The oil industry has suffered a series of extraordinary blows after customers, shareholders, and the courts turned on it out of concern over climate change. Almost in unison, the following things happened:
- The Dutch court ordered Royal Dutch Shell to reduce emissions by 45% within nine years,
- An upstart shareholder seeking to shake up Exxon Mobil Corp.’s board bested the company by replacing two members,
- and Chevron Corp. investors instructed the company to cut its greenhouse gas emissions by 61%.
- Meanwhile, longtime ally Ford Motor Co. dove deeper into electric mobility and widened its distance from fossil fuels.
In other words, Shell, Chevron, and ExxonMobil were all brought to their knees over mounting climate concerns – and this is just the beginning.
Fred Krupp, The Environmental Defense Fund President, said regarding the day’s events:
Game-changer is an overused metaphor, but surely this is one. The policy environment for companies has already changed and will change more.
When Royal Dutch Shell lost its court case to a group of climate activists, it set a new era of climate-related legal claims. The decision immediately hailed as a “landmark” case, upheld complaints filed by groups including Greenpeace and Friends of the Earth Netherlands along with over 17,000 citizen co-plaintiffs.
It forces the company to slash its global emissions by 45% by 2030 from 2019 levels. The Dutch court said Royal Dutch Shell had helped deliver “dangerous climate change” and ordered the company to slash its own CO2 emissions and those of its suppliers and customers.
Moments after the verdict was announced by the judge, Friends of the Earth Europe tweeted:
This is a huge win for climate justice. We hope this verdict will trigger a wave of climate litigation against big polluters to force them to stop extracting & burning fossil fuels. It’s a win for communities in the global South who are facing climate impacts now.
Andy Palmen, the interim director of Greenpeace Netherlands, described today’s decision as “a historic victory” after the verdict. He said:
Shell cannot continue to violate human rights and put profit over people and the planet. This verdict is a clear signal to the fossil fuel industry. Coal, oil, and gas need to stay in the ground. People around the world are demanding climate justice. Today the court confirmed that the fossil fuel industry couldn’t continue its climate pollution. We can hold multinational corporations worldwide accountable for the climate crisis.
Joana Setzer, assistant professor at the London School of Economics and Political Science, said:
The judgment is mind-blowing. The court is telling the company they have to make financial sacrifices and shift their behavior.
The case is unique in that the groups haven’t demanded any compensation from Shell. Instead, the company is being asked to issue a policy change. Friends of the Earth’s experts say the company is responsible not to harm the climate and society, and since it wasn’t taking responsibility, the group decided to go to court with its co-plaintiffs.
Nine de Pater, the Campaign Director for Climate Case Shell, told Euronews Green:
We see that Shell is not changing on its own and continues to cause dangerous climate change. After trying many different ways to convince Shell to take a greener course, the only option left for us was to get them forced by a judge. The shell must now comply.
The problem of the climate crisis is too big to wait for the big polluters to do something. Shell is responsible for causing dangerous climate change, and as long as Shell is doing that, we will continue our fight against it. The science is obvious on this: CO2 emissions must be reduced, and there is no more room for new oil and gas projects.
We are convinced that everyone must do their part. But especially the big polluters like Shell. The event has shown that it is possible to force climate action through a judge.
The suit claimed that Shell’s annual emissions constituted an unlawful danger to the climate that must be stopped. Approximately 3% of the globe’s total emissions come from Shell, and only 4% of its investments go to sustainable energy.
A statement from the organization read:
Shell is the biggest polluter in the Netherlands. The company emits nine times as much CO2 as the entire Netherlands combined. Shell has known since the sixties that the use of oil and gas is harmful to the climate.
The activists from the winning team were crying from happiness outside the court afterward. Roger Cox, Friends of the Earth’s lawyer, said:
This statement is going to change the world. People around the world are ready to sue oil companies in their own country, following our example. And not only that. Oil companies will become much more reluctant to invest in fossil fuels, polluting fuels. The climate has won today.
A Friends of the Earth spokesperson said:
This is great news for all of us, ourselves, and our children. Shell will adjust its policy so that it will also emit less CO2 in real-time. It is not up to the judge to say how Shell should do this, but the company will not continue pumping as much oil and gas as they do now. Even if Shell decides to appeal, the ruling will lead to more cases worldwide, and politicians and oil and gas companies will feel the pressure to change their course.
However, the ruling is only legally binding in the Netherlands for the Dutch-British company, so it sets no precedent for U.S. courts. Furthermore, Shell says it will appeal what it called a “disappointing” verdict.
Meanwhile, in the U.S., oil and gas giants ExxonMobil and Chevron both separately suffered shareholder rebellions from investors and activists over their failures to curb emissions or outline ambitious paths to do so.
Chevron board members backed a call, with 61% supporting the action, to cut emissions from the end-use of its fuels. In addition, 48% of the board members backed a call to report on the business impact of achieving net-zero emissions by 2050.
And, Hedge fund activists from tiny investment operation Engine No 1 succeeded in replacing two ExxonMobil board members with its candidates. They will pile pressure on the company to move in a more environmentally conscientious direction.
Ric Marshall, the executive director of ESG Research at investment consultancy MSCI, told Reuters:
It’s a huge deal. It shows not just that there is more seriousness apparent in the thinking among investors about climate change, it’s a rebuff of the whole attitude of the Exxon board.
Darren Woods, the CEO, and chairman of Exxon Mobil, said:
With almost 3 million shareholders, it’s not surprising we heard a wide range of views, and many supported the work that we’re doing to improve earnings and cash flow capacity, as well as the work to advance the company to a lower-carbon future. Today, we heard shareholders communicate a desire for Exxon Mobil to further these efforts. We’re well-positioned to do that.
Andrew Behar, the CEO of shareholder advocacy group As you Sow, said:
A powerful signal has been sent to every oil company, to every company that’s polluting, to every company that’s in the economy. These boards can’t continue ignoring their shareholders. Shareholders have said ‘enough.’ Shareholders are using their power. This has been a long time coming.
Bess Joffe, a member of the Church Commissioners for England, said:
Today was a stark warning for Big Oil. Executives are now being held to account by investors and lawmakers.
Mark Jones, a political science fellow at Houston’s Rice University, said regarding the courtroom and boardroom actions:
There’s no going back. There’s no going back to where things were for oil and natural gas.
The global scientific consensus on the damage emissions is having on the planet is finally being recognized worldwide. Hopefully, it’s not too late. The World Meteorological Organisation put out a forecast. It says there’s a 40% chance the world will hit 1.5°C of warming above pre-industrial levels within just the next five years. The meteorologists say it’s still a fixable situation, but we’re cutting it close.
