May 26 (Reuters) - The successful board challenge against Exxon Mobil Corp casts a spotlight on two recently launched sustainability-focused investment firms that took opposite sides in the high-stakes battle: Engine No. 1 and Inclusive Capital Partners. Engine No. 1 set the spark in January by formally nominating four directors to Exxon’s board, accusing it of not moving fast enough to diversify away from fossil fuels. Inclusive Capital Partners sided with Exxon after its founder Jeffrey Ubben joined the energy giant’s board in March, and argued it was already working with the company to improve its technology in areas such as carbon capture. Both funds were launched less than a year ago. Their quick ascendance to Exxon’s board underscores how Wall Street’s new focus on environmental, social and corporate governance (ESG) is opening doors for activist hedge funds at some of the world’s largest companies. Engine No. 1 was launched by hedge fund veterans Charles Penner and Chris James in December 2020. Penner spent much of his career at activist hedge fund Jana Partners, where he quarterbacked a campaign to get iPhone maker Apple Inc to create tools for parents to track and limit the use of children’s’ smartphones. Engine No. 1 reported as of the end of March owning 917,400 Exxon shares valued at $51 million - a sum that traditionally would barely get a phone call returned from a company like Exxon, whose current market capitalization stands around $250 billion. Yet thanks to the backing of some of the biggest Wall Street fund managers such as BlackRock, it has won at least two seats on Exxon’s board. Lawyers and industry analysts who worked with Penner said he had immersed himself for years in researching how to take on the oil giant and speaking to other Exxon shareholders. Engine No. 1 “did an effective job of making their case, and it appears that investors are saying that with their votes,” said Tim Youmans, engagement leader for EOS at Federated Hermes, which advises clients how to vote. Ubben founded Inclusive Capital in June of last year after leaving ValueAct Capital, the activist hedge fund he launched in 2000. He had a built a reputation for pushing for change outside the limelight and working more collaboratively with management than many other activists. He has described Inclusive Capital as a return-driven environmental and social activist firm and raised concerns about the sustainable products being sold by big index funds. In a recent regulatory filing the firm said it owned 1.6 million share of Exxon, valued at $93.6 million. Ubben defended Exxon against Engine No. 1’s criticism, and as of Wednesday morning Ubben was still calling top Exxon investors to make the company’s case, according to people familiar with the matter. While the result is a setback for Ubben, he gets to keep a board seat at Exxon he may not have gained if the oil major was not seeking to defend itself against Engine No. 1 in the first place. Representatives for Ubben did not immediately comment for this article. A spokesman for Penner referred to his statement at Wednesday’s annual meeting in which he said the firm has “learned that change can happen anywhere. It will always be a long shot, but it will always be worth it.” In a statement on its website on Wednesday a top Exxon investor BlackRock Inc said it backed three of the four dissident nominees. Those directors, “together with Mr. Ubben, bring the fresh perspectives and relevant transformative energy experience to the Board that will help the company position itself competitively in addressing the risks and opportunities presented by the energy transition,” BlackRock said.