Home / Business / Massive setbacks push the oil giant to ‘Tipping point’

Massive setbacks push the oil giant to ‘Tipping point’



Nun, environmental lawyer pension fund manager and the largest asset manager in the world These were among the extraordinary rebels that claimed a shocking victory this week. Compared to some of the largest and most influential fossil fuel companies in the world.

From Houston to The Hague They fought in shareholder meetings and courtrooms. It kicks off a surprising turn of events in an expedited effort to force the world’s coal, oil and gas companies to tackle their key role in the climate crisis. And while they come with remarkably different perspectives — corporate shareholders, child rights advocates, environmentalists, thousands of Dutch citizens — they share a fundamental message: a future that will Quitting the fossil fuel business is no longer there, but now.

“These companies are facing pressure from regulators, investors and courts now need to improve their game,” said Will Nichols, head of environmental research at risk analytics firm Maplecroft. “That’s an important part of society. And it’s not a good look to resist all of that.”

The most dramatic turning point was the Netherlands, where a court ordered Royal Dutch Shell, the world’s largest private oil trader and also the largest company in the Netherlands, to rapidly cut its greenhouse gas emissions from its global operations this decade. It is the first time a court has ordered a private company to change its business practices with regard to climate.

Symbolism is inevitable: the famous Netherlands was built on land reclaimed from the sea. Face the immediate threat of a warming climate caused by the incineration of Shell’s own products: oil and gas.

In another example this week At the annual shareholder meeting of Exxon Mobil, America’s largest oil company, The message was clearly framed in terms of profits: A small new hedge fund led investor rebellion to diversify its oil and gas exposure. or risk Hurt investors and the bottom line

Not only that, Chevron shareholders voted for the company to reduce its emissions. But also the emissions produced by customers burning oil and gasoline are remarkable. and in Australia The judge warned the government of the proposed coal mine expansion. The project, challenged by eight teenagers and an 86-year-old nun, must ensure that it does not endanger the health of the country’s children.

Time matters. This week, scientists also concluded that Over the next five years, at least the average global temperature will temporarily rise above dangerous limits. by climbing more than 1.5 degrees Celsius or 2.7 degrees Fahrenheit. which is warmer than in pre-industrial times Avoiding thresholds is the main objective of the Paris Accord, a major global climate agreement between nations. in the world in the fight against climate change

Of course, these actions do not immediately represent a threat to the fossil fuel industry. For more than a century and a half, the global economy has been driven by oil and coal. which will not change immediately

However, the verdict, like in the Netherlands, could be a harbinger of similar legal attacks against other fossil fuel companies and their investors. Experts say Kate Raworth, an economist at the University of Oxford. described Shell’s loss in court as “Social turning point for a future without fossil fuels”

Shell said it found the Hague district court’s decision “disappointing” and intended to appeal. Such a process can take years to reach the country’s highest court. delay the operation But it has continued to attract public attention.

If the lower court’s verdict continues Analysts said Shell will have to reorient its business to reduce its oil portfolio and halt the growth of liquefied natural gas. in which Shell is an industry leader. That’s a concern for investors with oil and gas reserves at companies such as Shell Patrick Parento, a professor at Vermont Law School. “The decision tells a company that ‘You have to get out of the oil business’ for cautious individuals in the financial community That worries them a lot.”

Dangerous for Shell The Dutch national judiciary in the past has shown itself to be at the forefront in most climate litigation. In 2019, the Dutch Supreme Court ordered the government to cut greenhouse gas emissions in a lawsuit filed by environmental group Urgenda. sue It is the first case in the world to force national governments to tackle climate change to maintain human rights commitments.

The case began in the district court in The Hague. before entering the judicial process The lawsuit against Shell is an escalation of that strategy.

After suing the government and winning Environmental advocates decided to take on one of the country’s most influential companies. The case was brought in 2019 by Milieudefensie, Friends of the Earth branch in the Netherlands. Like Greenpeace and the 17,000 Dutch citizens, complainants argued the company had a legal obligation to protect Dutch citizens from potential climate risks, the district court agreed.

“The effect of this case on the fossil fuel industry will be systematic and immediate,” Tessa Khan, a lawyer suing the government on behalf of Urgenda, said on Twitter. investor group”

Shell had already begun to see the writing on the wall. It said earlier this year that global oil demand was likely to hit its highest level in 2019 and decline more slowly in the years to come.

and at least compared to some American colleagues. Shell has set somewhat more ambitious climate goals. The company has promised to reduce the carbon concentration of its operations. This means that the company can continue to expand its oil and production. But with reduced emissions for every barrel produced.

A district court on Wednesday ordered the company to cut its total greenhouse gas emissions by 45 percent by 2030 compared to 2019 levels. The ruling applies to Shell’s global operations. but that said Although still appeal enforced in Nigeria Shell is the largest oil producer. It can be proven “inactive,” said Biraj Borkhataria, an analyst at RBC Capital Markets, an investment bank.

“However,” he said separately in a note to clients on Thursday, “This is another example of society asking for more from oil companies.”

Shell’s rulings are particularly striking as private companies are the target of climate litigation in the United States and elsewhere, but courts rarely judge them.

Dutch lawsuit opens up potential front line This gives climate advocates more courage to prosecute more countries. Especially where national laws ensure the right to a clean environment. Many European and Latin American courts including in the Netherlands have interpreted the law in their country in this manner

Farmers in Peru sue German energy giant About the impact of global warming on glaciers in his country, about 20 American cities, counties and states have sued the fossil fuel industry since 2017, seeking compensation for local costs of climate change.

The government is still on the hook.

Germany’s Supreme Court recently told the government to tighten climate targets because they did not go far enough to guarantee future generations would be protected.

in the case of Australia Eight teenagers, along with nun Brigid Arthur, go to court to stop the government from expanding a gigantic coal mine called Whitehaven. The court on Thursday stopped issuing a mine ban as the plaintiffs had requested.

But in ordering the government “Proper care is taken to avoid injury to children,” said Michael Berger, executive director of Columbia University’s Sabin Center for Climate Change Law and a lawyer, who said climate change was a “bad thing.” “Intergenerational crimes” representing several US cities and states. suing fossil fuel companies

“The actions we take today on climate change can send our children, our children, and other future generations a better chance. to a world that is fundamentally livable or a world that is not,” he said. “The court is aware.”

The most watched cases in the United States which filed a lawsuit on behalf of a youth against the US government. is to try to create constitutional rights in a favorable environment. After a recent defeat in federal court A federal judge has ordered the parties to enter negotiations to settle the dispute.

The action against Chevron and Exxon is noteworthy. This is because it reveals the extent to which shareholders are quick to be alert to the risks their investments take. If energy companies don’t start to drastically change their business models

Major shareholders show their growing distrust. that companies Able to deliver expected financial performance without oil and gas diversification.

Exxon this week lost a battle against small new hedge fund Engine No. 1, which is bringing together big investors such as Blackrock and New York State pension funds to force the company to change course. Hedge funds win at least two seats on Exxon’s 12-person board.

Tensie Whelan, director of the New York University Stern Center for Sustainable Business, called this Traditionally, this is a “critical moment for committee responsibilities.” Activist shareholders often refer to company executives in financial matters. It is not a social issue such as climate change, she said. “Shareholders are deeply concerned about the financial risks posed by climate change. and willing to take greater responsibility for the board’s consideration,” Ms Whelan said.

Stanley Reed and John Schwartz have a report




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