The Little Engine That Maybe Could
May 26, 2021 10:40 AM Subscribe
History has been made at the Exxon AGM today. At least 2 of the Engine No. 1 directors have been elected. Voting on the other two was too close to call. Investors are serious about the transition to net zero.
Engine No. 1 wins at least 2 Exxon board seats as activist pushes for climate strategy change [CNBC]
A tiny, climate-conscious player is creating a giant headache for Big Oil [Politico]
Exxon aims to beat back dissidents at shareholder meeting showdown [Reuters]
Exxon Has a Tough Green Activist [Bloomberg; Archive]
Engine No. 1
Engine No. 1 wins at least 2 Exxon board seats as activist pushes for climate strategy change [CNBC]
A tiny, climate-conscious player is creating a giant headache for Big Oil [Politico]
Exxon aims to beat back dissidents at shareholder meeting showdown [Reuters]
Exxon Has a Tough Green Activist [Bloomberg; Archive]
Engine No. 1
And for Shell: The Dutch court just ruled Shell must cut its CO2 emissions by 45% by 2030.
It's a good day to be green.
posted by scruss at 11:23 AM on May 26, 2021 [12 favorites]
It's a good day to be green.
posted by scruss at 11:23 AM on May 26, 2021 [12 favorites]
Damn, those are big firms to be forced to think about their actions.
Well done, Engine No. 1 -- you are a very good engine, indeed!
posted by wenestvedt at 11:41 AM on May 26, 2021 [8 favorites]
Well done, Engine No. 1 -- you are a very good engine, indeed!
posted by wenestvedt at 11:41 AM on May 26, 2021 [8 favorites]
It'll be interesting to see if the big petroleum companies start to shift toward hydrogen and hydrogen-related fuels. A lot of capital is flowing in that direction right now. The oil majors have some expertise that could be useful in that space.
posted by Artifice_Eternity at 12:21 PM on May 26, 2021 [2 favorites]
posted by Artifice_Eternity at 12:21 PM on May 26, 2021 [2 favorites]
I don't understand how these firms recoup all the sunken (buried) capital that ongoing gas and oil production was supposed to pay for--all the R&D, the leases, the buildings and equipment, etc that's already been spent. Those aren't assets anymore if they transition to no-carbon energy -- they're costs.
posted by notyou at 12:59 PM on May 26, 2021 [1 favorite]
posted by notyou at 12:59 PM on May 26, 2021 [1 favorite]
I don't understand how these firms recoup all the sunken (buried) capital that ongoing gas and oil production was supposed to pay for ... Those aren't assets anymore if they transition to no-carbon energy -- they're costs.
Bankruptcy, I hope.
posted by jedicus at 1:02 PM on May 26, 2021 [11 favorites]
Bankruptcy, I hope.
posted by jedicus at 1:02 PM on May 26, 2021 [11 favorites]
I don't won't them to have a green future, I want them to die. Money is their only god, if they have to lie about lead, or climate change, or taxes, or the exploited, they'll do it to protect the money. They are known liars. You mention hydrogen. If they discover that the best way to make money from hydrogen is to build a 1000 foot high middle finger in the middle of native people's sacred land, they'll fucking do it.
If it were up to me I'd deliberately exclude them from new energy. Suppose there are unforeseen consequences to lithium batteries that effect us all. How can you trust them not to cover it up and lie about it until it's too late to do anything about it? We can't trust them.
They should be held accountable, not given more opportunity to play the same games.
posted by adept256 at 1:15 PM on May 26, 2021 [12 favorites]
If it were up to me I'd deliberately exclude them from new energy. Suppose there are unforeseen consequences to lithium batteries that effect us all. How can you trust them not to cover it up and lie about it until it's too late to do anything about it? We can't trust them.
They should be held accountable, not given more opportunity to play the same games.
posted by adept256 at 1:15 PM on May 26, 2021 [12 favorites]
I don't won't them to have a green future, I want them to die.
Mitt, is that you?
