Climate pressure and resignation rock Shell, ExxonMobil

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Five years ago, Shell chief executive Ben van Beurden sat down for an interview with The Washington Post and said “we believe climate change is real. We believe that the threat of climate change is real. And we believe that action is needed.”

Then he added: “That doesn’t mean we have to say goodbye to hydrocarbons. In fact, we can’t. But it means we have to make smarter choices.”

But today, Shell and other oil companies are under fire from those who don’t believe industry leaders are making smart choices. Dissident shareholders are trying to use the annual meeting to press their case this week. And at Shell’s annual meeting in London on Tuesday, dozens of climate activists wore “Christian Climate Action” T-shirts and rhythmically chanted “we will, we will stop you,” forcing the company chairman to halt the process for more than an hour.

At the heart of the problem is disagreement about the goals of the big oil and gas companies. Should they do further exploration to meet the demand for their products, especially from poor countries in the world? Or should they switch to building renewable energy projects while discontinuing their traditional businesses to meet climate change targets?

“Pressure is mounting on the front lines of climate justice,” said Caroline Dennett, a Bristol, UK-based safety expert on a contract with Shell that quit in protest over the company’s climate policies this week. On his LinkedIn page and in a note sent to Shell’s 1,400 employees, he accused the company of “double talking” and expanding its oil and gas operations “against clear warnings from scientists.”

“Shell is fully aware that their ongoing oil & gas extraction and expansion projects are causing extreme damage, to our climate, environment, nature and people,” wrote Dennett, who was hired to help Shell avoid the mistakes made by BP that caused the massive oil spill- magnitude in the Gulf of Mexico. “I can no longer work for a company that ignores all warnings and ignores the risks of climate change and ecological collapse.”

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“I really wanted to understand the executive committee,” Dennett said later in an interview. “When they look in the mirror, I just want to know what they see. Do they really believe that the strategy they have really fits a livable world?”

Shell’s chief executive, van Beurden, who went on “Trouble with Jon Stewart” to make his case recently, said that shareholder resolutions at this week’s annual meeting show that “the majority of shareholders continue to support Shell” and that the company is “on a path that correct.”

In London, however, the message is ambiguous. Support for Shell’s climate plan fell 10 percentage points to just under 80 percent. But support also fell for a resolution brought by Follow This, a climate group critical of Shell, to just 20.3 percent of the vote, down from about 30 percent last year.

“The company has set ambitious targets in line with the 1.5°C goal of the Paris Agreement,” Shell said in response, urging shareholders to reject the Follow This resolution. “The strategy supports an orderly transition, one that maintains oil and gas supplies where they are needed, and one that accelerates the shift to low- and zero-carbon energy.”

One indication that oil companies are not winning the battle over substance and image is the new set of hurdles they face in hiring.

Investing in fossil fuels is a “dead end — economically and environmentally. No green wash or spin can change that,” United Nations Secretary-General António Guterres said recently in a graduation speech at Seton Hall University. “So my message to you is simple: Don’t work for climate destroyers. Use your talents to propel us towards a renewable future.”

Mark Brownstein, senior vice president for energy at the Environmental Defense Fund, said he had spoken to CEOs of energy companies who were “concerned that continuing to do business as usual is not viable in today’s competition for talent.” Many of the companies working on renewable energy are smaller, more innovative, and more flexible than the oil giants.

Brownstein, who years ago left a large utility in New Jersey to join an environmental group, said that two people have left Shell to follow a similar path: Andrew Baxter, who was the lead author of a recent EDF report, and Shareen Yawanarajah, who is leading the energy transition effort in Southeast Asia for the EDF.

The war in Ukraine has played a role in sending mixed messages to oil and gas companies. International sanctions against Russia have tightened oil and gas markets, raised prices and threatened the security of energy supplies. But the government is also trying to accelerate the installation of renewable projects such as solar and wind power.

