Real-world stuff has kept me away from the keyboard for the past month or so. This will happen occasionally, but I have no intention of quitting the blog permanently. If I do I’ll let you know, so please do keep checking back.
While I was away ExxonMobil came under pressure from a minority of shareholders to adopt various climate change policies:
After a long battle to even get on the agenda for ExxonMobil’s 2016 Annual Meeting, the company’s shareholders on Wednesday voted against four initiatives to address climate change, even while the company is facing an investigation for its climate denial activities.
Investors were hoping to force Exxon to add a climate expert to its board, to enact a policy to avoid 2°C warming, to increase capital distributions (with the understanding that continued investment in assets likely to be stranded is not a good long-term strategy), and to report on the impact climate change policies worldwide to the company’s bottom line.
Each shareholder proposal failed.
“We know the path that Exxon is on, and the business strategy as it exists today, and as it existed for the last 50 years, is not a business strategy that is going to work in the 21st century,” Natasha Lamb, Arjuna Capital’s director of equity research and shareholder engagement, told ThinkProgress after the meeting. “It is not in line with a low carbon scenario where we limit the burning of fossil fuels.”
This is something I don’t quite understand. I remember years ago meeting a childless, middle-aged woman who worked as a freelance journalist in London complaining that England should be more like Germany and France in relation to social policy, labour laws, housing, foreign policy, approach to sex and alcohol, and a whole host of other criteria. She spent half her life campaigning on behalf of fringe political parties who she thought might bring this about. What I never understood is why she didn’t move to Germany or France. That’s not to say I think anyone who disagrees with aspects of a country and prefers how things are done elsewhere should be invited to move in the first instance. But if somebody wants to see wholesale changes such that their Country X becomes much more like Country Y, then why not simply move to Country Y?
I was reminded of this woman when I read the story of people – both investors and outsiders – clamouring for ExxonMobil to adopt various climate change policies. But we already have major oil companies doing just that: Shell and Total, to name two. They have already embraced the climate change narrative and are putting emissions at the centre of their corporate strategies, so why do those who are not happy with ExxonMobil’s strategy not simply sell their stock and invest in those majors who share their strategic vision?
I would have thought it would be better to have the majors pursuing several different strategies on climate change in order to spread risk and to properly ascertain which one turns out to be the most sensible. If, for example, government-induced emissions targets and other climate initiatives prove to be extremely expensive, unpopular, and ineffective then ExxonMobil’s stubborn insistence on producing oil and gas in the most cost-effective manner might turn out to be the best approach, with other majors left wondering why they bet everything on the promises of politicians. If people genuinely think ExxonMobil are pursuing a poor strategy, then switch to Total. Simple.
But I don’t think this has anything to do with investors’ concerns for the value of their stock. To me it looks more like a minority of activists wanting to browbeat ExxonMobil into conformity regardless of their financial performance, backed by larger groups (including politicians) who are concerned that ExxonMobil’s financial performance might outstrip those majors who have chosen to sink billions into what will probably be a highly expensive campaign of virtue-signalling and arse-licking. If they can force ExxonMobil to adopt the same strategy, it will be a lot harder to blame the resulting mess on specific policies.
In other words, the last thing the elites and the environmentalists want is to see a competition: they want to put an equally heavy millstone around everybody’s neck.