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Big Oil Investors Backing Off From Paris-Aligned Climate Targets

Big Oil Investors Backing Off From Paris-Aligned Climate Targets

According to Follow This, a coalition of over 8,000 green shareholders in oil and gas corporations, the fight against the climate problem has slowed in 2022 for investors in Big Oil.

According to Follow This, the recently updated CA100+ benchmarks demonstrate that no oil giant is aligned with Paris. Despite this, in 2022, shareholder votes for Paris-consistent targets fell.

According to the organization, oil companies may now claim that a majority of their shareholders back them in continuing to take insufficient climate action for another year. Shell CEO Ben van Beurden, for example, has declined to commit to absolute emissions reductions by 2030.

Despite the decline in votes, roughly one-third of shareholders joined together in a shareholder revolt, pressing firms to establish Paris-consistent targets, according to Follow This.

“We appreciate the investors who voted to reduce emissions this decade.” They are the genuine change movers in the fossil fuel business, which has a long history of resistance to change — Big Oil will make or break the Paris Agreement. Follow This creator Mark van Baal said, “Together, we must persuade more shareholders that Big Oil will only alter direction if we unite our voice and vote in favor of Paris alignment.”

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An analysis of previous voting behavior revealed two types of voting rationales: one group insists on science-based targets and votes FOR all climate resolutions at Big Oil, while the other group accepts company-issued targets or disclosures and votes AGAINST climate resolutions at companies with non-Paris-compliant targets or disclosures.

In recent years, the first group has grown at an exponential rate. At Shell, voter turnout grew from 6% in 2017 and 2018 to 14% in 2020 and 30% in 2021. Despite Shell’s annual advancements of its aims or targets, the increase in votes occurred.

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However, BlackRock, the world’s largest asset manager, has noted that Russia’s invasion of Ukraine has changed the atmosphere, making them suspicious of suggestions to oil companies that want targets for cutting emissions in their supply chains and among their customers.

Exxon convinced Engine No.1, another green investor in Big Oil and holder of multiple seats on the Exxon board, that Scope 3 targets are not reasonable, according to Follow This.

“We didn’t support suggestions that urged these companies to set short-term targets on Scope 3 emissions since oil and gas producers can’t be exact on Scope 3 reductions until consumer companies are much clearer,” Engine No. 1 told the Responsible Investor.

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The energy crisis and the windfall profits stemming from the Ukraine war, according to Follow This, have largely obscured the climate crisis. Both challenges must be addressed at the same time by shifting investments to renewable energy sources.

The current windfall revenues from high oil prices should be used to make the massive investments in renewables that are required to address the climate issue and lessen reliance on geopolitical conflict-affected oil and gas sectors. The current energy problem, according to the organization, “will be overshadowed by the implications of cataclysmic climate change.”

“These election results constitute a setback in the fight against climate change.” “Everyone lost in May except the boards of Big Oil, which will continue to invest in fossil fuels for another year, fueling the climate problem,” Follow This explained.

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