Climate campaigners have scored another victory against Big Oil after Norway’s giant sovereign wealth fund announced will support the proposals for ExxonMobil Corp. (NYSE:XOM) and Chevron Corp. (NYSE:CVX) shareholders at its annual general meetings (AGM) on Wednesday to introduce emissions targets. With $1.4 trillion in assets, Norway’s wealth fund is the largest in the world, and its voice on issues like these carries a lot of weight. The fund is Exxon’s sixth-largest investor with a stake of nearly 1.2%. The move comes barely a week after climate protesters unleashed chaos at TotalEnergies’ (NYSE:TTE) AGM in Paris where shareholders backed a motion calling for the French energy giant to accelerate cuts to its greenhouse gas emissions. Similarly, in what is now shaping up to be another wave of climate fervor, the protesters stormed Shell Plc(NYSE:SHEL) AGM last week, accusing the Dutch national oil company of “killing” the planet and calling for it to be “shut down.”
It’s a surprising turnaround for oil and gas shareholders given that last year, there was a palpable shift in sentiment with climate activism and ESG taking a back seat amid the energy crisis worldwide
Changing feeling
2021 turned out to be a pivotal time for oil and gas companies in the global transition to clean energy, with Big Oil losing a series of board and court battles to hardline climate activists .
In May 2021, ExxonMobil lost three board seats to Engine No. 1, activist coverage, in an impressive proxy campaign. Engine No. 1 demanded that Exxon fossil fuel production must be reduced so that the company is positioned for long-term success. “What we’re saying is, plan for a world where maybe the world doesn’t need your barrels,Charlie Penner, leader of Engine No. 1 told the Financial Times Engine No. 1 enjoyed an impressive win thanks to the support of BlackRock Inc. (NYSE: BLK), vanguard i Street of the State who all voted against Exxon’s leadership.
Next was its close mate Chevron with no less than 61%. Chevron shareholders voting to further reduce emissions at the company’s annual meeting of investors and rejecting advice from the company that had urged shareholders to reject it.
Finally, a The Dutch court ordered Shell Plc reduce its greenhouse gas emissions more strongly and faster than it had planned. Never mind the fact that Shell had already committed to reducing GHG emissions by 20% by 2030 and to net zero by 2050. The Hague tribunal determined that was not good enough and demanded a 45% reduction in 2030 compared to 2019 levels. . The past two years have been particularly difficult for Shell shareholders after the company announced a significant dividend cut with the quarterly dividend falling to 16 cents from 47 cents, the first dividend cut since World War II. Meanwhile, the company’s debt had massively increased from $1 billion in 2005 to $73 billion in 2020.
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Fortunately for these oil and gas giants, investor sentiment turned in their favor last year.
In May 2022, Exxon recorded a major victory after its shareholders supported the company’s energy transition strategy at the annual general meeting. Only 28% of the participants supported a resolution presented by the follow this activist group calling for faster action to fight climate change; a proposal calling for a report on low-carbon business planning received just 10.5% support, while a report on plastics production received a favorable vote of 37%.
Following in the footsteps of its larger peer, in June, Chevron shareholders voted against a resolution calling on the company to adopt targets for reducing greenhouse gas emissions, indicating support for the steps the company has already taken to tackle climate change.
Only 33% of shareholders voted in favor of the proposal, according to preliminary data released by the company, a sharp change from last year, when 61% of shareholders voted in favor of a similar proposal.
Buoyed by the previous year’s victories, including rules that made it easier to put public policy questions on the ballot, an analysis of Esgauge-provided data by the Conference Board revealed that last year, activists for the climate presented nearly 400 environmental and social proposals with the members. companies of the Russell 3000 index. However, the share of support for environmental proposals fell from 37% in 2021 to 33% in 2022, reflecting a growing aversion among asset managers to tie managers’ hands on climate-related issues. The Russian invasion of Ukraine has also forced investors and companies to think more about energy security.
But it is now increasingly clear that climate activists are not about to go down without a fight. And, more and more institutional investors are becoming powerful climate advocates. Two years ago, New York City Mayor Bill de Blasio and Comptroller Scott M. Stringer sent shock waves through the oil and gas industry after announcing that the city’s $226 million pension fund of dollars plans to divest most of its fossil fuel investments over the next five years and also cut ties with other companies that have been contributing to global warming.
Around the same time, Rockefeller Brothers Funda family foundation built on one of the world’s largest oil fortunes, followed suit by announcing that it would abandon their investments in oil and gas and stop making new investments in the future. The $5 billion foundation was originally created with oil money in the 19th century by the son of John D. Rockefeller. Standard oil fame
Finally, BlackRock Inc.(NYSE:BLK) CEO Larry Fink said he would start pushing companies to do much more to reduce their carbon emissions by leveraging the massive weight of its mammoth asset base. BlackRock is the world’s largest asset manager with $9.1 trillion in assets under management (AUM).
Predictably, opponents of boardroom activism have dismissed Norway’s sovereign wealth fund’s latest move, while clean energy fans have welcomed it as a beacon for the growing movement of divestment of fossil fuels. But at least oil and gas investors can take solace in the fact that these companies aren’t likely to run out of backers anytime soon, with private equity firms are happy to step in as more traditional financiers resist.
By Alex Kimani for Oilprice.com
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