“This season, investors are giving Big Oil a kind of climate hold, a climate break,” said Mark van Baal, head of Follow This. “The Ukraine war and the energy crisis have changed the picture for investors, and that is very bad news for the fight against climate change. Both crises must be tackled simultaneously by investing these unexpected gains in renewable energy.”

The climate crisis is also affecting financial companies that have supported fossil fuel companies.

On May 19, 72 percent of shareholders of insurance giant Chubb voted against management in favor of a resolution asking the company to report on how it plans to map greenhouse gas emissions associated with its underwriting activities and investments and still achieve net zero emissions. in 2050.

BlackRock, the world’s largest asset manager, has issued a guide that many critics say is not strong enough for this era. The company, whose backing helped win several investment initiatives last year, said it would avoid resolutions that are “too prescriptive” or that call for “changes to the company’s strategy or business model.”

Companies and other financial advisors are considering the dynamics in the new world of ESG — environment, sustainability and governance. In recent years, financial advisors have argued that ESG investments are not only good, they are profitable. Now, however, the surge in oil and gas prices and the profits they bring has changed the investment climate.

Daniel Klier, chief executive of ESG Book, a data firm, said ESG’s funds are made up mostly of technology stocks. “In terms of design, it is low-carbon, but this year oil and gas will be a knockout year,” he said. “We are telling the world to buy this fund saying you are doing good for the world and your investment. But this may not hold up in the short term when the market is a little choppy.”

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This week, conflicts over how to invest for climate change spilled out into the open at HSBC, a major bank. Stuart Kirk, his top executive for responsible investment since July, gave a presentation entitled “Why investors shouldn’t worry about climate risks,” downplaying warnings about the climate crisis as “baseless” and “tensioning.”

He said international estimates of lost economic output by the end of the century were small enough to be “more or less irrelevant.”

“Who cares if Miami is six meters under water in a hundred years,” said Kirk, making excuses for adaptation. “Amsterdam has been six feet underwater for centuries, and it’s a very nice place. We will deal with it.”

HSBC immediately suspended it.

Climate change could also be an influence at ExxonMobil, widely regarded as the most rigid and unyielding company in the industry historically.

A year ago, three energy arms won seats on ExxonMobil’s board over management objections, which cost tens of millions of dollars to hold them back. Three new directors, selected from the outset by private equity firm Engine No. 1, should instill greater financial oversight and a greater sense of climate action.

Christopher James, executive chairman of Engine No. 1, said he was happy so far. Long an opaque company, Exxon recently revealed its political contributions. It has also increased its capital allocation, meaning increased drilling in places like the Permian Basin, James said.

What’s more, he says, Exxon has reached beyond the company for someone to run an expanded unit for low-carbon solutions to energy problems. Exxon moved a lot of people to Houston to work on it. The business – which Exxon says could bury large amounts of carbon dioxide underground in old geological structures – is key to the company’s future, James said.

Adding a senior outsider at Exxon is almost “unheard of,” he said. As for CO2 uptake and other changes, James said, “in Exxon terms, it’s a monumental change.”

For those trying to differentiate between the major international oil companies, BP and Shell are usually seen as politically and strategically better off than the other.

Shell’s Van Beurden would not comment this week. In a 2014 interview, he said that “I’m not against renewable resources.” But he also said it was a “fantasy” to suggest that renewable resources could supply all the energy needed.

“Slamming a number of international oil companies that collectively make up 2 or 3 percent of the world’s total resource base and saying ‘invest yourself out of it’ is not going to be a solution,” he said at the time.

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But the pressure on Big Oil continues.

“Shell, a few years ago, was a visionary,” said Dennett, a safety contractor. Now, he says, “they don’t have a vision for the future that doesn’t involve continued extraction.”

“We’re not talking about turning off the faucet right now. It would be a disaster for the community,” he added. But to add new production limits while acknowledging climate change, “that’s where the big contradiction lies and why I say they ignore the risks of climate change and don’t behave in a safe way, because they put us all at risk. .”

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