Corporations aren't people, my friend.
They don't die, they are not "held accountable", there is no "they" that persists past the average employee turnover. It's a legal fiction that makes it possible for us to run our society in a particular way. I some ways that bad, in some ways good but treating a corporation like it was a person is ridiculous.
It'll be interesting to see if the big petroleum companies start to shift toward hydrogen and hydrogen-related fuels. A lot of capital is flowing in that direction right now. The oil majors have some expertise that could be useful in that space.
That's open to question. They have the expertise that might be useful if we use hydrogen produced using carbon capture and storage (blue hydrogen) but it's very much open to question whether they will ever get capture rates high enough at an acceptable energy cost to compete with solar/wind/batteries. If the capex cost of electrolysers really does come down to the $100-$300 level then they can be usefully deployed to soak up what would otherwise be all the "excess" energy we produce from VREs and do something useful with it later (green hydrogen) but that doesn't really use most of the useful expertise they have.
posted by atrazine at 2:10 PM on May 26, 2021 [4 favorites]
Mitt, is that you?
Corporations aren't people, my friend.
They don't die, they are not "held accountable", there is no "they" that persists past the average employee turnover. It's a legal fiction that makes it possible for us to run our society in a particular way. I some ways that bad, in some ways good but treating a corporation like it was a person is ridiculous.
It'll be interesting to see if the big petroleum companies start to shift toward hydrogen and hydrogen-related fuels. A lot of capital is flowing in that direction right now. The oil majors have some expertise that could be useful in that space.
That's open to question. They have the expertise that might be useful if we use hydrogen produced using carbon capture and storage (blue hydrogen) but it's very much open to question whether they will ever get capture rates high enough at an acceptable energy cost to compete with solar/wind/batteries. If the capex cost of electrolysers really does come down to the $100-$300 level then they can be usefully deployed to soak up what would otherwise be all the "excess" energy we produce from VREs and do something useful with it later (green hydrogen) but that doesn't really use most of the useful expertise they have.
posted by atrazine at 2:10 PM on May 26, 2021 [4 favorites]
Seconding atrazine. I don't buy into the idea that corporations, in and of themselves, have anything even vaguely resembling human personhood. So when we say they lie and they cheat and they steal and they destroy sacred sites, I think it's important to note that it's not some faceless implacable corporate self that's done these things; it's specific people within the management and on the boards of those corporations who have explicitly decided to do those things because those specific people are irredeemable shitheads.
And if we can find a way to winkle those irredeemable shitheads out of their positions of power and make sure they never work again, then I can't see any prima facie benefit in having the corporations we winkle them out of "die". It's the shitheads we need to keep track of, not the corporations they happen to be working within at any given time.
If I get to live in a future where Exxon is in the business of selling reliable energy delivery while actively taking responsibility for minimizing associated damage and rectifying such damage as it does do, I'll happily take it.
posted by flabdablet at 2:14 PM on May 26, 2021 [9 favorites]
And if we can find a way to winkle those irredeemable shitheads out of their positions of power and make sure they never work again, then I can't see any prima facie benefit in having the corporations we winkle them out of "die". It's the shitheads we need to keep track of, not the corporations they happen to be working within at any given time.
If I get to live in a future where Exxon is in the business of selling reliable energy delivery while actively taking responsibility for minimizing associated damage and rectifying such damage as it does do, I'll happily take it.
posted by flabdablet at 2:14 PM on May 26, 2021 [9 favorites]
And for Shell: The Dutch court just ruled Shell must cut its CO2 emissions by 45% by 2030.
