The day everything changed for big oil?
Posted on: May 27th, 2021
We all know that climate change poses a massive – indeed ‘existential’ – threat and that things will change rapidly as we work to acheive the goals agreed in Paris in 2015.
We also know that renewable energy companies, and related industries, have a bright future – indeed it could be said that ‘they are the future’, as one of the speakers at UKSIF’s spring conference said earlier today.
What is less clear is the role – if any – big oil companies will play in that future.
The choices, as I and many others see them, are between their finding a way to transition to become properly clean energy companies – or eventual oblivion.
The former will not be easy, but the implication of the latter, particularly for investors like pension funds – is horrible.
This ‘rock and a hard place’ dilemma is why although many investors have chosen to divest others are supportive of the aims of NGOs and others who are using every means possible to encourage ‘big oil’ to transition.
26 May 2021 undoubtedly marked a momentous day in this journey and may well turn out to be the day everything changed…
Yesterday’s developments are outlined below, with links to to further reading:
A Dutch court in the Hague ruled that Royal Dutch Shell must reduce its net carbon emissions by 45% below 2019 levels by 2030 – in a case brought by Milieudefensie (the Dutch wing of Friends of the Earth) . Shell have said they will contest the ruling.
- https://www.ft.com/content/340501e2-e0cd-4ea5-b388-9af0d9a74ce2?emailId=60aeb99b4ab84000040e7fd1&segmentId=7e94968a-a618-c46d-4d8b-6e2655e68320
- https://www.bbc.co.uk/news/world-europe-57257982
- https://www.shell.com/media/news-and-media-releases/2021/shell-response-to-dutch-court-ruling-in-case-brought-by-milieudefensie.html
ExxonMobil’s shareholders voted two directors, proposed by (hedge fund manager) Engine No 1, onto their board on the grounds that the group’s focus on fossil fuels had put it at ‘essential risk’. (I can not see a response from the company).
- https://www.ft.com/content/da6dec6a-6c58-427f-a012-9c1efb71fddf?emailId=60aeb99b4ab84000040e7fd1&segmentId=7e94968a-a618-c46d-4d8b-6e2655e68320
- https://www.businesswire.com/news/home/20210526006050/en/ExxonMobil-Announces-Preliminary-Results-in-Election-of-Directors
- https://fortune.com/2021/05/26/exxonmobil-agm-landmark-vote-shareholders/
A big majority of Chevron shareholders voted in favour of a resolution calling on the group to ‘substantially reduce’ it’s scope 3 emissions. The company has said it will carefully consider the result.
- https://www.ft.com/content/fa9946b9-371b-46ff-b127-05849a1de2da?emailId=60aeb99b4ab84000040e7fd1&segmentId=7e94968a-a618-c46d-4d8b-6e2655e68320
- https://www.theguardian.com/business/2021/may/26/exxonmobil-and-chevron-braced-for-showdown-over-climate
- https://www.reuters.com/business/energy/chevron-shareholders-approve-proposal-cut-customer-emissions-2021-05-26/
No one was expecting oil companies to be particularly delighted with developments of this kind, but shareholder action such as this, coupled with stronger government policies – supported by the courts – is clearly essential if we are to encourage progress and avert the worst ravages of climate change.
I congratulate everyone involved in each of these initiatives. Although this is a marathon not a sprint their contribution must not be underestimated.
For those working in retail investment markets our free to use fund tool Fund EcoMarket allows you to search for around 50 different related fund and fund management group strategy options.
The most popular individual issue searches so far this year are ‘[has a] Climate Change / Greenhouse Gas Emissions Policy’ and ‘Avoids Coal, Oil and Gas Majors’. The most popular SRI Style theme remains ‘Sustainability Themed’. All illustrate the great interest in this issue amongst the sustainable investment advisory community and their clients.