Exxon, Chevron and Shell are being forced to do something about climate change — and this is only the beginning of the big test for big oil
- Shareholders are becoming more conscious of the environmental impact caused by corporates and they're willing to take the reins of change into their own hands.
- Oil majors
Exxon, Chevronand Shellall saw upheavals this week as investors pushed for more accountability and better measures to address global warming.
- As the world gets warmer, it’s more than likely that the number of legal challenges pointed at the oil and gas industry is only going to increase.
AdvertisementFossil fuels are being put on trial around the world as oil majors like Exxon, Chevron, and Shell are being forced to recognise the impact of
US oil giants Exxon and Chevron saw their own shareholders turn against them. A tiny hedge fund led by climate change activists called Engine No.1 was able to replace two of Exxon’s board members with its own candidates.
Meanwhile, at Chevron, 61% of its shareholders voted in favour of Follow This’ proposal, which will force the company to cut its carbon emissions.
And, in the Netherlands, another group of climate change campaigners called Friends of the Earth won a court battle in Hague, which will force Shell to cut its carbon emissions by 45% over the next 10 years.
Investors are more conscious of where they are willing to put their money today. ‘Impact investing’ — when investments are made with the intention to generate a positive, measurable and environmental impact along with financial returns — may have started among the millennials, but now, every generation wants it.
Why other oil majors should be nervous
The actions taken this week reflect the push among investors for the energy sector to take fossil fuels out of the equation. It's a very clear memo to oil majors that shareholders aren’t kidding about climate change — and the margin for bad faith is getting thinner by the second.
According to a 2020 report by the International Energy Agency (IEA), “There are few signs of large-scale change in capital allocation needed to put the world on a more sustainable path.”
Simply put, big oil needs to put its money where its mouth is because so far, none of their goals are aligned with the Paris Climate Change Agreement target to limit global warming to 1.5 degrees Celsius.
The IEA’s report shows BP doing better than the rest of the fossil fuel industry, but none of the big five — Exxon, Chevron, BP, Total and Shell — are anywhere close to clearing the bar.
AdvertisementIn India, the
The panel asked the two to pay ₹17 crore in penalties to the Central Pollution Control Board (CPCB). This may look like a big number for you or me, but it’s only 0.2% of ONGC’s profit in FY20.
As the world gets warmer, it’s more than likely that the number of legal challenges pointed at the oil and gas industry is only going to increase. Shareholders are going to demand more accountability and companies will be forced to recognise the threat that fossil fuels pose to the world. Those still looking towards fossil fuels have a big reckoning in the works.
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