Shareholders, citizens, and Dutch judges converged to shakeup the oil industry on May 26, 2021.
In three independent proceedings, a clear message broke through: oil companies are being made responsible for emissions of third parties. This is the end game. And the rules for the industry are being written by people that want no part of it.
Here’s what transpired:
ExxonMobil’s shareholders elected two directors endorsed by Engine No. 1, an activist investor group that promotes the idea that ExxonMobil’s contribution to carbon dioxide emissions creates an existential risk to the company’s “long term business model.” The message it seems is that shareholders want the company to remain in the energy business, just not fossil fuels. It is an enormous challenge. The company has deep resources and global reach. Let’s see how the new board navigates its way forward.
Chevron’s shareholders approved a resolution that instructed the company to “substantially reduce the greenhouse gas (GHG) emissions of [its] energy products (Scope 3).” Scope 3 refers to emissions from assets that are not owned or controlled by the reporting organization. In essence, this means emissions from customers and suppliers, i.e., third-parties.
A court in the Netherlands ordered Royal Dutch Shell to cut its carbon emissions – and the carbon emissions of the company’s suppliers and customers – by 45% by 2030. “The court orders Royal Dutch Shell, by means of its corporate policy, to reduce its CO2 emissions by 45% by 2030 with respect to the level of 2019 for the Shell group and the suppliers and customers of the group.”
These are among the biggest oil companies in the world. Boards are being pressured to change. Will a diamond emerge?