes back to what does the market want. And we’ve always felt like from the very beginning when we were doing the analysis, that people were extrapolating from very small sample sizes, a very small, you know, data sets to this EV growth.

So we never believe that, you know, just like any other product, you’re moving through consumer segments and tiers that as you penetrate those segments change in their motivations and abilities and desire and all that begins. You know, so there I always felt like we were extrapolating just too small of a set. So I felt like in the past, the projections were too high. And I think we’re projecting now we’ve had this lull and people now are kind of doom and gloom. And I don’t believe that either, frankly. I think, you know, in my mind we’re planning for a long term that the electric vehicles will have a role to play. They’ll penetrate to a certain level in society, and the costs have to continue to come down. Our view is, you know, frankly, the reason we’re in lithium is because we can provide our skill sets to a product that the world is going to need as we electrify, generally speaking, and battery usage goes up.

And so we see long-term demand for lithium. And then our view is we can produce that at a lower cost and more environmentally friendly footprint. And therefore there’s an advantage that we can bring to that space. That’s why we’re interested in lithium. Trying to predict exactly what the sales are. I would tell you, I don’t think we’re any better than anybody else out there. I would just say we don’t get too caught up in the hyperbole. We didn’t get overly excited when people were saying it was going to go through the moon and we’re now not overly depressed. The people are saying that the thing’s stalled, and we’re not going to take it. I think the answers are somewhere in between there, and society will figure that out. And our view is we’ll be there with a product that’s going to be needed to make that successful.

Lev-Ram: And you’re able to extract it also from the United States currently.

Woods: That’s right.

Lev-Ram: And there is even more that we’re finding. So can you also kind of talk about what that means in terms of, you know, obviously we’re seeing across the board with manufacturing a lot of incentives also to manufacture domestically. What does it mean for the company and for the country?

Woods: There’s clearly a view that, you know, as you think about moving into new technologies, new products, that you want to have a secure source of supply. And I think that’s true with lithium is certainly true with energy and oil and gas in our business. And our view is, you know, I think the right answer for any one country or any one segment of society or business is to have diversified supply. I would tell you from our perspective, it’s not about making sure that it only happens within the U.S., it’s really making sure that you have options and availability, and you don’t find yourself tied to any one single source of supply or dominated by a single source of supply that basically, just like in business, you know, gives that supplier power. And you want to try to, you know, not be found to be basically dependent on any any one single entity out there.

So I think domestic supply is important from that standpoint. We’re not limiting ourselves to domestic supply. This is an extraction process that I think, again, has a lot of benefits to what technology currently exists out there. One that we have a capability in, but it will be dictated in terms of where you do it based on where those resources reside. You got to have a concentration of lithium in this brine water to make it economically feasible. The acreage that we have in Arkansas that we’re trying to develop has that concentration, makes it economically viable and therefore we’re developing that there are other opportunities around the U.S. and around the world that we’ll look to basically develop as well and pace that with the growth in the lithium demand and the supply that comes on there.

Murray: Darren, I’d like to go back to this question of how long is this all going to take? Because I don’t believe we’ve quite…

Lev-Ram: Alan needs a year. He needs a month and a day.

Woods: I can’t give that to you. I don’t know the answer to that.

Murray: All right. But let me ask you this. I am 100% in agreement with you that we would all be better off if we had effective governance that could put a price on carbon and create a market you could compete in that provides the right incentives to get us there. We don’t have effective government. We don’t seem to be headed in that direction. The IRA, as you pointed out, it may not have been the way you would do it, but it was a big, big deal. I don’t know how many more things like that you’re going to get. So I guess the question I have for you is in that in environment, what is the responsibility of ExxonMobil to push the market forward, to push us towards a solution? And how far are you willing to go in doing that?

