A Good Move for the Green Movement
Last Wednesday, May 26, 2021, was a great day for the Green Movement and a bad day for Big Oil. The three most publicly traded fossil-fuel companies were all handed big decisions that will force them to clean up their act much more quickly than they had originally planned:
- Shell was found to be partially responsible for climate change by a Dutch court and ordered to reduce its carbon emissions by 45% by 2030.
- Exxon lost three seats on its board to an activist investor Engine No. 1, which will likely result in a major overhaul of its fuel-focused business strategy.
- Exxon’s counterparts at Chevron also supported a motion to include emissions from burning fuels sold by the company in future reduction targets, against the wishes of the board.
Engine No. 1, a hedge fund owning approximately .02% of Exxon’s stock, challenged the company’s sustainability campaign and its outdated strategies in response to climate change in a campaign beginning last December. They called for Exxon to gradually diversify its investments to prepare for a future with fewer fossil fuels, despite Exxon’s insistence that plastics and gasoline will remain in demand for years to come.
“Over the past decade, [Exxon] has failed to evolve in a rapidly changing world, resulting in significant underperformance to the detriment of shareholders and risking continued long-term value destruction,” Engine No. 1 said in a statement about why it put forward its slate of candidates.
Activists and investors are steadily applying more pressure on Big Oil companies to be held accountable for their impact on the environment. Society’s views, as well as the political and legal environment in which fossil-fuel industries are operating, are rapidly changing in support of sustainability and green initiatives. While many oil companies have started to adopt comprehensive plans to reduce their carbon footprint, especially in Europe, many face skepticism about their strategies and motives.
The Wall Street Journal states, “The Shell ruling, issued by the district court in The Hague, found that Shell must curb its carbon emissions by 45% by 2030 compared with 2019 levels—and that the company was responsible not only for lowering its own direct emissions from drilling and other operations, but also those of the oil, gas, and fuels eventually burned by consumers.”
Shell reportedly said that it expected to appeal the decision, citing their investment of billions of dollars in low-carbon energy, electric vehicles, and renewable energy. However, the decision by the Dutch court sends a message that the world will no longer idly allow the fossil-fuel industry to pollute the planet and contribute to climate change unchecked.
Evidence shows that we have a growing responsibility to keep global warming from exceeding 1.5 degrees Celsius above pre-industrial levels, as stated in the Paris climate agreement. The efforts by major players in the fossil fuel energy up to this point will not get us there. However, both decisions regarding Shell and Exxon are huge indicators of where the industry is headed, even if we still have a long journey ahead. “People around the world are demanding climate justice,” Andy Palmen, interim director of Greenpeace Netherlands, said in a statement.
While we may have a long way to go to net zero, these recent decisions show that moving away from fossil fuels is no longer only the stance of environmentalists and activists but also a priority for key stakeholders keeping their businesses relevant and profitable.
Paige is the Solar Admin and Office Manager at Solterra Solar. A Kentucky native, she’s fond of hiking, traveling, dinosaurs, and recently began roller skating. When she isn’t in the office working on a solar project, she enjoys being outside or doing something creative (or both!).