Beyond the possibility of appeal, if I remember correctly, BBC's environment correspondent noted some open questions about limitations of the ruling, particularly wondering if the ruling is limited to emissions within the confines of Holland, or to the business operations headquartered from Holland (which would apply to operations at a global level). Still, it is a welcome sign of positive change, when regulatory regimes are starting to recognize their authority and their obligations to serve the public interest.
posted by They sucked his brains out! at 2:15 PM on May 26, 2021 [2 favorites]
Beyond the possibility of appeal, if I remember correctly, BBC's environment correspondent noted some open questions about limitations of the ruling, particularly wondering if the ruling is limited to emissions within the confines of Holland, or to the business operations headquartered from Holland (which would apply to operations at a global level). Still, it is a welcome sign of positive change, when regulatory regimes are starting to recognize their authority and their obligations to serve the public interest.
posted by They sucked his brains out! at 2:15 PM on May 26, 2021 [2 favorites]
I saw the phrase "history has been made" in reference to a big shakeup at exxon, and this line popped into my head:
Indiana Jones: Well, we made it!
Henry Jones: When we are airborne, with Germany behind us, *then* I will share that sentiment.
posted by cubeb at 2:21 PM on May 26, 2021 [6 favorites]
Indiana Jones: Well, we made it!
Henry Jones: When we are airborne, with Germany behind us, *then* I will share that sentiment.
posted by cubeb at 2:21 PM on May 26, 2021 [6 favorites]
I don't understand how these firms recoup all the sunken (buried) capital that ongoing gas and oil production
Gas and oil have uses beyond burning them and emitting greenhouse gases, so it isn't like their existing assets go to zero. Their value will likely be much lower, but still nonzero. If enough companies disinvest in fossil carbon production, the value might not even decline at all.
Part of the reason it has proven so hard to stop digging up oil is because of all the other things we get from it beyond gasoline, diesel fuel, and jet A. Wax, plastics, fertilizers, industrial feedstocks of nearly uncountable variety, and a whole lot more of what makes modern life possible come from oil. That's why I've been saying it's dumb that we keep burning it pretty much my entire adult life. Like it or not, we need the stuff. We don't need to burn it, that's a (poor) choice.
posted by wierdo at 2:52 PM on May 26, 2021 [13 favorites]
Gas and oil have uses beyond burning them and emitting greenhouse gases, so it isn't like their existing assets go to zero. Their value will likely be much lower, but still nonzero. If enough companies disinvest in fossil carbon production, the value might not even decline at all.
Part of the reason it has proven so hard to stop digging up oil is because of all the other things we get from it beyond gasoline, diesel fuel, and jet A. Wax, plastics, fertilizers, industrial feedstocks of nearly uncountable variety, and a whole lot more of what makes modern life possible come from oil. That's why I've been saying it's dumb that we keep burning it pretty much my entire adult life. Like it or not, we need the stuff. We don't need to burn it, that's a (poor) choice.
posted by wierdo at 2:52 PM on May 26, 2021 [13 favorites]
The reason I suggest that it might be good to shift the oil cos. in the direction of hydrogen is that they are big, wealthy, powerful entities, with a great deal of political influence. It may be morally satisfying to contemplate their destruction, but in the world as it exists, it may be more expeditious to get them to shift their business models rather that go to war with them.
I think the areas where existing fossil fuel cos. might have expertise that would be applicable to hydrogen would be carbon capture and storage (as atrazine said), and transportation (e.g., pipelines -- some existing natural gas pipelines may be convertible for hydrogen transportation). However, there's no question that these firms will end up with a lot of stranded assets (as notyou said). That's going to be a difficult financial, contractual, and political problem to deal with. But obviously, it must be dealt with.
posted by Artifice_Eternity at 3:11 PM on May 26, 2021 [1 favorite]
I think the areas where existing fossil fuel cos. might have expertise that would be applicable to hydrogen would be carbon capture and storage (as atrazine said), and transportation (e.g., pipelines -- some existing natural gas pipelines may be convertible for hydrogen transportation). However, there's no question that these firms will end up with a lot of stranded assets (as notyou said). That's going to be a difficult financial, contractual, and political problem to deal with. But obviously, it must be dealt with.
