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Public and political pressure forcing oil giants to reduce emissions

18th Jun 2021
Public and political pressure forcing oil giants to reduce emissions

(Photo credit: WikiCommons)

The public has made it clear that they expect modern businesses to have climate plans—goals to reduce overall emissions, and while companies oblige, they may announce unreachable targets for good PR rather than any actual intention of meeting them.

Now, however, national court systems, investors and activists are coming together to demand that some of the world’s largest private-sector polluters—oil and gas companies—seriously reduce emissions or face legal and shareholder backlash.

 

Royal Dutch Shell

In a landmark case in the Netherlands, courts forced oil-giant Royal Dutch Shell to cut Carbon dioxide (Co2) emissions by 45 per cent from 2019 levels by 2030. The company, which plans to appeal, deemed the case unnecessary as they claim to already be taking steps to reduce emissions with their ‘net-zero by 2050’ plan, which the court ruled too vague. Environmentalists hailed the verdict as a major win in keeping up with Paris Agreement targets.

The case, brought by the Dutch branch of Friends of the Earth, showed that The Netherlands intends to make Paris targets enforceable. Even if Shell successfully appeals the case, the national public support has sent a message to investors that the company must steer away from fossil fuels to remain competitive and in the good graces of governments.

 

ExxonMobil

In a similar development, Exxon, the only oil giant that had virtually no climate plan in place, was forced by shareholders to put two climate activists on its board. A small advocacy hedge fund Engine No.1 forced the move, to the dismay of Exxon CEO Darren Woods. Dissenting, Exxon executives were not in an ideal position to negotiate as last year oil demand plummeted amid the coronavirus pandemic, and Exxon Corp posted $22 billion in losses.

The new board members, Gregory Goff, CEO of Andeavor, a refining and marketing company, and Kaisa Hietala, an executive at Finnish oil refining company Neste Oyj, have extensive backgrounds in the oil sector but claim to represent a fresh outlook focused on investing in renewables.

Pressure grew on Exxon to accept the nominees after a California teachers’ pension fund threw their weight behind the Engine number one nominees. Exxon has lagged behind other fossil fuel companies in announcing climate mitigation targets and engaging with alternative energy experts. According to Forbes, “for more than a decade, Exxon has voiced support for the implementation of a federal carbon tax—the company’s way of putting the onus on lawmakers to address the emissions problem.

”In another blow to Exxon, a lawsuit filed by private citizens of Guyana against the government over climate change may cause Exxon’s drilling permits in the South American country to be revoked.

 

Chevron

In Chevron’s boardroom, a vote took place demanding cuts in Scope 3 emissions, defined by the Environmental Protection Agency as emissions that are “the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain.”

While the vote is non-binding and lacks detail in how the goal will be met, it does send a message to shareholders and executives alike that there will be a strong focus on carbon emissions’ reduction measures. Environmentalists have shed light on cradle-to-grave emissions and plastic production, calling on governments to force polluting businesses to pay for the ecological damage created by the creation of their products.

In another blow to big oil, US President Joe Biden suspended the leases for oil companies to drill in the Arctic National Wildlife Refuge, which had been granted at the end of President Trump’s term.

Such moves show that oil companies would do well to invest in the renewable energy sector sooner rather than later. 2020 was an abysmal year for investors in gas and oil—for the first time in history oil prices went into the negative, and now shareholders are willing to push executives, reluctant or not, toward the inevitable future of energy, not merely to protect the planet, but to protect their investments.

Sarah Sakeena Marshall,
Grit Daily Staff Writer, The Muslim News Environmental Columnist

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