Victory for activists
Shell and ExxonMobil feel heat of climate action
Backlash against big oil
Climate activists have scored a milestone victory over big oil following a court ruling against Shell and investor action to force boardroom changes at ExxonMobil.
A Dutch court ordered Shell to drastically cut its carbon footprint, while ExxonMobil was forced to accept activists on to its board.
The landmark court ruling in The Hague marks the first time a fossil fuel company has been held accountable for its contribution to climate change and forced to reduce greenhouse gas emissions throughout its whole supply chain.
Seven campaign groups, including Friends of the Earth Netherlands and Greenpeace Netherlands took the case to court on behalf of 17,000 Dutch citizens.
Shell, which had already announced internal targets for cutting emissions, will now have to make radical changes to its operations to meet the international aim of limiting global warming to 1.5C set out in the Paris Agreement.
The company is said to be responsible for 2.36% of all emissions and will now have to cut carbon dioxide gases by 45% over the next ten years, a considerable hike in its own target of 20%.
The case is the first time activists have taken a major energy firm to court to compel it to overhaul its climate strategy and campaigners described the verdict as a “historic victory” for people and the earth.
Andy Palmen, interim director of Greenpeace Netherlands, said: ”This verdict is a historic victory for the climate and everyone facing the consequences of the climate crisis.
“Shell cannot continue to violate human rights and put profit over people and the planet.
However, Shell is expected to launch an appeal against what a spokesperson for the firm described as a “disappointing court decision”.
The spokesperson added: “We are investing billions of dollars in low-carbon energy, including electric vehicle charging, hydrogen, renewables and biofuels.
“We want to grow demand for these products and scale up our new energy businesses even more quickly.”
In the UK, industry has committed to working in line with the Paris Agreement and recently passed the landmark North Sea Transition Deal which included a pledge to cut production emissions by 15 million tonnes by 2030, the equivalent of 22% of annual emissions from UK homes.
Deirdre Michie, chief executive of industry representative body Oil & Gas UK, said: “The UK offshore oil and gas industry was the first sector to commit to the government’s target of achieving net-zero carbon emissions by 2050, in line with the Paris Agreement.
Deirdre Michie: reductions in place
“Companies are already reducing greenhouse gases through the landmark North Sea Transition Deal, developing greener technologies to cut our emissions and helping other industries to do the same.”
The court ruling came as US oil giants ExxonMobil and Chevron suffered shareholder rebellions from climate activists and unhappy institutional investors over their failure to set a strategy for a low-carbon future.
Hedge fund activists at Engine No. 1 successfully replaced two Exxon board members with its own candidates to help drive the oil company towards a greener strategy. Exxon’s second largest shareholder, BlackRock, is understood to have thrown its support behind the campaign.
Exxon was forced to adjourn its annual shareholder meeting for an hour in a bid to stave off the rebellion by Engine No.1 which may claim a further two board seats once the preliminary results are finalised
Meanwhile, a majority of Chevron shareholders voted 61% in favour of a proposal from Dutch campaign group Follow This to force the group to cut its carbon emissions.
Danni Hewson, AJ Bell financial analyst said: “Big Oil has much to think about today from the landmark ruling which will force Shell to cut emissions faster, to the shareholder showdown which could push Exxon Mobil to take on four new board members.
“Even if Shell wins at appeal or Exxon’s board stays the same, today is a big moment. Climate activists have power and they’ve figured out how to use it.
“Change can be painful but both businesses have accepted it is coming and moreover change is preferable to the alternative.
“The issue for both is the speed at which they’ve indicated they’re moving towards that change. Not fast enough has been the clarion cry and those making the noise could be right on two fronts.
“First, reaching the ambitious climate targets western governments have set requires big oil to be at the forefront of that change. Second there’s potentially a huge financial implication for businesses falling behind the curve.
“Investors have recognised not only the risk but the reward. ESG investing has become de rigueur, not merely ethically sound but financially as well.”