And what exertion was extended to accomplish the mission? Phew, a mere wave of the hand, so it appears, a little more than the belching of a few vacuous platitudes -- "climate change," carbon neutral," "stakeholders inclusion" -- to an electorate hopelessly clueless to the notion of unintended consequences. The inquisitors of Spain would marvel at the efficiency of the conversion.
Of course, Engine No. 1's conversion would have failed miserably sans the assistance of a few well-heeled allied acolytes, most notably the progressive agendas of enormous government pension funds (their enormity alone offers depressing insight to the size and scope of the public sector) and hopelessly woke, PC-correct asset managers like BlackRock, and big union pension funds like Calstrs. Engine No. 1's victory was hardly the product of a jacquerie uprising, it was a progressive political coup.
Pounding Exxon Mobil's board in the press for its putatively poor record on "carbon" is one thing, the potential collateral damage inflicted by the pounding is another. Such victories are sure to stimulate the borderline resolute to act. A mass swarming of these emboldened epigone can lead to exponential growth of activism that leads to full-blown lunacy.
We witnessed full-blown lunacy only a couple of weeks ago in the Netherlands. The climate-obsessed locals coalesced like a school of piranhas to turn their teeth on homegrown Royal Dutch Shell.
A Hague court ordered Shell to slash its global carbon emissions by 45% by the end of 2030 compared with 2019 levels. The court ruled in favor of a group that prances around as Friends of the Earth, which claims to be a "bold voice for justice and the planet." FOTE was joined by another 17,000 co-plaintiffs.
Specially, the court opined that Shell's sustainability policy was found to be insufficiently “concrete." Irony of ironies, the Hague court failed to provide a "concrete" roadmap to guide Royal Dutch on its Quixotic journey, saying the energy giant “has complete freedom in how it meets its reduction obligation and in shaping the Shell group’s corporate policy.” In other words, the court has no idea what it just ordered, but just do it.
The precedence is the problem. Shell lawyer Dennis Horeman foresaw the future and said in December that a ruling against the Shell could create a situation “in which countless parties can hold each other accountable for their role in that (energy) transition through the courts” and give the judges “a central role in an active and delicate political process.”
The recent climate-worshipper victories against Shell and Exxon Mobile are rife with unintended consequences. One is so glaringly obvious that you would think it should go without saying, but apparently it needs to be said.
These victories occur just as crude supply tightens with no end of the tightening in sight. The trend in declining oil-well production and chronic lack of past investment are sure to continue because of court-order precedence (to be fortified by likely future precedence) and emboldened climate-change zealotry. Analysts expect Shell to cut production three percent annually when production was already contacting one-to-two percent annually.
This, at a time, when demand is hardly contracting. No matter how often the climate worshippers click their red-slippered heels together and which it were otherwise, oil demand remains robust, and will likely remain robust to rebound to 100-millio-barrels a day as more economies return to post-pandemic form.
Engine No. 1, Friends of the Earth, and others cut from similar cloth can stand gleefully huddled, wringing their hands, sporting Snidely-Whiplash smiles. The fact is they harm the very companies open to incorporating their agenda if given the time and the requisite technological advancements.
Being strong-armed to deliver the future today ensures the relatively environmentally friendly oil companies of the west will cede market share to the relatively environmentally unfriendly companies of OPEC, Russia, and the monarchical rentier petro-states of the Middle East and Indonesia.
"It looks like the West will have to rely more on what it calls "hostile regimes" for its supply," joked a high-level executive from Russia's Gazprom, referring to energy companies around the world owned completely or mostly by the state Few of these companies are so constrained by activist pressures or so reliant on global capital markets (climate-change enforcers, these days).
Their victory, your costs.
As it stands, eighty percent of global energy needs are met by fossil fuels. The dynamic is sure hold into the deep future. As much as climate-worshippers and activist shareholders want the major western oil companies to slash upstream investment, the world’s energy system is unready to deprive itself of the oil and gas resources their exploring and developing deliver. The surge in climate activism demanding these companies drastically cut emissions and invest in low-carbon energy instead of oil and gas will lead to more price volatility in a sector rife with price volatility.
The climate worshippers get more of the "green" they want, you get less of the green you want -- dollars in your wallet. Welcome to the realm of unintended consequences and ESG- investing.