Big Oil has been shaken by a climate calculation.
International oil companies have established detailed plans to reduce carbon emissions. But the extraordinary defeats of the meeting room and the courtroom have shown how powerful forces in society want faster change.
Shareholders in ExxonMobil, a titan of corporate America, supports a long-running militant campaign to review the company’s board of directors, giving new directors a mandate to push for a more aggressive strategy to reduce emissions.
Wednesday’s vote came after a The Dutch court ordered Royal Dutch Shell to accelerate and deepen its emission sizes. Meanwhile, investors in Chevron challenged management for a bigger climate vote, approving a measure for the company to set strict targets on the emissions of products it sells for the first time.
The actions show increasing pressure on international oil companies to respond more aggressively to climate change, with far-reaching consequences for energy supply and energy investors.
The hypotheses about energy that were common a few years ago are dismantled. The International Energy Agency said in a statement reference report last week that the hit of the emission targets would require ending investment in new oil and diesel fields. Threats to future oil demand have been underscored by this week’s enthusiastic reception on new electric version of Ford’s F-150 pickup truck, a gas guzzler that reigns as America’s most famous automobile.
The Big Oil examination is on track when governments around the world set a zero net carbon emission objectives ahead of international discussions on the weather later this year. While most major oil companies have tightened their climate policies, they are still failing to meet the goals of the Paris Agreement, according to new research by Carbon Tracker, a think tank.
“This reflects a major change of sea.” Political leaders, business leaders and of course investors are all stepping up to address this climate emergency, ”said Liz Gordon, executive director of corporate governance at the New York State Commonwealth Retirement Fund, who supported the militant campaign against Exxon. “It’s a great day.”
It was an extraordinary defeat for Exxon, which relinquished at least two advisory positions to candidates for a small shareholder called Engine No 1. The activist hedge fund launched its proxy fight in December and claimed that the attention of the company on the development of oil and gas had had to put up with “Existential risk”.
“It’s a historic vote that represents a turning point for companies that are not prepared for the global energy transition,” said Aeisha Mastagni, portfolio manager of the California State Retirement System, one of the the largest pension funds in the country.
“ExxonMobil’s board elections are the first for large U.S. companies to focus on the global energy transition,” he added. “It certainly won’t be the last.”
The militant campaign also exploited investor concern about Exxon weak financial performance in recent years, which has delayed both its peers and the wider market.
Exxon CEO Darren Woods has made a strong defense of his strategy for the company during the proxy fight, arguing that the world would still consume significant amounts of oil for decades to come and their society could respond to this demand profitably even as countries seek to reduce carbon emissions.
But he also succumbed to some of the activists ’demands in an attempt to win over the remaining shareholders by adding new board members, promising to spending slash on new oil and gas projects, disclosing for the first time emissions created by the combustion of the company’s products and promising to increase spending on carbon capture and storage.
Woods, who retained his seat on the board in Wednesday’s vote, acknowledged the defeat, telling the Financial Times that the company “has heard shareholders communicate a desire for ExxonMobil to further its efforts” to improve performance. finance and address climate risk. “We’re well placed to do that,” he said.
Large investors are increasingly using their influence to bring carbon-intensive businesses online in the face of climate change.
BlackRock, whose boss Larry Fink highlighted the asset manager’s push for sustainable investment last year, has backed three of the No. 1 engine candidates.
The vote “reflected our belief that Exxon’s energy transition strategy is no more than what is necessary to ensure the company’s financial resilience in a low-carbon economy,” BlackRock he said in the bulletin explaining his decision.
The defeat of Shell’s courtroom could also have far-reaching consequences. The decision effectively sets a precedent where a court can decide on the corporate strategy of a large greenhouse gas emitter and force a review of its business, analysts said.
“The court basically says that not only Shell, but the energy industry and corporate polluters around the world should reduce oil and gas extraction, and reduce CO2 emissions,” said Joana Setzer, which focuses on climate litigation and environmental governance at the Grantham Research Institute for Climate Change and the Environment at the London School of Economics.
The ruling struck Shell just a week after its annual meeting. While most shareholders have voted in favor of its energy transition plan, a growing number of investors want the Anglo-Dutch company to do more.
BP also earlier this month away The stock is calling for it to bolster its climate targets, but it has also seen support for the measure grow. Friday Total France will see a reaction to its annual investor meeting.
Defeats for Exxon, Shell and Chevron on Wednesday brought the sector’s climate challenge to strong relief, analysts said.
“This is one of those days that will be seen in retrospect as a day when everything changed,” said Andrew Logan, senior director of oil and gas at Ceres, which coordinates investors ’climate action.