A Bad Day At Black Rock For Big Oil!

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Probably not many of you remember the 1955 film Bad Day At Black Rock starring Spencer Tracy, Ernest Borgnine, Lee Marvin, and a cast of thousands. It was a really awful movie in which little if anything of substance happened, but the title has become part of our lexicon. May 26, 2021 was a Bad Day At Black Rock for the fossil fuel industry, which suffered three body blows, one courtesy of a Dutch court and the other two delivered by investors, including BlackRock, the largest investment management organization in the galaxy.

Shell Gets Slapped By Dutch Court

In April, 2019, a group of 7 plaintiffs representing 17,000 Dutch citizens filed a lawsuit against Royal Dutch Shell. The suit, brought by Greenpeace and Friends of the Earth Netherlands, among others, marks the first time environmentalists have turned to the courts to try to force a major energy firm to change strategy. The plaintiffs claim Shell is threatening human rights by continuing to invest billions of dollars in the production of fossil fuels. According to Reuters, Shell is the largest emitter of carbon dioxide pollution in the world.

The ruling by the court in The Hague orders Shell to reduce its carbon emissions by 45% by 2030 as compared to 2019 levels. “The court orders Royal Dutch Shell, by means of its corporate policy, to reduce its CO2 emissions 45% by 2030 with respect to the level of 2019 for the Shell group and the suppliers and customers of the group,” Judge Larisa Alwin said. The court ruling went on to say the company’s climate policy was “not concrete and is full of conditions…that’s not enough. The conclusion of the court is therefore that Shell is in danger of violating its obligation to reduce. And the court will therefore issue an order upon [Shell].”

The court order requires the company to reduce its absolute level of emissions. Oil companies typically break those emissions into Scope One, Scope Two, and Scope Three categories. Scope Three pertains to the carbon dioxide created when customers actually burn the oil and gas they get from Big Oil. The industry struggles mightily to insist it is not responsible for those emissions, consumers are. Shell’s present climate policies pledge contains intensity-based targets, which the court correctly noted would allow the company to actually increase production while appearing to be honoring the terms of the Paris climate accords. The Dutch court wasn’t buying it.

Some investors have been pressuring Shell to begin using absolute reduction targets, but it has refused to do. CEO Ben van Beurden rejected absolute reduction targets at the company’s annual meeting, saying “Reducing absolute emissions at this point in time is predominantly possible by shrinking the business.” Yes, that’s the point, Ben. Contributing to the annihilation of the human race is NOT a proper business model. Now with the ruling by the Dutch court, the company has no choice. The court said its decision applies to all Shell’s activities worldwide, not just those in the Netherlands.

For its part, Shell says it will vigorously appeal the court’s decision. It is actually doing more than most of its peers when it comes to transitioning from fossil fuels to renewable energy, but that is still too little too late for the Earth. “This is arguably the most significant climate change related judgment yet, which emphasizes that companies and not just governments may be the target of strategic litigation which seeks to drive changes in behavior,” attorney Tom Cummins tells Reuters.

Michael Burger, head of the Sabin Center for Climate Change Law at Columbia Law School, adds “there is no question that this is a significant development in global climate litigation, and it could reverberate through courtrooms around the world.”

BlackRock Votes Against Exxon Management

For years, Larry Fink, head of BlackRock, has been talking the talk about fossil fuels and climate change. But despite impassioned pleas to the CEOs of the world’s largest oil companies, his company has consistently refused to walk the walk by voting the shares it controls against the “kick the can down the road” policies those companies have been using for decades. No longer.

On the same day as the court ruling in the Netherlands, BlackRock supported four nominees for positions on the company’s board of directors. The company bitterly opposed the election of those four and actually stopped the voting for an hour in the middle of the meeting so its executives could get on the phones to do a little arm twisting. In the end, two of the four were elected, a third is in a race that is too close to call, and a fourth was not elected. “Stopping the vote was a pretty desperate move and usually portends a result the establishment does not want to happen,” a former oil refining executive tells The Washington Post.

In addition to BlackRock, the three biggest US pension funds and the two biggest advisory services voted with BlackRock, which together with Vanguard and State Street, holds more than 20% of ExxonMobil’s outstanding shares. How Vanguard and State Street cast their proxies is not known at this time. All in all, it is a slap in the face to ExxonMobil CEO Darren Woods.

Fred Krupp, who heads the Environmental Defense Fund, tells the Post the vote “sends an unmistakable signal that climate action is a financial imperative, and leading investors know it and are demanding change. This is a watershed moment for the oil and gas industry. It’s no longer tenable for companies like ExxonMobil to defy calls to align their businesses with decarbonizing the economy.”

“Investors are waking up,” Anne Simpson, managing investment director for board governance and sustainability at the California Public Employees’ Retirement System, said in the run-up to the vote. “The sleeping giant maybe is stirring.”

In addition to electing 2 or possibly 3 new directors to the 12 member Exxon board, shareholders also approved measures calling on Exxon to provide more information on its climate and grassroots lobbying efforts. “Exxon Mobil shareholders chose real action to address the climate crisis over business as usual in the fossil fuel industry,” said New York State Comptroller Thomas DiNapoli, according to a report by Reuters.

Chevron Investors Join The Revolt

Also on Wednesday, Chevron stockholders voted overwhelmingly in favor of a proposal to cut emissions generated by the use of the company’s products, a move that underscores a growing investor push at energy companies to reduce their carbon footprint. According to Reuters, the shareholders voted 61% in favor of the proposal to cut Scope 3 emissions based on a preliminary vote tally announced by Chevron at its annual meeting.

Although the proposal does not require Chevron to set a target of how much it needs to cut emissions or by when, the overwhelming support for it shows growing investor frustration with companies, which they believe are not doing enough to tackle climate change.

The Takeaway

This, folks, is how change happens. One minute, a snow covered mountain in the Alps is basking in the sun. The next, an avalanche is rolling downhill, sweeping away everything in its path. One minute the Old Man Of The Mountain is staring out across the state of New Hampshire the same way it did for thousands of years. Then in a blink of an eye, it’s gone.

Those of us here at CleanTechnica have been writing stories for more than a decade about cutting carbon emissions and wondering if anyone is actually paying any attention to our musings. Then WHAM! Wednesday, May 26 comes along and suddenly Shell, ExxonMobil, and Chevron are all getting a dressing down in public. It’s a beautiful sight to see and a sign that things may actually be changing for the better.

The bitter truth is that “net zero” is a scam cooked up by the fossil fuel industry to create the illusion that they are taking climate change seriously. It relies on the hope that technology will somehow spring from somewhere that magically removes billions and billions of tons of carbon dioxide from the atmosphere in a way that is affordable. The premise is we can continue to burn fossil fuels forever because all we need to do is suck out the carbon emissions later and life will go on pretty much as it always has.

Wrong. We can’t rely on magic dust, hopes, prayers, or sorcery.  There is only one way to address climate change — stop burning fossil fuels. Everything else is just smoke and mirrors designed to keep us docile while the world implodes around us. Maybe, just maybe, the flim-flam is now over and May 26, 2021 will go down as a the day in history when everything changed. The struggle isn’t over yet. Far from it. But it seems the tide has turned on fossil fuels, and not one minute too soon.

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Steve Hanley

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new."

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