Victory for climate activists in the Dutch Courts and in Exxon and Chevron boardrooms

May 26 will go down in history as a very bad day for the fossil fuel industry for three reasons: in the Netherlands, the courts issued a  landmark decision that requires Royal Dutch Shell to cut its carbon emissions – including Scope 3 emissions – by 45% by 2030. Also on May 26, activist shareholders won separate victories at the corporate annual meetings of ExxonMobil and Chevron. Bill McKibben reflects on all three events in “Big Oil’s Bad Bad Day” in The New Yorker , and Jamie Henn wrote  “A Landmark Day in the fight against fossil fuels” in Fossil Free Media.

The case of Royal Dutch Shell is summarized by Friends of the Earth Canada in their press release , which also links to an English-language version of the Court’s decision.  

“On May 26, as a result of legal action brought by Friends of the Earth Netherlands (Milieudefensie) together with 17,000 co-plaintiffs and six other organisations the court in The Hague ruled that Shell must reduce its CO2 emissions by 45% within 10 years.

…..“This is a turning point in history. 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. This ruling may also have major consequences for other big polluters,” says Roger Cox, lawyer for Friends of the Earth Netherlands.

The verdict requires Royal Dutch Shell to reduce its emissions by 45% by the end of 2030. Shell is also responsible for emission from customers and suppliers. There is a threat of human rights violations to the “right to life” and “undisturbed family life”.

German news organization Deutsche Welle offers an excellent, more thorough discussion in “Shell ordered to reduce CO2 emissions in watershed ruling”, which points out that the case was argued on human rights grounds – much like the precedent-setting Urgenda case and the recent German constitutional case. In those cases however, governments were called upon to defend the human right to a future safe from the dangers of climate change. The Shell case is the first time such an argument has been tried against a corporation – and is seen as a harbinger of future legal action. The Centre for Research on Multinational Corporations (SOMO) in Amsterdam also provides a succinct summary in  “The Shell climate verdict: a major win for mandatory due diligence and corporate accountability: “Shell must reduce its CO2 emissions by net 45% by 2030 (compared with 2019) regardless of the actions or policies of the Dutch government. But the ruling is historic for other reasons as well: the court based its verdict to a large extent on two soft law standards – the United Nations Guiding Principles on Business and Human Rights (UNGPs) and OECD Guidelines for Multinational Enterprises (OECD Guidelines). In addition, it asserts that companies have an individual responsibility to combat climate change throughout their value chains, and it very clearly links climate change to human rights. This means the judgment is likely to play an important role in the realisation of mandatory due diligence legislation”.

An even more thorough review of the decision comes from the Columbia University Sabin Center Law Blog :  Guest Commentary: An Assessment of The Hague District Court’s Decision In Milieudefensie et al. v. Royal Dutch Shell Plc  .

Shareholder Activism at ExxonMobil and Chevron Oil Majors:    “The Showdown over Exxon’s climate future is here”   appeared in Axios on May 24,  anticipating “ the highest-profile effort by climate activist investors to force any of the oil majors to diversify away from fossil fuels more quickly – targeting the highest-profile company.”  The Washington Post also described the conflict in “The fight for the soul – and the future – of ExxonMobil” on May 22.  As events unfolded at the annual shareholders meeting of ExxonMobil on May 26, the small activist investor group Engine No. 1 won a victory when two of the four Board members it nominated to the Exxon board were confirmed, against the company’s slate. (A third Board member was also subsequently confirmed).  The victory was all the more impactful because Engine No. 1 was supported by the three biggest U.S. pension funds — the California Public Employees’ Retirement System, the California State Teachers’ Retirement System and the New York State Common Retirement Fund, as well as the giant BlackRock, the world’s largest asset manager.   According to “Exxon activist wins board seats in historic climate victory” in The Financial Post (May 26) “The result is an embarrassment for Exxon, unprecedented in the rarefied world of Big Oil, and a sign that institutional investors are increasingly willing to force corporate America to tackle climate change.” The article concludes: “the message from shareholders is clear: The status quo cannot continue.” “After Big Oil’s very bad week, the message for Alberta is clear” by Mitchell Beer appeared in Policy Options (June 2), linking the May 26 events and the International Energy Association report, Net Zero in 2050: A roadmap for the global energy system.

