Oil majors are being forced to decarbonize policies now. At the annual general meeting of shareholders held by ExxonMobil in the U.S., two of the four director candidates recommended by the talking shareholders were elected. Both are decarbonized. Meanwhile, the Hague District Court in the Netherlands has sentenced the Royal Dutch Shell to order carbon dioxide (CO2) emissions to be reduced by 45% from 2019 to 2030. Oil industry has entered a new era in which even the major oil companies that have led the world's energy industry cannot resist the trend of decarbonization. (Photo is an image. Quoted from Yahoo image)
ExxonMobil held an annual shareholders meeting on May 26. Prior to the meeting, investment company Engine NO.1 called for a renewal of its directors, saying that the current management's environmental measures "expose them to dividend risk."
On the other hand, Exxon asked shareholders not to approve the candidates recommended by Engine NO.1, and the conflict between the two sides had surfaced. Re-elected ExxonMobil directors were Woods, Michael Angelakis, Susan Avery, Angela Braly, Ursula Burns, Kenneth Frazier, Joseph Hooley and Jeffrey Ubben. Elected from Engine No. 1’s nominees were Gregory Goff and Kaisa Hietala.
The outcome was not yet determined for ExxonMobil director candidates Steven Kandarian, Douglas Oberhelman, Samuel Palmisano and Wan Zulkiflee, and for Engine No. 1 candidate Alexander Karsner. A fourth Engine No. 1 candidate, Anders Runevad, was not elected.
After the shareholders meeting, “We welcome all of our new directors and look forward to working with them constructively and collectively on behalf of all shareholders,” said Darren Woods, chairman and chief executive officer(CEO).
Meanwhile, the Hague District Court in the Netherlands sentenced Royal Dutch Shell on May 26 to order carbon dioxide (CO2) emissions to be reduced by 45% from the year 2019 to 2030. The proceedings were filed by several environmental groups. In February of this year, Shell filed a lawsuit that the measures to prevent global warming announced by Shell’s strategy were inadequate.
Shell's global warming prevention measures are 20% in the year 2030 and 40% in 2035 (both compared to the year 2016) with the long-term goal of reducing greenhouse gas (GHG) emissions to virtually zero by 2050. The policy was to reduce it, but it did not seem to be a satisfactory number or initiative for environmental groups.
Shell was seen by energy professionals as leading the way in decarbonization efforts with BP, but following this ruling, Other oil companies are no longer a fire on the opposite bank. It is expected that fossil fuel companies will be under considerable pressure.
Regarding the two major news about oil majors in Europe and the United States, a domestic oil wholesaler in Japan said, "From the side of stable energy supply, I feel that what we have done so far is totally denied. Decarbonization is an important issue. I know that, but I think it’s a little nervous. "
Exxon's shareholders' meeting, a judicial decision on Shell, could be a catalyst for oil companies to become more vulnerable and decarbonization to accelerate. Oil companies will have to tackle the decarbonization policy as the most important policy from now on.
On the other hand, in the ExxonMobil issue, it cannot be overlooked that speculators such as hedge funds are using decarbonization as a means of making money. It has been pointed out that it is a harmful effect of shareholder supremacy. Fossil fuel companies appear to be the target of international financial capital under the slogan of decarbonization.
Shell has indicated that it will appeal soon, but in near future, the management of Western oil companies may be too concerned about judicial decisions to atrophy to development and investment. If that happens, it may benefit China and Russia, which have so far ignored international public opinion and judicial decisions. This means to deviate from the spirit of the Paris Agreement, which aims to prevent global warming. This is because decarbonization is an important issue that should be tackled all over the world.
A minority of people may no longer challenge the promotion of decarbonization to resolve climate change issues. However, if only the numerical targets for decarbonization are the golden standard and fossil fuel companies make a sharp shift in their current energy policy, we may witness the reality that a stable supply of energy is threatened. As a result, it may deviate from the original purpose of preventing global warming and only create a confrontational structure.
Jiro Arihara
Journalist based in Tokyo. In addition to approaching trends in international politics and the world economy from the perspective of resources such as energy, minerals, food & grain etc.
