Good morning news for the environment!


I have to say I’m happy with this outcome, I think, but I don’t have the foggiest idea what was done or the mechanics of the process. I guess there was some kind of rebellion within ExxonMobil, and the good guys won.

ExxonMobil shareholders voted Wednesday to install at least two new independent directors to the company’s board, a resounding defeat for chief executive Darren Woods and a ratification of shareholders’ unhappiness with the way the company had been addressing climate change and its lagging financial performance.

The votes were part of a day of reckoning for an oil and gas industry already struggling over how to deal with climate change. In Europe, a Dutch court ordered Royal Dutch Shell, considered one of the more forward-thinking companies in the industry, to make deeper-than-planned cuts in greenhouse gas emissions. And in the United States, Chevron lost a shareholder vote directing the company to take into account its customers’ emissions when planning reductions.

The balloting at the storied oil giant ExxonMobil “sends an unmistakable signal that climate action is a financial imperative, and leading investors know it and are demanding change,” said Fred Krupp, president of the Environmental Defense Fund. “This is a watershed moment for the oil and gas industry. It’s no longer tenable for companies like ExxonMobil to defy calls to align their businesses with decarbonizing the economy.”

Near as I can tell, the disparate groups who are major shareholders in ExxonMobil had a big vote to decide who was to lead the company. These voters are people outside the company who own many shares of stock, in the form of things like hedge funds and pension funds, and they flexed their muscles and forced ExxonMobil to take a more aggressive position on protecting the environment. They were led by a hedge fund called Engine No. 1, which owned 0.2% of the stock, and I’m already exhausted from trying to figure out how this works, so don’t ask me how such a tiny shareholder could have that much influence. I can cope with the twisty business of molecular genetics, but high finance baffles me.

The court decision is entirely separate for the ExxonMobil internal coup.

Separately, a Dutch court on Wednesday ordered Royal Dutch Shell to cut its carbon emissions by 45 percent by 2030 compared with 2019 levels in a landmark case brought by climate activist groups. Shell said it would appeal. The Hague District Court ruled that the Anglo-Dutch energy company has a duty to care about reducing greenhouse gas emissions and that its current reduction plans were not concrete enough.

I would like to understand how this all happened, but it sounds like growing public awareness of the danger of climate change is percolating upwards and finally having a material effect on these companies that directly control the flow of carbon.

One of the ardent supporters of the Engine No. 1 slate said the hedge fund found eager supporters because of the widening realization that climate change is a financial issue.

“Investors are no longer standing on the sidelines hoping for the best,” said Simpson. “Climate change is a financial risk, and as fiduciaries we need to ensure that boards are not just independent and diverse, but climate-competent.”

Ah, that’s what we need more of.

Comments

  1. microraptor says

    Meanwhile, ConocoPhilips is planning to add “chillers” to the ground in its arctic drilling stations to try to prevent the permafrost from thawing as quickly.

  2. PaulBC says

    It’s only tangentially relevant, but one of the things that disgusted me most about the Trump administration was its commitment to dirty energy forever, even if big business is moving to cleaner alternatives out of self-interest. The appointment of Wilbur Ross as Commerce Secretary couldn’t have been clearer. He’s a greedy old coot who got rich off coal, but not nearly as rich as he wants people to think he is, because coal just isn’t worth much. One foot in the grave and the other foot 70 years in the past. Complain all you want about Biden, things are definitely looking up.

    The problem with global warming is that it’s accelerating a lot faster than our pitiful attempts to keep up. The only thing I would take away from this Exxon Mobil decision is that we don’t have as many people actively trying to kill the planet. Unfortunately, that’s far from enough.

  3. garnetstar says

    The reason for this is clearly stated in the article: “Climate action is a financial imperative.” In other words, shareholders recognize that their business is at risk, it’s come to that.

    Oil companies have irrationally refused to recognize this. All the industrial processes that are needed to take CO2 out of the atmosphere and convert it to saleable, useful products, or to collect it as a side product from combustion and use it instead of releasing it into the atmosphere, are already known. And, have been for decades. In fact, petroleum products are far too valuable to burn as fuel, because they’re needed for the chemical and materials industry.

    All these processes need is tweaking and scale-up to be a huge source of revenue for oil companies and to really eradicate their emissions. Just like the oil companies did for producing plastics and soap and other catalytic processes. All the companies need is to see which side of their bread is buttered, and to do it. But, too stupidly fixed on their profits from combustion of their fuels to see the future.

  4. asclepias says

    Chevron also got thumped by shareholders. I was particularly thrilled to hear the news about Royal Dutch Shell because it (along with Chevron–it’s rare for an oil company to own a field all by its lonesome) has been complicit in major human rights abuses, plus it’s done major damage to coastal environments in Africa. Meantime, the downturn in coal has had extreme effects on the economy here in Wyoming, but instead of doing something that will work, the state legislature decided to start suing other states that retire coal-fired power plants.

