In Royal Dutch Shell’s case, The Hague District Court declared that the company had contributed substantially to climate change and that its plan to address greenhouse emissions is insufficiently ambitious. Under the court’s order, Shell must ditch its strategy to cut its carbon intensity, which would not necessarily reduce the raw amount of emissions it releases into the atmosphere, and devise a way to nearly halve the emissions for which it is responsible by 2030. The decision could signal follow-on rulings against other big polluters subject to European courts.
In ExxonMobil’s case, an activist hedge fund that owns a sliver of the company’s stock appears to have waged a successful campaign to install at least two green-minded directors on the firm’s board. The fund wants the oil giant to invest in technologies that address rather than aid climate change, in part on the theory that oil demand will slacken as governments get increasingly serious about facing global warming.
In other words, two big players may have to behave like the nice-sounding commercials many major oil companies run these days. To top it off, Chevron’s shareholders this week voted for the company to slash its emissions.
Make no mistake; the world still needs oil and will for decades. It is neither feasible nor desirable to end the oil business, as the recent shutdown of the Colonial Pipeline, which temporarily upended daily life along the East Coast, showed. But it is even more important for the future of humanity that polluting industries not engage in their own forms of reality denial. Just as it is tempting for many industries and politicians to ignore climate change as a distant problem best forgotten, many will write off this week’s reckoning as unique to the oil business. It is not. It is a harbinger for all major polluting industries.
The science of climate change is clear, severe consequences are already visible, and rising generations will not tolerate inaction. Society will force businesses to face up to climate change sooner than they may imagine, and it is in their best interest to advocate aggressively for policies that make the forthcoming energy transition predictable, economically rational and effective.
That policy is a strong carbon tax, an idea oil companies embraced too late and in too weak a form. This week should be a wakeup call. Businesses implicated in climate change do not have the time or space they may have thought they did to deny, delay or demand concessions. They should use whatever political pull they have to advocate aggressively for a high and rising carbon price, as soon as possible. Because as climate change gets worse — and it will get much worse due to the long-lasting emissions humans have already pumped into the atmosphere — the pressure to act will only grow.