The EconomistJune 1st 2019 Business 591I
nvestors concerned about climate
change have never been better organised,
thanks to Climate Action 100+, a coalition
with more than $33trn in assets under
management. Nor have they ever had more
success. Last year shareholders of Royal
Dutch Shell persuaded it to pledge emis-
sions reductions from both its operations
and its products. In May bp’s shareholders
voted to require the European oil-and-gas
giant to disclose how its strategy matches
the goals of the Paris climate agreement.
Edward Mason, the head of responsible
investment for the Church of England, sees
“a gulf opening between the European su-
permajors and the American ones”. On May
29th the shareholders of ExxonMobil, the
world’s biggest listed energy company, and
Chevron, another American major, voted
against climate resolutions. Yet even in Eu-
rope green investors’ impact is more a rip-
ple than a wave.
In America oilmen have been shielded
in part by regulators. Even before Exxon-
Mobil’s annual meeting, America’s Securi-
ties and Exchange Commission (sec) had
sided with the company by agreeing that an
emissions resolution brought by the
Church of England and New York state’s re-
tirement fund amounted to micromanage-
ment. This allowed the motion to be omit-
ted from its proxy materials.
At the same time, some big asset man-
agers have become more restrained. In 2017
BlackRock helped pass a resolution requir-
ing ExxonMobil to disclose how climate
change, or efforts to combat it with mea-
sures like carbon taxes, might affect itsbusiness. It has seemed warier of the new
campaigns at Exxon. After the sec’s deci-
sion, the Church of England and New York
sought to split the roles of chairman and
chief executive at ExxonMobil, hoping that
a more independent board would set a
greener strategy. Preliminary results show
only 41% of votes in favour. ExxonMobil in-
sists it shares green investors’ concerns
about climate change, pointing to invest-
ments in biofuels and carbon capture and
storage. “Exxon seems stuck in time,”
counters Thomas DiNapoli, New York’s
state comptroller.
European firms seem forward-looking
by comparison. Look closer, though, and
they too appear grounded in the past. Shell
aspires to halve its “net carbon footprint”
by 2050. Shorter-term targets support the
ambition—but leave room for emissions to
rise so long as solar and wind power ac-
count for a growing share of Shell’s energy
production. bp opposed targets for total
emissions, supporting instead the resolu-
tion focused on strategy disclosure.
Bruce Duguid of Hermes Investment
Management, who worked with bp on be-
half of Climate Action 100+, says that dis-
closure will help investors understand if
the billions which bp continues to spend
on oil and gas creates too much risk. bp will
describe how big new capital projects stack
up against the Paris goal of keeping warm-
ing “well below” 2°C relative to preindus-
trial times. Equinor, Norway’s state behe-
moth, agreed to something similar in
April. As with Shell, bp’s resolution does
not require it to cut oil and gas output.
Greenpeace, a combative ngo, blocked en-
trances to bp’s headquarters in London
ahead of its annual meeting on May 21st.
Energy companies have made the right
noises in other areas. ExxonMobil, Shell
and bp have each devoted $1m to support
an American proposal for a carbon tax. In
April Shell said it would drop its member-
ship of the American Fuel & Petrochemical
Manufacturers, describing the lobbygroup’s climate policies as being in “mate-
rial misalignment” with its own. bp plans
to review its membership of trade groups.
For the time being, though, Shell, bp
and ExxonMobil remain members of the
American Petroleum Institute, which has
sought to ease rules on emissions of meth-
ane, a potent greenhouse gas. They also
maintain links with the Western States Pe-
troleum Association, which last year
fought a carbon tax in Washington state. bp
spent over $13m directly to help defeat a
ballot initiative in favour of the levy.
Some investors in America will contin-
ue to seek changes, including on company
boards. “The story of the next year is, how
do we increase the pressure for companies
to act fast?” says Andrew Logan of Ceres, a
consortium of investors that helps co-ordi-
nate Climate Action 100+. Others are begin-
ning to question the value of shareholder
engagement. The Church of England has
said it will divest by 2023 if no advances are
made. “Investors’ patience is not limitless,”
says Mr Logan. “It’s going to be measured in
years, not decades.” 7NEW YORK
Shareholders test the limits of
climate activismBig Oil and climate changeBack to the well
“O
versupply and people will die.”
That evocative line was at the heart
of the opening argument laid out in a
courtroom in Oklahoma on May 28th. Mike
Hunter, the state’s attorney-general, ac-
cused Johnson & Johnson (j&j), a pharma-
ceutical giant, of misleading doctors and
patients about the dangers of opioids, pre-
scription medicines used to treat severe
pain. After a heart-wrenching description
of addicted patients and the plight of ba-
bies with neonatal opioid syndrome, Mr
Hunter asked, “How did this happen? I have
a short, one-word answer: greed.”
The opioid crisis claimed nearly
400,000 lives between 1999 to 2017, and
rages on today. Americans want someone
to blame and to pay for cleaning up the
mess, so politicians are taking to the
courts. A federal trial in Ohio will aggregate
claims of nearly 2,000 cities, counties, Na-
tive American tribes and hospitals, against
a number of opioid-makers and distribu-
tors, but will not start until October.
That is why all eyes are on Oklahoma
this week. The j&j case is heavy with sym-
bolism. It is the first of many against opioid
manufacturers to reach trial. It is conduct-
ed in the same courtroom where Big Tobac-
co was humbled in 1998, which led to ciga-NEW YORK
The first trial of an opioid
manufacturer beginsOpioidsAn industry in
the dock