Exxon Mobil & Fossil Fuel Producers—End of the Road?
The behavior of Exxon Mobil and other energy producers has been heavily criticized for years for its denial of climate change and global warming—its own brand of fake news. The charge that fossil fuel companies are this generation’s tobacco companies is a fair accusation.
But three developments this month have suggested these companies finally face real change, if not a full accounting for their past misconduct.
First, the Biden administration is committed to finally address climate change, not just by rejoining the Paris Agreement and killing the Keystone Pipeline, but by creating a spate of new regulations and legislation to hasten the end of U.S. reliance on fossil fuels. Long-standing tax advantages for fossil fuels are likely to be dramatically cut. Exxon’s ability to influence that process and new standards is badly damaged by its misconduct over the past three decades.
Second, the trend away from gas- and diesel-powered cars and trucks has accelerated and become more concrete than ever before. Boris Johnson’s UK government announced recently that no gas- or diesel- powered cars can be sold there after 2030. And this week, General Motors announced that it had set a goal of abandoning all gas- and diesel-powered cars and trucks by 2035. (Ironically, this week the National Association of Homebuilders opposed new national building standards that would require new homes to be wired for electric car charging. Can you spell “out of step?”)
Third, Exxon seems caught in a financial industry squeeze as investors realize Exxon and other leading firms must prepare for and manage their way successfully through the coming transition. Two activist hedge funds seeking more dramatic climate actions are pressuring the company. And investment firms that have for several years urged Exxon Mobil to get serious are doubling down on their climate demands. Larry Fink of BlackRock for the second year has used his annual letter to address environmental risks, demanding more concrete action. We should credit activist investors such as California public pension plans and university endowment activists, but also Mindy Lubbers and her Ceres organization with championing from the inside the notion that climate change has real financial implications. Lubbers has been the most articulate voice convincing many institutional investors to take climate change exposure into account in their investment decisions.
Relevant articles: