As the momentum behind sustainable investing and climate change gains traction, some companies in the fossil fuel industry are beginning to find it tougher to operate.
On Wednesday, the district court in The Hague ruled that Royal Dutch Shell PLC is partially responsible for climate change and ordered the company to cut carbon emissions, a first-of-its-kind ruling, the Wall Street Journal reports.
“This case is unique because it is the first time a judge has ordered a large polluting company to comply with the Paris Climate Agreement,” Roger Cox, lawyer for Friends of the Earth Netherlands, told the WSJ.
The court ordered the oil and gas company to curb carbon emissions by 45% by 2030, compared to 2019 levels, in a bid to fall in line with United Nations guidance for member states in their path toward preventing global temperatures rising more than 1.5 degrees Celsius above pre-industrial levels.
“This case epitomizes the expanding fronts where fossil fuel companies are coming under pressure: On top of investors and regulators demanding carbon cuts, now heavy-emitters are facing censure through the courts,” Will Nichols, head of environment and climate change at risk analysis company Verisk Maplecroft, told the WSJ. “We can expect this case to embolden activists and pressure groups.”
Activist investors have already been pressuring energy companies to shift gears. For example, on Wednesday, Exxon Mobil Corp. CEO Darren Woods suffered one of his biggest setbacks at the hands of a tiny activist investment firm established less than six months ago. At least two of the activist’s nominees won seats on Exxon’s board Wednesday, despite the CEO’s vehement opposition, Bloomberg reports. A third seat may even go to the activist firm when the final results from the annual meeting are counted.
“This historic vote represents a tipping point for companies unprepared for the global energy transition,” California State Teachers’ Retirement System, also known CalSTRS, which had supported Engine No. 1, said in a statement after the meeting. “While the ExxonMobil board election is the first of a large U.S. company to focus on the global energy transition, it will not be the last.”
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