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June 24th, 2021 
Awake Goy 
While Australian politicians languish in a world blotched by climate change scepticism and fossil fuel love-ins, global oil and gas companies have been shaken. Three titans of oil fame – Shell, ExxonMobil and Chevron – faced a range of decisions in May that promise to dramatically shape their future operations. The point is not negligible, given that this triarchy produced, between 1988 and 2015, 5% of total global scope 1 and 3 emissions.
Royal Dutch Shell was the first giant humbled by a Dutch court ruling that it was required to reduce total emissions by net 45% of 2019 levels by 2030. “The reduction obligation relates to the Shell group’s entire energy portfolio and to the aggregate volume of all emissions (Scope 1 through to 3).” The case had been brought by a number of environmental groups, including Milieudefensie, claiming that RDS had “an obligation … to contribute to the prevention of dangerous climate change through the corporate policy it determines for the Shell Group.” To not do so would result in a breach of human rights.
The company submitted the rather amoral rationale that not selling its products would simply mean that others would do the same thing. A vain effort was also made to convince Judge Larisa Alwain that RDS was sufficiently doing its bit to deal with climate change by reducing its Net Carbon Footprint comprising direct, indirect carbon emissions and customer emissions for products sold “by 20% in 2035 and by 50% in 2050.”
RDS also claimed that there should be no legal solution to this dispute: climate change policies were ultimately up to lawmakers and politics, not judicial heads. These grounds were soundly dismissed by the court. The judgment found that RDS was “free to decide not to make new investments in explorations and fossil fuels, and to change the energy package offered by the Shell group”.
While not facing the ire of courts, Chevron was tackling climate change activism from within, meeting a proposal by shareholder activist firm FollowThis to reduce its Scope 3 emissions by selling reduced quantities of fossil fuels. The measure had the support of 61% of investors. Other measures voted upon registered lower but not insignificant numbers: 48% of shareholders wished for a report on the impacts of a 2050 net-zero outcome while the same number also voted for a report on “dark money” lobbying.
One could hardly see this as a tree-hugging measure of ecological fancy. Investments were potentially at stake. “As shareholders, we understand this support to be part of our fiduciary duty to protect all assets in the global economy from devastating climate change. Climate-related risks are a source of financial risk, and therefore limiting global warming is essential to risk management and responsible stewardship of the economy.” Not willing to be dictators on the issue, those making the proposal did not wish to limit “the Company’s powers to set and vary their strategy or take any action which they believe in good faith would best contribute to reducing GHG emissions.”
To the two giants facing the headaches of necessary reform can be added Exxon Mobil. Last month, Exxon Mobil’s CEO Darren Woods failed to quash what was described as an “insurgency” at the company’s Annual Shareholder Meeting. Engine No. 1, a small activist hedge fund with a mere 0.02% stake and no history of oil or natural gas activism, daringly nabbed two seats on the board. This took place, despite the warning by Woods that voting for such an environmentally minded concern would “derail our progress and jeopardise your dividend.”
One of Engine No.1’s backers, California State Teachers’ Retirement System, called the vote “historic”, representing “a tipping point for companies unprepared for the global energy transition”. Climate change constituted “the greatest threat to our future” and it was incumbent on shareholders “to hold the ExxonMobil board accountable to mitigate risk and contribute to the sustainable value of their investments.”
This would have come as a rude shock to a company with an extensive record of concealing its own research on climate change. In September and October 2015, it was revealed by InsideClimate News, the Los Angeles Times and the Columbia Graduate School of Journalism that one of the planet’s largest oil companies was well immersed in the study of global warming. Its public front was one of scepticism. In 1990, the board claimed that the company’s “examination of the issue [of global warming] supports the conclusions that the facts today and the projection of future effects are very unclear.”
Despite this terse dismissal, it transpired that engineers and researchers in the employ of Exxon were conducting work on how best to adjust the company’s approach to rising temperatures. Internal briefing papers were circulated and discussed, data generated and mulled over. In 1978, James Black of Exxon’s Products Research Division wrote a paper for discussion with the unmistakably relevant title of “The Greenhouse Effect”. This followed on from his 1977 presentation to the management committee. “Present thinking holds,” writes Black, “that man has a time window of five to ten years before the need for hard decisions regarding changes in energy strategies might become critical.”
In 1991, senior ice researcher Ken Croasdale of Exxon’s Canadian subsidiary told an engineering conference that “any major development with a lifespan of say 30-40 years will need to assess the impacts of potential global warming.” This was particularly pertinent “of Arctic and offshore projects in Canada, where warming will clearly affect sea ice, icebergs, permafrost and sea levels.” Not wishing to bite the hand feeding him, Croasdale brightly considered the benefit a warming planet might have for company operations in the Beaufort Sea: “potential global warming can only help lower exploration and development costs”. This is no longer the case: the investors and funds are in revolt and such large oil companies are counting a different set of costs.
Dr. Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. Email: [email protected]
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