While the Exxon battle grabbed most headlines because of the high-profile participants, a similar story played out at the Chevron Oil annual meeting, where 61% of  shareholders rebelled against the company’s board by voting in favour of an activist proposal from Dutch campaign group Follow This to force the group to cut its carbon emissions. The press release from Follow This is here. The website of  Follow This  is titled: “Green Shareholders Change the World”.  It states that “Follow This compels oil majors to commit to the Paris agreement.” and invites readers to “ Buy a green share and become a co-owner of an oil company. Together we file green resolutions and get a vote in the future of the oil industry.”

Much more will be written about these landmark events. For now, The Guardian offers :  “Climate activist shareholders to target US oil giant Chevron” (May 20)   and “ExxonMobil and Chevron suffer shareholder rebellions over climate”.

Corporate net zero goals: solution or deception?

Climate change superstar Mark Carney set off a media flurry in a video interview with Bloomberg Live on February 10, in which he claimed that Brookfield Asset Management is a “net zero” company because its renewables investments offset emissions from its other holdings. Carney reflects a new trend of corporate aspirational statements, for example: Jeff Bezos’ corporate network The Climate Pledge claimed in February that 53 companies across 18 industries have committed to working toward net-zero carbon in their worldwide businesses, most by 2050.  Recent  high profile examples include Royal Dutch Shell , Canada’s TD Bank  and Bank of Montreal, and  FedEx , which on March 5 announced its goal to be carbon-neutral by 2040 as well as an initial investment of $2 billion to start electrifying its delivery fleet and $100 million to fund a new research centre for carbon capture at  Yale University.

Will these corporate goals help to reach the Paris Agreement target?  Many recent articles are skeptical,  labelling them “sham”, “greenwash”, and “deception” which seeks to protect the status quo.  Some examples:

The climate crisis can’t be solved by carbon accounting tricks” (The Guardian, March 3) which offers a concise explanation of why “Disaster looms if big finance is allowed to game the carbon offsetting markets to achieve ‘net zero’ emissions.”

Global oil companies have committed to ‘net zero’ emissions. It’s a sham” by Tzeporah Berman and Nathan Taft (The Guardian, March 3) – which instead advocates for an international Fossil Fuel Non-Proliferation Treaty.

Call the Fossil Fuel Industry’s Net-Zero Bluff” by Kate Aronoff  in New Republic. She writes: “This isn’t the old denialism oil companies funded decades ago. … Instead of casting doubt on whether the climate is changing, this new messaging strategy casts doubt on the obvious answer to what should be done about it: i.e., rapidly scaling down production….. For now, it’s one part creative accounting and many parts a P.R. strategy of waving around shiny objects like biofuels, hydrogen, and carbon capture and storage.”

Can the market save the planet?  FedEx is the latest brand-name firm to say it’s trying” in the Washington Post , which quotes Yale Professor Paul Sabin, warning that “carbon capture research also should not become an excuse for doubling down on fossil fuel consumption, or delaying urgently needed policies to move away from fossil fuel consumption, including the electrification of transportation.”

Chasing Carbon Unicorns: The Deception of Carbon Markets and Net Zero  – a hard-hitting report by Friends of the Earth International which argues that net zero pledges are “a new addition to the strategy basket of these actors who are fighting hard to maintain the status quo.”   The report names these actors, led by the  financial community’s new Taskforce on Scaling Voluntary Carbon Markets (TSVCM) – established by Mark Carney and the led by the CEO of the Standard Chartered Bank, with a goal to develop standards for “credible offsets” . FOE International also names a
group of Oxford academics which is supporting the TSVCM work by developing the Oxford Principles for Net Zero Aligned Carbon Offsetting , and  conservation agencies which have endorsed the work: Conservation International (CI), Environmental Defense Fund (EDF), The Nature Conservancy (TNC), and World Wildlife Fund (WWF).

Chasing Carbon Unicorns concludes:

“Net zero” is a smokescreen, a conveniently invented concept that is both dangerous and problematic because of how effectively it hides inaction. We have to unpack “net zero” strategies and pledges to see which are real and which are fake. Fake zero strategies rely on offsets, rather than real emission reductions. Real zero strategies require emissions to really go to zero, or as close to zero as possible.”