posted by Artifice_Eternity at 3:11 PM on May 26, 2021 [1 favorite]
The problem with the "there are no corporations, only people" view is it ignores that shareholders invest in the corporation as a whole rather than in individuals. If I can get rich investing in EvilCo and then EvilCo can absolve itself by kicking out a few scapegoat boardmembers, that creates a huge perverse incentive. But if a court could actually dissolve EvilCo and render my shares worthless I might think twice before investing in it.
posted by Pyry at 3:16 PM on May 26, 2021 [1 favorite]
posted by Pyry at 3:16 PM on May 26, 2021 [1 favorite]
You want to punish the investors who are replacing board members and forcing Exxon to cut carbon emissions more?
posted by ryanrs at 4:57 PM on May 26, 2021 [1 favorite]
posted by ryanrs at 4:57 PM on May 26, 2021 [1 favorite]
Well, alternatively, we could simply treat a corporation as a collection of individuals with no special liability protection. EvilCo gets fined a billion dollars and you're invested in them? You're on the hook for your fair share of that.
posted by Pyry at 5:31 PM on May 26, 2021 [1 favorite]
posted by Pyry at 5:31 PM on May 26, 2021 [1 favorite]
Unless the fine is large enough to bankrupt the company, that already happens. Granted, there are certainly times when fines or damages awards that would bankrupt a company would be beneficial for society as a whole.
There's a reason some states still don't allow certain professionals to practice under a limited liability entity, only a traditional partnership.
posted by wierdo at 5:48 PM on May 26, 2021 [2 favorites]
There's a reason some states still don't allow certain professionals to practice under a limited liability entity, only a traditional partnership.
posted by wierdo at 5:48 PM on May 26, 2021 [2 favorites]
Bill McKibben's take:
If you want to keep the temperature low enough that civilization will survive, you have to keep coal and oil and gas in the ground. That sounded radical a decade ago. Now it sounds like the law.
posted by doctornemo at 6:17 PM on May 26, 2021 [2 favorites]
If you want to keep the temperature low enough that civilization will survive, you have to keep coal and oil and gas in the ground. That sounded radical a decade ago. Now it sounds like the law.
posted by doctornemo at 6:17 PM on May 26, 2021 [2 favorites]
It's the shitheads we need to keep track of
I fear it's shitheads all the way down....
posted by not_that_epiphanius at 6:59 PM on May 26, 2021 [2 favorites]
I fear it's shitheads all the way down....
posted by not_that_epiphanius at 6:59 PM on May 26, 2021 [2 favorites]
The problem with the "there are no corporations, only people" view is it ignores that shareholders invest in the corporation as a whole rather than in individuals. If I can get rich investing in EvilCo and then EvilCo can absolve itself by kicking out a few scapegoat boardmembers, that creates a huge perverse incentive.
The thing about that is, kicking shitheads off the board is good for investors. Because it's those people who have been driving the decisions that have both made EvilCo evil and left it holding this huge bag of stranded assets instead of having moved in a more sustainable direction decades ago.
Sustainability - genuine sustainability, not just the spin doctored greenwashed claim of it that's given rise to such endless and completely justifiable cynicism - is a business concept. The most reliable way to make a lot of money, as an investor, has always been to put large amounts early into businesses that will remain in operation for the long term, and then wait for the long term. Investors want businesses to be sustainable, which is exactly why it's been possible for such a relatively tiny group of them to organize such an effective tilt at the Exxon board in this instance.
That organizing works and has the shithead faction genuinely worried. The Australian media, for example, regularly features spluttering denouncements of "activist shareholders" from exactly those Government and media shitheads you'd expect to parrot such things.
posted by flabdablet at 1:06 AM on May 27, 2021 [4 favorites]
The thing about that is, kicking shitheads off the board is good for investors. Because it's those people who have been driving the decisions that have both made EvilCo evil and left it holding this huge bag of stranded assets instead of having moved in a more sustainable direction decades ago.
Sustainability - genuine sustainability, not just the spin doctored greenwashed claim of it that's given rise to such endless and completely justifiable cynicism - is a business concept. The most reliable way to make a lot of money, as an investor, has always been to put large amounts early into businesses that will remain in operation for the long term, and then wait for the long term. Investors want businesses to be sustainable, which is exactly why it's been possible for such a relatively tiny group of them to organize such an effective tilt at the Exxon board in this instance.
