Yesterday wasn’t a good day for the fossils in suits who run fossil-fuel companies.
“Three of the world’s largest oil companies faced a major reckoning” on Wednesday, May 26, 2021, “over their part in climate change,” newsmagazine Vox said in a story here. The gory details:
“First, a Dutch court told Royal Dutch Shell to cut its greenhouse gas emissions by a whopping 45 percent by 2030 in response to a lawsuit filed by seven environmental groups. Arguing that Shell is bound by an ‘unwritten standard of care’ to human rights and the Paris climate agreement, the court ruled that Shell has the responsibility to ‘contribute to the prevention of dangerous climate change.’ Although the judge’s decision isn’t the final say in the matter, her words could affect other ongoing climate litigation around the world.
“The second reckoning came at Chevron’s unusual shareholders meeting, at which 60 percent voted for a resolution recommending that the company reduce its emissions — not only in its production process but also in the products it sells to consumers. The vote is not binding, but follows a trend from other shareholder meetings this year. A similar resolution passed at ConocoPhillips’ recent meeting in May, and another Philips 66 resolution requests that the company produce a report on its lobbying activities.
“Last came an even more unlikely development. At ExxonMobil’s annual shareholder meeting, a small advocacy investment firm called Engine No. 1, which owns just 0.02 percent of the company, staged a coup by winning at least two seats on Exxon’s board of directors.”
In the corporate world, where “one person – one vote” isn’t the rule and voting power rests on ownership of shares, it’s highly unusual for shareholder nominees and proposals opposed by management to prevail. After all, most of a company’s shareholders own its shares to make money, and the big institutional shareholders have a legally binding fiduciary duty to put the financial interests of their constituents first and foremost.
Individuals and small shareholders pushing environmental and corporate governance initiatives are voices crying in the wilderness.
Court rulings are one thing (in the U.S., environmental lawsuits against oil companies have been largely going against state attorney generals and activists, and in favor of companies). Shareholder revolts against management policies that succeed are another thing altogether.
Engine No. 1 wasn’t expected to win. But its chances look better in recent days as big pension funds, including California’s and New York’s, and private funds and advisory services climbed on board of its campaign to swap out Exxon’s directors and steer the company in a new direction. Alone among the publicly-traded major oil companies, Exxon wasn’t planning for a greener future of alternative energy, and was committed to focusing entirely on oil and gas production for the foreseeable future.
For now, there’s little doubt that oil and gas will continue coming out of the ground, and going into the atmosphere, for decades to come. At least, that’s the conventional wisdom, and the basis on which millions of investors make their investment bets. But things can change fast in unforeseen ways.
The shareholder revolt at Exxon doesn’t mean its shareholders don’t want to make money anymore. The votes for Engine No. 1 represent billions of dollars of investment equity, and nobody throws away that kind of money. The opposite is true: The owners of those shares are hedging their bets against faster change than management envisions, brought on by an escalating climate crisis, in order to protect their investments.
The times they are a’changin’. Exxon was the last major holdout against the eventual demise of fossil fuels. Now, people who see that future fast approaching will set on Exxon’s board, and guide its business policies, too.
It is the science behind what happens when a gallon of gas is combusted (burned). All those long lines of organic chemicals are broken down to produce about 19.64 pounds of CO2 for each gallon of gas burned. If you burn a gallon of gas with 10% ethanol then about 18.95 pounds of CO2 is produced. A gallon of ethanol produces about 12.72 [pounds of] co2. You combust petroleum unless you are producing it from vats of microorganisms producing oil rather than pumping ancient fossil fuels from the ground. Petroleum is fantastic stuff and our whole economy runs on it. How many acres can the Dutch or the US turn over to the production of ethanol. Probably nowhere near enough to run Americas fleet of cars. [This comment has been edited. Some material has been deleted. — Ed.]
Ethanol is ancient technology. Ever heard of electric cars? Of course, how the electricity is produced impacts CO2 emissions. But the U.S. and Europe are moving toward renewables.