Clean200 list of global companies released

Corporate Knights released the 2021 edition of its annual Clean200 list of publicly traded companies on February 18  –  a list of global companies with total revenues over $1 Billion annually, ranked by green energy revenues.  According to the press release:  “The Clean200 utilizes Corporate Knights Clean Revenue database which tracks the percent of revenue companies earn from clean economy themes including energy efficiency; green energy; electric vehicles; banks financing low-carbon solutions; real estate companies focused on low-carbon buildings; forestry companies protecting carbon sinks; responsible miners of critical materials for the low-carbon economy; food and apparel companies with products primarily made of raw materials with a significantly lower carbon footprint; and Information and Communications Technology (ICT) companies that are leading the way on renewable energy while also being best-in-sector according to currently accepted privacy benchmarks.”   Certain companies are automatically excluded from consideration: weapons and  military arms manufacturers, palm oil, paper/pulp, rubber, timber, beef and soy producers (as identified by As You Sow’s Deforestation Free Funds), as well as companies using child or forced labour, and companies that engage in negative climate lobbying.

According to the introductory article : “On average, 39% of revenues earned by Clean200 companies are classified as clean, which the majority of other revenues classified as neutral, compared to just 8% clean revenue for their peers.” Notably, the Clean200 companies also outperform others financially.  Forty-six of the 200 Clean companies are headquartered in the United States; followed by Japan (26), China (17), France (15), and Canada and Germany (8 each). The top performing company is Alphabet Inc., parent company of Google,  with 83.33% percent green revenue for 2019.  For Canada, the list includes the Canadian Pacific and Canadian National Railways as well as Bombardier, Cascades Inc., Canadian Solar, Telus, Hydro One, and Brookfield Renewable Partners.

Benchmarking corporate Just Transition policies gives auto manufacturers like Tesla a low score

The World Benchmarking Alliance (WBA) announced in February that will combine its existing Corporate Human Rights Benchmarking  with its Climate and Energy Benchmarking of global corporations, to produce a Just Transition Benchmark Assessment .  The WBA has a practical objective:

“Trade unions and civil society organisations can use the transparency provided by these assessments to hold companies accountable, and governments can use them as evidence to inform policy making for a just transition. Additionally, investors and the companies themselves will be able to use the assessments as a roadmap to move towards practices to ensure no one is left behind in the decarbonisation and energy transformation.”

Assessing a just transition: measuring the decarbonisation and energy transformation that leaves no one behind  outlines the methodology of this new assessment exercise and invites stakeholders to contribute in an ongoing process till 2023. The proposed outcome is to publish Just Transition Benchmark assessments of approximately 450 companies in high-emitting sectors – in publicly available rankings,  as are the many other reports of the World Benchmarking Alliance. Assessing a just transition also includes results from a pilot project of the automotive sector to illustrate how the Just Transition assessments will be done. It synthesizes the findings from the WBA Automotive Benchmarking for 2020  with its Corporate Human Rights Benchmarking .

Global auto manufacturers are racing to produce electric vehicles, but are they respecting workers’ rights?

In combining the findings of the two existing benchmarking initiatives, Assessing a just transition states: “…. Some companies that demonstrated action on climate issues, such as low-carbon transition plans, emissions reduction targets and climate change oversight, disclosed very little, if any, information on how they manage human rights, and vice versa. This lack of correlation suggests that many automotive manufacturers still consider climate and human rights issues separately, to be addressed independently of each other, despite the fact that they are increasingly recognised as interconnected.”

A brief case study highlight of Tesla states:  “….. when observing the company’s approach to managing human rights, Tesla scores in the bottom third of companies assessed in the CHRB with an overall score of 6.3/100. This approach has come under recent scrutiny, with a 2020 shareholder resolution demanding Tesla improve its disclosures on human rights governance, due diligence and remedy. While the resolution did not pass (24.8% voted in favour), it highlights that even when a company contributes to decarbonisation, a lack of essential human rights policies and processes to prevent abuse of communities and workers cannot be overlooked.”