Woods: So I think, you know, this is the challenge. We have a whole set of responsibility. One of is it to advance technology, provide solutions that help society achieve that objective. That’s clearly an object. We also have an objective and responsibility to our shareholders. We have to balance those objectives sets. I think unlike a lot of activist groups and ideologues that are out there who can focus on a single variable or a single cause, that’s a luxury that we don’t have. So we have to figure out how we can strike the right balance, offer solutions that meet these growing needs, develop technologies, and we do do that. We have invested in these technologies. I mentioned to you the direct air capture that we’re doing. I mentioned the things that we’re doing in carbon capture and storage. Those are all things that are very early in the stages that frankly today won’t be viable long-term businesses if society doesn’t start to put a value on decarbonization. And so to a certain extent, it’s a little bit like exploration in our upstream businesses that we see an opportunity we’re managing and mitigating the downside and positioning ourselves for the upside. I think that’s the most that you can ask for a public company out there.

Murray: And how much of an effect did the IRA subsidies have on on your business?

Woods: If you look at the lithium business, there’s an established market and a price out there. So it’s not directly part of the subsidies, but it is driven by EVs, which are part of the IRA subsidies. And so indirectly, the subsidies are behind the lithium business. The carbon capture and storage business, I would say the incentives to do that are all driven through the government. The low carbon hydrogen, again, there’s not a market out there to sell low carbon hydrogen to a third party without the government subsidies. Biofuels that we’re investing in Canada, as an example, are driven through regulation. And so I would tell you today, there is not a viable market where consumers step in and are willing to pay a premium for low carbon products. That’s the reality of what we face today. I can’t. I can’t drive demand and I can’t make customers pay more for a product that has less carbon intensity.

Murray: So you’re you’re a fan of the IRA?

Woods: Our view is it’s an important bridge to get things started. And so my mind is, yes, you got to have, the government has to play a role. I would have had the government play a different role, but to the extent that’s what they chose, they make the political decisions. They’re answerable to the people. I don’t pretend to be. I am answerable to my shareholders and investors, not to the general public. So the government has its role, makes its decisions and that construct, we’re trying to be a a positive force to demonstrate that this can actually work and to start down that learning curve. Whether we’ll be successful as a society with that remains to be seen.

But to your broader question of when, we don’t know the answer to that. What we’ve been looking at are the signposts. What has to happen in order for us to get on to this path. And so we have a very active process of monitoring, you know, investment in infrastructure. You know, if you’re going to electrify the whole country, you’ve got to have transmission systems and distribution systems. Do we see the permits going into those things? Do we see the advances in scale technology? There’s a lot of things that we’re watching. Do you see a market developing? Many, many things that we’re looking at. And frankly, if you look at those signposts, you don’t see the activity.

And I would tell you, my view is we’ve got to move away from our governments and politicians talking in aspirational terms and building the narrative based on hope and roll your sleeves up and start doing some real math here about how are we going to get from where we’re at to where we want to go to. What’s it going to take? How much is it going to cost? Who’s best positioned to do that? And actually start building a feasible plan that balances all the competing forces out there, rather than ignoring the constraints and challenges and focusing on the hope and aspirations that in my mind will never solve the problem. And we’re not doing enough of that as a world, as a society. I don’t see many governments anywhere sitting down and actually tackling these issues and inviting the right people and industry and government to roll their sleeves up and start building the plan to accomplish what the world basically needs. That’s a great signpost. Tell me when that starts to happen. I’ll tell you we’re on the path.

Lev-Ram: So he’s saying September 5th, I think.

[Laughter.]

Lev-Ram: 2050.

Woods: We have been advocating, I have to tell you that we have volunteered with every government that we engage with, that when they’re ready to do that, we’re ready to sit down and contribute our piece. I don’t pretend that we have all the answers. I just think that we can contribute, as can many other companies. And when they’re ready for a contribution, a serious contribution, a serious conversation, they want to do real math, they want to bring the engineers to the table, use data and analysis to figure out how we solve it, we’re here. W e’re there, we’re ready, and we’ve been volunteering to do that for some time now. And I would tell you.

