Exxon Mobil (NYSE:XOM) is trading at its highest level in over a year, with a dividend of almost 6%. But institutional investors no longer have patience for the company. An activist fund called Engine n ° 1 got enough backing to oust at least two directors at the May 26 annual meeting. The vote reflects not only a change in attitude at Exxon, but also a trend in energy stocks.

The upheaval could not have happened without major support from institutional investors, who control 53% of XOM stock. As Conor Sen from Bloomberg tweeted, “No.1 engine convinced Black rock et al to make a change at Exxon, one of the many companies they collectively control. “

What BlackRock wants

BlackRock CEO Larry Fink, whose company has contributed several executives to President Joe Biden’s administration, called for “tectonic change†in his 2021 letter. “No problem ranks higher than climate change on our clients’ priority lists, â€he wrote.

If the institutions act on this basis, it will have an impact on all energy stocks. Houston is as closely tied to oil as Detroit was to cars 40 years ago. But over the past decade, technology has produced cheaper substitutes for fossil fuels. Electricity produced by wind turbines and solar panels is now the source of cheap energy.

In the case of Exxon Mobil, the No.1 driver wants more investment in clean energy and more discipline in the allocation of capital, including lower gas and oil prices. He also wants top executives like CEO Darren Woods to be penalized for their past performance. In Woods’ case, he earned $ 75 million while the company’s market cap fell by $ 200 billion. The proof is that the XOM stock has outperformed its rival Chevron (NYSE:CVX) since Engine # 1 launched its campaign.

What Exxon Mobil does

However, telling Exxon Mobil to take climate change seriously is a bit like telling the Chicago Tribune take the internet seriously in 1995, or Altria (NYSE:MO), then Phillip Morris, to take lung cancer seriously in 1970.

Exxon Mobil specializes in oil and gas. Under Woods, the company discovered vast new deposits off Guyana and doubled hydraulic fracturing in the Permian Basin in Texas. Its latest quarterly report, released on May 5, reported profits of $ 2.7 billion, or 65 cents per fully diluted share, on production of 3.8 million barrels of oil per day.

The problem is that downstream operations – refining and selling petroleum products – still suffer from low margins. The demand for gasoline decreases with every electric car sold. Future demand for natural gas decreases with each new wind or solar farm that goes into production. But Exxon’s investment budget for 2021 remains between $ 16 billion and $ 19 billion.

Will something change for energy stocks?

The radical change has already started. The market treats oil stocks like Exxon and Chevron, which show a 5.16% return, like it treated cigarette stocks a generation ago. Reserves and capital budgets are shrinking. The money goes to the shareholders instead of going back into the company.

Other integrated oils, such as BP (NYSE:BP), Total (NYSE:EARLY) and Royal Dutch Shell (NYSE:RDS-A), seem all-in on an environmentally conscious approach, at least rhetorically. Total controlled SunPower (NASDAQ:SPWR), a producer of solar panels, for years. BP says its goal is “net zero emissions” by 2050. And a court recently asked Shell to reduce its emissions by 45% by 2030.

Climate awareness is here to stay with energy stores

The oil press calls Exxon’s vote a “judgment dayâ€. For investors, they should consider that debt levels and dividends now matter more than oil production.

For example, the Permian player EOG Resources (NYSE:EOG), after earning $ 1.62 per share, announced a special dividend of $ 1 per share “to demonstrate our commitment to return cash to shareholders.”

Forget about investing in energy stocks in the hope of a return. Buy oil and gas stocks for dividend income. This is what is going to be sustainable.

As of the publication date, Dana Blankenhorn does not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to InvestorPlace.com Publication guidelines.

Dana blankenhornhas been a financial journalist since 1978. His latest book isBig Bang of Technology: Yesterday, Today and Tomorrow with Moore’s Law, technology essays available on Amazon’s Kindle store. Ffollow him on Twitter at@danablankenhorn.