Related reports:

The WBA  Corporate Human Rights Benchmarking Report for 2020 Key Findings  includes five sectors: Agricultural products, Apparel, Extractives & ICT manufacturing – and for the first time ever, 30 companies in the Automotive manufacturing sector.   The report states: “The average score for automotive companies is 12%, the lowest score ever for a CHRB-benchmarked sector. Two thirds of the companies scored 0 across all human rights due diligence indicators. These poor results suggest implementation of the UNGPs is weak across the sector.”

Twenty-five “keystone” companies in the automotive industry have been benchmarked for their progress towards Paris goals since 2019. Results of the 2020 report are here , and a blog in December 2020 summarizes the results in  “A tale of two automotive companies: sluggish incumbents and opaque disruptors in the race to zero-emissions vehicles”.

 

How “clean” are clean energy and electric vehicles?

Several articles and reports published recently have re-visited the question: how “clean” is “clean energy”?  Here is a selection, beginning in October 2020 with a multi-part series titled Recycling Clean Energy Technologies , from the Union of Concerned Scientists. It includes: “Wind Turbine blades don’t have to end up in landfill”; “Cracking the code on recycling energy storage batteries“; and “Solar Panel Recycling: Let’s Make It Happen” .

The glaring problem with Canada’s solar sector and how to fix it” (National Observer, Nov. 2020) states that “While solar is heralded as a clean, green source of renewable energy, this is only true if the panels are manufactured sustainably and can be recycled and kept out of landfills.” Yet right now, Canada has no capacity to recycle the 350 tonnes of solar pv waste produced in 2016 alone, let alone the 650,000 tonnes Canada is expected to produce by 2050. The author points the finger of responsibility at Canadian provinces and territories, which are responsible for waste management and extended producer responsibility (EPR) regulations. A description of solar recycling and waste management systems in Europe and the U.S. points to better practices.  

No ‘green halo’ for renewables: First Solar, Veolia, others tackle wind and solar environmental impacts” appeared in Utility Drive (Dec. 14)  as a “long read” discussion of progress to uphold environmental and health and safety standards in both the  production and disposal of solar panels and wind turbine blades. The article points to examples of industry standards and third-party certification of consumer goods, such as The Green Electronics Council (GEC) and NSF International. The article also quotes experts such as University of California professor Dustin Mulvaney, author of Solar Power: Innovation, Sustainability, and Environmental Justice (2019) and numerous other articles which have tracked the environmental impact, and labour standards, of the solar energy industry.

Regarding the recycling of wind turbine blades:  A press release on December 8 2020 describes a new agreement between  GE Renewable Energy and Veolia, whereby Veolia will recycle blades removed from its U.S.-based onshore wind turbines by shredding them at a processing facility in Missouri, so that they can be used as a replacement for coal, sand and clay in cement manufacturing.  A broader article appeared in Grist, “Today’s wind turbine blades could become tomorrow’s bridges” (Jan. 8 2021) which notes the GE- Veoli initiative and describes other emerging and creative ways to deal with blade waste, such as the Re-Wind project. Re-Wind is a partnership involving universities in the U.S., Ireland, and Northern Ireland who are engineering ways to repurpose the blades for electrical transmission towers, bridges, and more.  The article also quotes a senior wind technology engineer at the National Renewable Energy Laboratory in the U.S. who is experimenting with production materials to find more recyclable materials from which to build wind turbine blades in the first place. He states: “Today, recyclability is something that is near the top of the list of concerns” for wind energy companies and blade manufacturers alike …. All of these companies are saying, ‘We need to change what we’re doing, number one because it’s the right thing to do, number two because regulations might be coming down the road. Number three, because we’re a green industry and we want to remain a green industry.’”

These are concerns also top of mind regarding the electric vehicle industry, where both production and recycling of batteries can be detrimental to the planet.  The Battery Paradox: How the electric vehicle boom is draining communities and the planet is a December 2020 report by the Dutch Centre for Research on Multinational Corporations (SOMO). It reviews the social and environmental impacts of the whole battery value chain, (mining, production, and recycling) and the mining of key minerals used in Lithium-ion batteries (lithium, cobalt, nickel, graphite and manganese).  The report concludes that standardization of battery cells, modules and packs would increase recycling rates and efficiency, but ultimately,  “To relieve the pressure on the planet, …. any energy transition strategy should prioritize reducing demand for batteries and cars… Strategies proposed include ride-sharing, car-sharing and smaller vehicles.”