We are in the middle of the corporate Annual General Meeting season, where the oil majors formally report their financial results for the last year.
It is the one time in the year that Big Oil bosses have to come face to face with their shareholders. In turn, for shareholders it is the one time in a year that they can hold the company to account for its failings or inaction on issues like climate change. If they so wish.
For Big Oil, in recent years, the bosses have had to shield awkward and challenging questions from investors increasingly concerned about climate change. As Oil Change International (OCI) pointed out in its 2020 report, Big Oil Reality Check, none of the oil majors come close to aligning their actions with the urgent 1.5°C global warming limit as outlined by the Paris Agreement.
We just cannot carry on drilling for oil if we want a livable future. Indeed, OCI published more evidence this week to this effect in a peer reviewed journal, Environmental Research Letters. This revealed that nearly half of existing fossil fuel production sites need to be shut down early if we are to reach 1.5°C warming.
The time to stop drilling and building new fossil fuel infrastructure is now. My colleague, Co-Research Director Kelly Trout told the Guardian newspaper, “our study reinforces that building new fossil fuel infrastructure is not a viable response to Russia’s war on Ukraine. The world has already tapped too much oil and gas.”
But the oil majors are not listening. In fact they are exploiting the Ukraine / Russian war to make bumper profits and ward off climate action.
Let’s look at profits. As consumers worldwide are struggling to pay bills or to afford to heat their homes, all the companies to report so far are having a fossil fuel bonanza on the back of the record prices.
BP reported an underlying profit of $6.2bn for the first quarter of 2022 – up significantly from $2.6bn in the same period from last year. In response, there were calls for a windfall tax on oil company profits, with one union boss in the the UK calling the profits “obscene.”
BP was not alone. The Norwegian oil company, Equinor also reported $18 billion in adjusted pretax earnings in the first quarter. This compared with a revised $4.1 billion a year earlier. Other oil companies recorded record profits too, such as the Italian company ENI.
As the oil companies soak up record money, the pressure they are under to speed up aligning their production with climate goals has receded.
At BP’s AGM last Thursday in London, only 15 percent of shareholders voted in favor of a climate resolution. This was down from 21 percent the year before.
Again, BP was not alone. At Equinor’s AGM, only 38 percent of non-government shareholders backed the climate resolution. And at ConocoPhillips’s meeting last Wednesday, only 39 percent of shareholders supported the climate proposal, compared to 58 percent the year before.
The BP resolution was filed by Follow This, which would have forced BP to set climate targets to reduce its emissions in line with scenarios produced by the International Energy Agency and Intergovernmental Panel on Climate Change. It was rejected by BP’s Board, which called it “disruptive,” which would have “threatened long-term value creation.”
In response, Follow This’s founder, Mark Van Baal, said: “The oil industry is really using the energy crisis as an excuse now to stall climate action.”
He added: “Neither our climate resolution nor BP’s strategy have changed; their current strategy still does not lead to emission reductions by 2030. However, investor sentiment apparently has changed, likely as a result of the energy crisis and windfall profits brought on by the war in Ukraine.”
Let’s see what happens next week. Shell will hold its annual shareholder meeting on May 24. Total, Chevron, and Exxon all have AGMs the following day. All those shareholder resolutions look set to lose too as investors choose greed over public good.