Investors, lawmakers give Big Oil a stark warning on climate
Exxon loses 2 board seats to activist fund; Chevron pressed to further cut gas emissions
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Members of Dutch environmental group MilieuDefensie celebrating the verdict of the case against Royal Dutch Shell outside the Palace of Justice courthouse in The Hague in the Netherlands, yesterday. The oil giant was dealt a blow as it was ordered to slash its emissions harder and faster than planned.
PHOTO: BLOOMBERG
HOUSTON • Shareholders rebuked the top two US oil companies for dragging their feet on fighting climate change, while a Dutch court ruled that Royal Dutch Shell needs to accelerate cuts to greenhouse gas emissions by 2030.
"Today was a stark warning for Big Oil," said Ms Bess Joffe of the Church Commissioners for England, on Wednesday. The commissioners manage the Church of England's investment fund. Executives are "being held to account by investors and lawmakers", she said.
Exxon Mobil lost at least two board seats to an activist hedge fund, shareholders at Chevron endorsed a call to further reduce its emissions and a court deemed Royal Dutch Shell's emissions targets insufficient.
Investor support for climate concerns could force oil and gas companies to rethink how fast they pivot to other forms of energy.
BP, which recently pledged to consult with shareholders on its climate targets, could see the next test of the groundswell.
In a stunning blow to top management at Exxon, shareholders elected two change candidates for its 12-seat board and approved measures calling for annual reports on climate and grassroots lobbying effort. Activists could yet win a third seat with some votes still to be counted and the full board not yet known.
Tiny US hedge fund named Engine No. 1 led the effort to nominate the new board members and was supported by BlackRock, Exxon's second-largest shareholder. "It's a huge deal. It shows not just that there is more seriousness apparent in the thinking among investors about climate change, it's a rebuff of the whole attitude of the Exxon board," said executive director of ESG Research Ric Marshall at MSCI.
Exxon had fought to keep climate activists at bay, spending tens of millions of dollars on a high-profile PR campaign, agreeing to publish more details of its emissions and coming out in support of carbon reduction. Activists said it was too little, too late, and that Exxon needs a less reactive strategy.
After the meeting, chief executive Darren Woods said Exxon heard shareholders' desire to advance lower-carbon and cost-cutting efforts. "We are well positioned to respond," he said.
Chevron shareholders backed a call for the company to cut emissions from the end-use of its fuels with 61 per cent supporting the petition. Another resolution calling for a report on the business impact of achieving net zero emissions by 2050 was backed by 48 per cent of votes cast.
"The question for oil companies is when and how much" do they reduce oil and gas production in response to investor and social concerns, said Professor Charles Elson of corporate governance at the University of Delaware.
The votes signal a new sense of urgency, said Mr Mark Van Baal, who leads a climate advocacy group that placed resolutions calling for emissions cuts at Chevron, ConocoPhillips and Phillips66. All got at least 58 per cent support.
Investors are saying: "We want you to act by decreasing emissions now, not in the distant future," he said.
REUTERS
