Oil companies Shell, ExxonMobil and Chevron must commit to tackling the climate crisis. The call is coming from investors and a court.
In the space of a week, three of the world's largest oil companies saw their future plans upended. First, a Dutch court ordered Shell to cut its CO2 emissions into the atmosphere; then two dissident shareholders joined the board of directors of ExxonMobil for the first time. Finally, Chevron's shareholders also called for greater commitment to reducing climate-altering emissions.
A bad week for Big Oil but, as American journalist Emily Atkin neatly summed up in her newsletter Heated, "a great day for life on Earth!"
On Wednesday 26 May, a landmark ruling was handed down: oil multinational Royal Dutch Shell must reduce its greenhouse gas emissions by 45 per cent by 2030, compared to 2019 levels, in order to align with the requirements of the Paris Agreement on climate. So ruled the District Court of The Hague, in the Netherlands.
The verdict follows a lawsuit brought by a coalition of environmental organisations including Friends of the Earth Netherlands, Greenpeace Netherlands, ActionAid, Both Ends, Fossielvrij Nl, Jongeren Milieu Actief and Waddenvereniging, on behalf of 17,379 citizens. Their arguments hinge on the Paris Agreement on climate, which aims to keep the rise in average global temperatures to within 2 degrees Celsius above pre-industrial levels, doing everything possible to avoid exceeding 1.5 degrees.
But, according to the lawyers, by continuing to invest billions in fossil fuel energy production, Shell is breaching its duty of care and violating human rights. Meanwhile, the company reiterated its commitment to achieving net-zero emissions by 2050 and announced its intention to appeal the ruling.
In the same days that the ruling against Shell came down, two activists from the investment fund Engine No.1 joined the board of directors of ExxonMobil. The move represents an attempt to exert pressure from within and push the oil company to make a stronger commitment on the issue of climate change.
Most surprisingly, Engine No.1's proposal won the support of three major investment fund managers — BlackRock, Vanguard and State Street — which together hold more than 20 per cent of ExxonMobil's shares. BlackRock in particular, The Guardian reveals, which owns a 6.7 per cent stake in ExxonMobil, is said to have backed Engine No.1's candidates out of frustration at the American company's refusal to take climate concerns seriously.
Third in sequence, but no less significant, is the case of Chevron: several of its shareholders voted in favour of a resolution calling on the Californian oil company to reduce CO2 emissions linked to its oil and gas extraction activities. The message sent is that investing in fossil fuels could prove counterproductive. And it is the investors themselves saying so.
In Chevron's case, 61 per cent of its shareholders rebelled against the company's plan and called for reductions in so-called "scope 3" emissions — that is, those linked to customers' use of its products. The proposal does not require Chevron to set a specific target for emission cuts or a deadline for achieving them, but it is nonetheless a signal the company cannot ignore.
All the more so because things could have gone worse for Chevron. At the annual general meeting, shareholders narrowly rejected a proposal that would have required the oil giant to prepare a report on how its core business would be affected if the United States were to genuinely achieve net-zero emissions by 2050, as President Joe Biden has pledged. Another proposal, requiring Chevron to disclose more information about its lobbying activities, was rejected by the narrowest of margins. Both received 48 per cent of the vote.
In 2017, in the ranking of companies active in the oil and gas sector compiled by the Climate accountability institute, Chevron came second for greenhouse gas emissions, just behind Saudi Aramco. In this special ranking, ExxonMobil is fourth, while Shell occupies seventh place. Yet ExxonMobil, Shell and Chevron account for only 7 per cent of global production, which remains in the hands of large state-owned companies.
Furthermore, the International Energy Agency has stated that to genuinely keep the climate crisis under control, investors must stop financing the development of new fossil fuels within the next year.
Unfortunately, given recent investment in the oil sector (the banking sector has channelled more than 3 billion euros into fossil fuels since the Paris Agreement was signed to date), the International Energy Agency's recommendations are still far from being adopted. This is why the firm stances taken by some company shareholders (and by the courts) are encouraging signs for the planet's energy transition.