    Meanwhile, everybody should be worried. CO2 is supposed to peak at 419 ppm sometime this year (though that won’t be the yearly average), and research shows that CO2 is likely to begin affecting human health at 426 ppm. If you look up what the atmospheric concentration was expected to be this year according to 2012 estimates, we are already well above that (I believe the estimate was 410.2 ppm, and the average last year was 216 ppm). People who think that humanity can survive at Venusian levels of CO2 should be encouraged to look up the 1986 Lake Nyos disaster.

  5. asclepias says

    Chevron also got thumped by shareholders. I was particularly thrilled to hear the news about Royal Dutch Shell because it (along with Chevron–it’s rare for an oil company to own a field all by its lonesome) has been complicit in major human rights abuses, plus it’s done major damage to coastal environments in Africa. Meantime, the downturn in coal has had extreme effects on the economy here in Wyoming, but instead of doing something that will work, the state legislature decided to start suing other states that retire coal-fired power plants.

    Meanwhile, everybody should be worried. CO2 is supposed to peak at 419 ppm sometime this year (though that won’t be the yearly average), and research shows that CO2 is likely to begin affecting human health at 426 ppm. If you look up what the atmospheric concentration was expected to be this year according to 2012 estimates, we are already well above that (I believe the estimate was 410.2 ppm, and the average last year was 216 ppm). People who think that humanity can survive at Venusian levels of CO2 should be encouraged to look up the 1986 Lake Nyos disaster.

  6. PaulBC says

    garnetstar@3

    In fact, petroleum products are far too valuable to burn as fuel, because they’re needed for the chemical and materials industry.

    I’m skeptical of this claim, though I’ve read it elsewhere, because these materials exist in quantities that far exceed our demand for plastics or other chemical products. That’s why it’s cheap enough to burn. It’s a matter of economics. I can appreciate the view that you get more value in some intrinsic sense by using them as feedstock. But it’s not really value unless there’s demand, and right now there’s more demand for fuel, which is cheaper to refine, than all the other products you can make.

    I had thought we’d reach “peak oil” by now but it looks like we have become a lot more clever about extraction. Of course, the real cost is in the released carbon, and our economy is set up in such a way that it’s externalized. Without that, you might be right that “cheap fuel” would not be the most obvious product to make from crude oil.

  7. garnetstar says

    Yes, as you say, it’s a question of demand. And, when they could sell it all for fuel, and not have to refine it as much, that’s easier. And when it was cheaper and easier to extract.

    There’s a lot of money for them in making products out of fuel, though. And also out of CO2. So, they won’t go broke when they’re forced to decarbonize their industry more.

  8. says

    PaulBC@5

    I’m skeptical of this claim, though I’ve read it elsewhere, because these materials exist in quantities that far exceed our demand for plastics or other chemical products.

    Plastics are indeed a relatively small part of fossil fuel derivatives; between 5% and 10%, IIRC.

    But you’d be amazed how many different substances are ultimately made from fossil fuels, e.g. via steam reforming. For example the artificial fertilizer that the world depends on to grow food consumes 3-5% of the worlds natural gas supply via the Haber and Oswald processes.

  9. says

    @PZ

    I would like to understand how this all happened

    Direct link to the website of the organization that started the lawsuit.
    See also this for background.

    Basically, the goal is to get Shell to comply with the 2015 Paris agreements.
    The lawsuit was started in the Netherlands because Shell is a Dutch/British conglomerate.

  10. Kagehi says

    Now.. If only big corporations would get that electing US conservatives, and refusing to pay people living wages, where also “financial concerns that will lose them money in the long term, when doing these things start to observably cut into their profits”, because we know damn well that they won’t do F about either until it hits their stock holder’s pocket books.

  11. numerobis says

    microraptor: that’s normal in all Arctic construction. If you have a source of heat on top of the ground, you’ll melt the permafrost underneath unless you design ways to let that heat escape back into the air. You need that even in a stable climate.

    For the most part it’s passive systems; if you’re on permafrost, the average air temperature is well below freezing, so you can just stick a glorified straw into the ground. Since warm air rises, you can just let it rise and escape 9 months of the year, while the other 3 months of the year the torrid summer heat won’t easily go down the same pipes. Maybe in some more marginal places or if you have a really strong source of heat on top you need an active system.

    Places that are losing permafrost due to climate change, you’re just hosed. Sure you can chill the area immediately under the building, but the ground all around the building is going to be collapsing.

  12. Chakat Firepaw says

    They were led by a hedge fund called Engine No. 1, which owned 0.2% of the stock, and I’m already exhausted from trying to figure out how this works, so don’t ask me how such a tiny shareholder could have that much influence.

    It could be because the 0.2% is the figure based on all shares but the fund mostly owns common, (i.e. voting), shares rather than preferred, (non voting, but guaranteed to pay dividends), shares. That 0.2% could easily be 5-10% of the actual votes.

    It could also simply be because someone there is good at making deals and getting people together.

  13. Aaron says

    Sitting back and waiting for a small number of investors to make the right decision is better than sitting back while they make the wrong ones, but definitely not something we need more of. What we need more of is democratic control over those resources to begin with.

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