'Powerful signal': In a single day, Big Oil suffers historic blows on climate

The complaints signal that climate concerns, which were once limited to environmental activists and barely registered with some Washington lawmakers, have become mainstream thinking in C-suites and on Wall Street, analysts said. The visible effects of climate change, government action and shifting consumer sentiment are transforming the world in which companies do business.

The speed of events happening in an industry that typically measures change in decades means corporations and even entire regions, including West Texas, are faced with a reality where there is less demand for their product, Mark Jones said. a political science scholar at Rice University in Houston.

“There’s no going back,” Jones said of the action in the boardroom and courtroom. “There is no going back to where there was oil and natural gas.”

The action began early Wednesday when a Dutch court stated that European energy giant Royal Dutch Shell had helped drive. “dangerous climate changeAnd ordered the company to reduce its own CO2 emissions as well as those of its suppliers and customers by 45 percent by the end of 2030 compared to 2019.

The closely watched lawsuit – filed by Friends of the Earth Netherlands and more than 17,000 co-plaintiffs of citizens – claimed that Shell’s annual emissions, which make up around 3 percent of the world’s population, posed an unlawful threat to the climate that must be stopped.

Shell last month said it would Reduce the carbon intensity of its products by 20 percent by 2030 and zero emissions by 2050, which shareholders supported last week. The company is also investing billions of dollars in electric vehicles, hydrogen, renewables, and biofuels.

However, the Dutch court said that Shell’s initiatives were not concrete and relied too heavily on “monitoring social developments and not on the company’s responsibility to reduce carbon emissions”.

Bowl will appeal What it called a “disappointing” ruling, and the ruling does not set a precedent for US courts. However, the Dutch decision to impose emissions reductions on a company leads to similar rulings in the Netherlands, France and Germany in cases where the climate effort the government should be boosted.

The verdict is “staggering,” said Joana Setzer, assistant professor at the Grantham Research Institute at the London School of Economics and Political Science. “The court tells the company that they must make financial sacrifices and change their behavior.”

Hours later, Exxon Mobil lost a battle with its own shareholders. Engine No. 1, a small group of investors focused on long-term returns, convinced the majority of shareholders to install at least two of their nominees. Gregory Goff and Kaisa Hietalaon the board of directors of the oil company. Engine # 1 candidate Anders Runevad was not elected, and Exxon said it is reviewing the votes for a fourth, Alexander Karsner.

The victory of Engine No. 1, even part of it, was a milestone and a sign that environmental, social and governance investors are gaining influence in boardrooms. The move even came after Exxon spent $ 35 million to thwart efforts. It did so after BlackRock, the world’s largest asset manager with more than $ 8.6 trillion in assets under management, named three of Engine No. 1 had supported.

Engine # 1 had argued that Exxon’s reluctance to change its business strategy to address climate change put profits at risk. The vote was indeed a double win for environmentalists and their investor allies. This was a long-awaited blow to the energy giant only because large asset managers like BlackRock used their significant clout to force change.

vanguard and State Street, the largest and third largest shareholders, had not announced their votes until late Wednesday. BlackRock, Exxon’s second largest shareholder, voted for Goff, Hietala and Karsner.

“Exxon and its board of directors need to further evaluate the company’s strategy and expertise in light of the possibility that fossil fuel demand could decline rapidly in decades to come,” wrote BlackRock. “The company’s current reluctance to act poses a corporate governance issue that can undermine the company’s long-term financial sustainability.”

It was a remarkable reprimand for a company that has long had enormous political clout, to the point that its former CEO, Rex Tillerson, took over the helm of the State Department in 2017 under then-President Donald Trump.

Darren Woods, Exxon Mobil chairman and CEO, said in a statement: “With nearly 3 million shareholders, it is not surprising that we have heard a wide range of views and many have supported the work we are doing to improve earnings and performance Providing Cash Flow Capacity We heard today that Exxon Mobil shareholders have expressed their desire to move these efforts forward. We are well positioned to do so. “

Things went almost as bad for Exxon rival Chevron, who held its own annual meeting earlier in the day. A Shareholder resolution that would force the company to cut its Scope 3 emissions – Greenhouse gases released through the use of the oil, gas and other products it sells – passed with 61 percent of the vote.

While the oil companies were being hit by shareholders, a major auto company – Ford – redoubled its plan to be fossil-fuel-free. A week after the all-electric F-150 launched, Ford announced it had already received 70,000 reservations for the pickup, which will roll into showrooms in 2022.

The automaker also increased its spending on electrification, including battery development, from its current $ 22 billion to $ 20 billion by 2025. The company expects 40 percent of its global vehicle volume to be fully electric by 2030.

“Every oil company, every polluting company, and every company doing business has received a strong signal,” said Andrew Behar, CEO of As you Sow, a shareholder representative. “These boards can no longer ignore their shareholders. The shareholders have said” enough “. The shareholders are using their power. It took a long time.”

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