Murray: Some countries must be…

Woods: Some countries are doing that as you go around the world, I would tell you the U.S. with the IRA, they’ve been I would tell you with very constructive discussions with the U.S. administration around how do you bring the IRA, how do you translate the legislation into practical regulations that incentivize industry to do these things? And we’re bringing our perspective. Again, I’m not suggesting that our perspective is necessarily the only perspective or the right perspective. But it is one that is based on a very deep understanding of our industry and the technical capabilities required to achieve some of these objectives and so we’re trying to be a positive, constructive force here.

Lev-Ram: Positivity and constructive conversations between private sector and government sound like a pretty good thing. So we’ll take it. I want to ask you a question just about you and your leadership. You’ve been with the company for a long time. You are driving this transition and transformation currently but have seen it go through multiple changes over the decades. And just give us a little bit of your take of, you know, what is the ExxonMobil culture? How has it shifted and how has it not shifted? What are kind of the core, you know, values or aspects of the culture that you feel like are really consistent? I think a lot of people don’t know this.

Woods: No, I think you’re right. I think frankly, I as I came into this job, one of the things that I guess upset me the most was that the perception of our company doesn’t match the reality of the people who are in it and the hard work they do every day. And so, one of my objectives is to basically try to help the outside world better understand our company and the people that work here and the work we do.

And I would just point to, you know, probably the most explicit step that we took was I don’t know if the CNBC engagement that we had with David Faber where we I invited him to come in and all I asked him to do was be objective. And we gave him access to anywhere he wanted to go, talk to any people in our company. And my view was if people on the outside got to see who we were, what we did, and what how our people approach their jobs, that would start to change some of the perception, recognizing it’s a very long road to go on. And so that was the first effort.

But if you ask, we have a set of core values, one that I’ve grown up with, they haven’t changed. We’re trying to express them more effectively externally. But I would start with one that I think for me has been critical for my entire career, in fact, which brought me to this company is integrity. Not just being honest and ethical, but being intellectually honest and saying the hard things and taking positions on what we believe on based on the facts and not jumping on bandwagons or subscribing to popular narratives that we don’t believe those are the right things.

I would tell you a second, really critical value for us is courage of conviction—that once you figure it out the right thing, once you’ve done the assessment and you’ve got an answer, you’ve got to stand up and talk about it. You can’t be afraid to go against the conventional wisdom. And I would tell you in this job, certainly I’ve felt the pressure to conform and I know what it feels like to stand against the popular narrative. But our view is if you’ve done the analysis right, if you have done it objectively, if you’re not letting your emotions bias your thinking, but instead are kind of coming back to what is it going to take to be successful for the long term, that ultimately things come back around and you’re proven that the path was the correct one.

And then the third one that I would just mention is, you know, resilience, that you’ve got to be in this for the long haul and you’ve got to stand the pressure. And I would tell you, you know, those three of our five core values that we talk about with all of our employees and so when you come here, we’re not promising an easy career, but we’re promising a rewarding one and one that you can feel good about.

The first job I had in this company, long time ago, my first supervisor gave me two pieces of advice that I’ve lived with since that time and the first one was if you ever doing something that you’d be embarrassed for your mother to read about on the front page of the paper, stop doing it. And I have lived with that my entire and that is really good advice. And the second point he told me was every morning you got to get up and look yourself in the mirror, make sure you like what you see. And I just tell you, you know, do the right thing for the right reasons, in the right way, and the rest will come with it. And so, I mean, that is I would tell you, you go across we have very committed people focused on doing the right thing in the right way for the right reasons and they’re making a difference. And we have made a difference.

If you look at our industry, I think it’s hard to point to any industry that has progressed human living standards around the world, and we take great pride in that. But we’re not buried by that or married to the idea. The idea is that the world changes, things evolve. We’ve got a capability. Our job is to continue to contribute to society and basically help people achieve a prosperity to improve living standards and our people take great pride in our ability do that. And we are, you know, going through a transition but it will be a long one. People don’t fully appreciate the scale of the industry that we’re in today. And so I think, you know, the recognition back to your question, Alan, about how long will it take? You’ve got to come back to the size of the existing energy system today. It is big. It will take time to replace. But my point is, we’ve got to get started on it.

