Colossal fossils ExxonMobil, Chevron, Royal Dutch Shell, BP, and Equinor can expect to see shareholder resolutions in the first half of 2020 urging them to cut their carbon emissions in line with the targets in the Paris Agreement, after Netherlands-based responsible investment advocates Follow This announced a stepped-up campaign.
The U.S. version of the letter asks the Exxon and Chevron boards to align their strategies with Paris-compatible emissions levels, Reuters reports, in a post published by the Globe and Mail. “The European companies, which all agreed in recent years on various emission reduction targets, are however urged to set and publish clear long-term targets to meet the Paris goals.”
All the resolutions urge the companies “to include all types of emissions in their climate strategies, including those from fuels and products sold to customers, known as Scope 3 emissions, which are six to eight times bigger than emissions from the companies’ operations,” Reuters writes.
Follow This owns what the news agency calls “minor stakes” in the companies that give it standing to file shareholder resolutions.
Reuters notes that Exxon management successfully dodged a similar resolution last year from the Church Commissioners for England and the New York State comptroller’s office. Follow This held off filing a resolution with Shell last year, based on a plan it released in 2017 to cut its emissions intensity in half by 2050. Since then, the company has become the first colossal fossil to link executive pay to emission reductions, but still devotes just 5% of its capital investment to non-fossil energy, and retains a CEO who insists it has “no choice” but to pursue new fossil projects.
“Big Oil has come under increasing pressure from investors and environmental groups to invest in cleaner fuels as part of a wider energy transition,” Bloomberg writes. “While Follow This resolutions have so far been defeated, the group has gained public support from investors such as Dutch insurer Aegon and M&G Investments.”
“We believe change comes from a small number of progressive investors, not the majority,” said founder Mark Van Baal.
In a blistering critique of fossils’ claim that they’re contributing to the fight against climate change, the Bulletin of the Atomic Scientists notes the companies are betting on global temperatures to rise well above the Paris targets.
“For example, in ExxonMobil’s 2019 Outlook for Energy, the company projects no reductions in carbon dioxide emissions from the energy sector through 2040—and no date at which emissions reach net zero, implying indefinite warming,” write authors Kathy Mulvey and Peter Frumhoff of the Union of Concerned Scientists and Myles Allen of the University of Oxford. [They were saying the same in 2017—Ed.]
“And ExxonMobil is not alone,” they add. “Only 13% of the energy companies that follow the disclosure framework recommended by the Task Force on Climate-related Financial Disclosures are even testing the resilience of their business strategies in a scenario where global warming is kept below 2.0°C. A Transition Pathway Initiative survey of 50 oil and gas companies conducted earlier this year found that only one company (the Italian multinational oil and gas giant Eni) had made a public commitment to reduce its emissions to net zero by any date—and Eni’s commitment covers only the modest direct emissions from the extraction, processing, and refining of its fossil fuel products, not the much larger emissions that result from the burning of those products.”
The exception, they say, is Spanish multinational Repsol, which has “thrown down the gauntlet to its competitors, putting into stark relief the yawning gap between their climate claims and actions” by promising net zero emissions by 2050 with interim targets in 2020 and 2040. Earlier this month, Reuters said investors were hoping Repsol’s commitment would “pile pressure on rival oil and gas companies to follow suit in the fight against climate change”.
“It is clear that this is a very significant commitment from Repsol that raises the bar across the oil and gas sector,” said Adam Matthews, Director for Ethics and Engagement at the Church of England Pensions Board.
“We have been pressing fossil fuel companies to commit to align with a net zero emissions pathway by 2050 for some time,” said Natasha Landell-Mills, head of stewardship at Sarasin & Partners. “In the end, shareholders need to know their companies are looking forward, not back, when it comes to the energy transition.”
The Bulletin authors add that “the success of public pension funds, faith groups, and other socially responsible investors in using shareholder resolutions to force publicly traded companies to plan for climate change has provoked a backlash. And that backlash has provided fuel to a long-simmering effort to quash shareholder democracy. The U.S. Securities and Exchange Commission has just announced a new rule that would make it much harder for shareholders to file proposals on climate change and other environmental, social, and governance issues with publicly-traded U.S. companies.”
The article lays out a set of principles for climate-conscious investment in fossil fuels, including three measures of companies’ actual progress toward decarbonization. They include “disclosure of absolute emissions of carbon dioxide and other heat-trapping gases from company operations and the use of company products until carbon emissions reach net-zero; disclosure of mid-term targets; and consistent, verifiable actions that support fair and effective climate policies—including the accurate portrayal of climate science in all communications.”