That organizing works and has the shithead faction genuinely worried. The Australian media, for example, regularly features spluttering denouncements of "activist shareholders" from exactly those Government and media shitheads you'd expect to parrot such things.
posted by flabdablet at 1:06 AM on May 27, 2021 [4 favorites]
And for Shell: The Dutch court just ruled Shell must cut its CO2 emissions by 45% by 2030
Important detail in that sentence: in the emissions tally they are being held to, the judge is including - as would seem obvious, but is one of the typical loopholes that regulations currently provides big oil - the final emissions deriving from the burning of the carbonfossil fuels that Shell extracts and sells: "The court orders Royal Dutch Shell, by means of its corporate policy, to reduce its CO2 emissions by 45% by 2030 with respect to the level of 2019 for the Shell group and the suppliers and customers of the group."
posted by progosk at 1:24 AM on May 27, 2021 [3 favorites]
Important detail in that sentence: in the emissions tally they are being held to, the judge is including - as would seem obvious, but is one of the typical loopholes that regulations currently provides big oil - the final emissions deriving from the burning of the carbonfossil fuels that Shell extracts and sells: "The court orders Royal Dutch Shell, by means of its corporate policy, to reduce its CO2 emissions by 45% by 2030 with respect to the level of 2019 for the Shell group and the suppliers and customers of the group."
posted by progosk at 1:24 AM on May 27, 2021 [3 favorites]
Speaking as someone who doesn't know anything about corporate boards, is this going to have real impact, or is it a symbolic thing? It looks like they have 12 or 13 members (depending on whether the chair counts?) I presume they need a majority for most decisions? Is this just an attempt to get dissenting opinions into the minutes?
To be clear, I'm not at all opposed to symbolic things. Everything about this - maybe aside from $60M spent campaigning - sounds good. But, "what can these 2 or 4 people do" seems like an important question that hasn't made it into the horse-race press discussion. Or, I've missed it.
posted by eotvos at 8:22 AM on May 27, 2021
To be clear, I'm not at all opposed to symbolic things. Everything about this - maybe aside from $60M spent campaigning - sounds good. But, "what can these 2 or 4 people do" seems like an important question that hasn't made it into the horse-race press discussion. Or, I've missed it.
posted by eotvos at 8:22 AM on May 27, 2021
(On reflection, I guess the Bloomberg article does address my questions. I'm not sure I understand the strategy. I'm also not sure I trust the writer of that piece, after looking through some previous articles - much less the publisher - to tell me what's actually important here.)
posted by eotvos at 8:35 AM on May 27, 2021 [1 favorite]
posted by eotvos at 8:35 AM on May 27, 2021 [1 favorite]
It also sends pretty clear message to the remaining board members. It's not like the activist investors who won this proxy fight are going to stop being activist investors. And their previous targets on the board have been sent packing, so presumably they'll be looking for new ones.
posted by ryanrs at 12:08 PM on May 27, 2021 [2 favorites]
posted by ryanrs at 12:08 PM on May 27, 2021 [2 favorites]
Corporations have institutional memories that give them structural advantages beyond that of individual employees. That institutional memory is why we can speak of oil companies, and not just their employees, as having expertise. It's also why we can speak of them being evil liars.
Shell has institutional knowledge about industrial chemistry, geology, mineral extraction, public corruption, criminal cover ups, and irregular warfare, and assasination. That's their institutional memory. That's why bankruptcy is the best option.
posted by head full of air at 3:05 PM on May 27, 2021 [3 favorites]
Shell has institutional knowledge about industrial chemistry, geology, mineral extraction, public corruption, criminal cover ups, and irregular warfare, and assasination. That's their institutional memory. That's why bankruptcy is the best option.
posted by head full of air at 3:05 PM on May 27, 2021 [3 favorites]
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