Lev-Ram: I can’t believe you voluntarily went back to Alan’s question, which he pestered you with the entire interview.

Woods: I’m a glutton for punishment, what can I say?

Murray: But the other thing, Darren, that notion that you don’t want to read anything and you don’t want your mother to read anything in the paper, it sort of depends on what papers she’s reading too.

Woods: My mother’s not a good litmus test for that, by the way, because she thinks your son does no wrong. But I would just finish up those three. I gave you the two more kind of our core values. One is care. Care about what you’re doing and why you’re doing it and care for the people that you work with, the communities that you’re in and the environment. We feel very strongly about that and I think if you had the chance to be at one of our operations, you would clearly see that. And the fifth one that we hold ourselves is excellence, that we hold ourselves to a high standard. We expect a lot of ourselves and of our people and when we don’t meet those high expectations, we challenge ourselves to get better. And those are the five core values that I think most everybody in our company believe in and resonates with them.

Murray: But I want to say we appreciate the fact that you have taken a different approach towards conversing with, I wouldn’t say the public, with the media on these things. Really appreciate the fact that you’ve come here today and spent so much time with us on this issue. I just have to ask you, I mean, this is a big, complicated, difficult transition. You’re under a lot of pressure, a lot of pushback that you’ve talked about. What do you do to relax? I mean, do you watch Hallmark movies? I mean, when you have a few spare minutes?

Lev-Ram: This is a good week for them, by the way, or every week is a good week for them.

Woods: You know, I put a lot of priority on my family and so that’s probably why I would tell you I’ve never brought work home to my family. I try to keep them separated from the things I do day and day. And so when I come home, unless I want to, which is very rare. We don’t talk about work. We talk about, you know, what’s happening in their lives. I’ve got three kids, I’ve got three grandkids, got another one on the way. And so when I’m not at work, I’m with the family and I try to get away and I like to go outside. We spend a lot of time outside. I’ve got some some property in the hill country of Texas I like to get away from. So I think getting clear my mind and I don’t get to wade down and try to disconnect from the world. I’m not a social media guy. I’m not on the internet all the time. I just feel like that drains you.

Murray: And your children and grandchildren aren’t harassing you about why you aren’t going faster to deal with the energy transition?

Woods: I think my grandchildren are too young to that. We’ll see when they get a little bit older. The oldest is four. So I think she’s not quite up to that argument yet. But, you know, given how she is today, I’m pretty sure at some stage she’s going to give me a run for my money. But I think my kids, they know they know what I stand for. They’ve grown up with me. You know, we’ve always believed in sitting around the kitchen table. And so despite long work hours, my wife and kids always accommodated that. We always sat down for dinner when I was in town. And I would tell you, our dinners were always long and we always talked and I always challenged them. You know, my gift to them is independent thinking. And listen carefully, understand what people are saying, but make sure that you make your own decisions and you have a basis for doing that.

And I think over the years, I can’t think of a topic that we haven’t touched on and discussed. So my kids know why I do the things that I do and they know, you know, the company that I work for and represent is very aligned with those principles and the values that I have as an individual. And so they know what I’m doing to try to help solve this problem for the world.

Lev-Ram: Darren, thank you so much for sitting with us. As Alan said, we really appreciate you taking the time and telling us so much about the company, both, you know, the transformation, the culture, and all of it. Thank you.

Woods: Happy to do it. Enjoyed the conversation and look forward maybe seeing you sometime in New York, Alan.

Murray: We’ll do the next one in person after you solve this problem, we’ll come back and review the progress.

Woods: All right. Thank you.

Lev-Ram: Alan will ask the same question. So just be prepared. Come ready.

Murray: Leadership Next is edited by Nicole Vergara.

Michal Lev-Ram: Our executive producer is Chris Joslin.

Murray: Our theme is by Jason Snell.

Lev-Ram: Leadership Next is a production of Fortune Media.

Murray: Leadership Next episodes are produced by Fortune’s editorial team. The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel. Nor does Deloitte advocate or endorse any individuals or entities featured on the episodes.