Boardroom Blitz Isn’t A Crushing Blow For Big Oil


By Irina Slav

Whether Big Oil was just dealt a crushing blow by climate activists or whether this is simply a new leaf in a book that we’ve already opened depends largely on which headlines you read and on which side of the politico-energy divide you fall.

If you strip away the headlines and empty your head of the narrowly polarizing aspects that have hijacked our global energy transition, it’s possible to examine what just happened on the Big Oil emissions scene with some useful sobriety.

Climate activists have every reason to be celebrating their boardroom–and in one case, courtroom–victories over Big Oil this month. But those victories, while long fought battles, do not imply the end to a mass casualty war. This was never meant to be a war. It is a “transition”, and what just happened in the boardrooms of the world’s biggest oil companies was a natural part of that.

It’s not an end to Big Oil, and it’s not as crushing a blow as has been suggested.

Shell, BP, Exxon and Chevron have just emerged from some turbulent shareholder votes and, in the case of Shell, a court case.

The cause of the turbulence was climate change and these companies’ efforts in helping mitigate it. The result of the turbulence is open to interpretation but many have seen it as a win for climate activists.

BP was first. Earlier this month, nearly 21% of its shareholders voted for a resolution filed by Dutch activist investor group “Follow This”, which had demanded the supermajor increase its emissions-cutting commitments. “Follow This” necessarily interpreted this as a major victory since a previous resolution of a similar nature had garnered only 8% of the votes.

Indeed, from this perspective, the vote is a definite improvement for the climate change lobby.

From the perspective of absolute numbers, the overwhelming majority of BP’s shareholders are fine with what the company is doing in terms of climate commitments right now. Yet, the increase in vote numbers for the climate resolution suggests things are changing, but it certainly won’t be overnight.

The shareholder vote at Exxon this week supports this suggestion. The supermajor reported that eight of its own nominees to the board of directors were voted in as well as two nominees of Engine No. 1, a hedge fund acting as activist investor with big ambitions to change Exxon’s ways.

So, yes, eight is more than two, but this is about much more than mathematical absolutes. The fact that even these two nominees won board seats is indeed a historic victory for activist shareholders, not least because Exxon’s chief executive himself campaigned against the Engine No.1 nominees, as the Wall Street Journal pointed out.

“We welcome all of our new directors and look forward to working with them constructively and collectively on behalf of all shareholders,” Darren Woods said after the vote.

“We’ve been actively engaging with shareholders and received positive feedback and support, particularly for our announcements relating to low-carbon solutions and progress in efforts to reduce costs and improve earnings. We heard from shareholders today about their desire to further these efforts, and we are well positioned to respond,” Woods added.

One could call this pretending to not have your arm twisted, but there are few options when you’ve been beaten in your own boardroom. Once again, most of the board members voted in by shareholders were Exxon nominees but a wind of change is certainly blowing in Big Oil Land.

That same wind blew right in the face of Chevron.

The company’s shareholders last week voted for a proposal that sought to reduce emissions generated by the people who use Chevron’s products. With a majority of 61%, shareholders remained deaf to the supermajor’s management’s efforts to kill the proposal, forcing it instead to commit to an ambitious emission-reduction plan.

Then there was one: Shell. Shell didn’t lose to shareholders. Shell lost to a Dutch court, which ordered the supermajor last week to slash its carbon emissions by 45% by 2030 in a landmark ruling in a climate case brought by environmentalists that could set significant precedents for other oil companies.

Shell already had big emissions-reduction plans; however, as a baseline, it used its emission levels from 2016. The court ruled it should reduce emissions from 2019 levels, including those of its suppliers and of its buyers.

Unsurprisingly, the plaintiffs in the case, “Friends of the Earth”, cheered the court’s decision, calling it “a monumental victory for our planet, for our children and is a step towards a liveable future for everyone”.

Big Oil majors, especially those in Europe, have gone to great pains to show they are serious about reducing their carbon footprint. Many on the activist camp have remained unconvinced. Now, it seems, they are beginning to gain influence among shareholders—and courts—and this may be just the beginning of a transformational change for the industry.

Crude Oil


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