Shell & Exxon – new tipping point, says Greenpeace

Jennifer Morgan is Executive Director, Greenpeace International. Here she talks with TTU’s founder and director Nik Gowing 24 hours after a Dutch court ruled against Shell for violating human rights.

In a remarkable ruling the judge ordered the hydrocarbon giant to cut emissions by 45% in the next nine years. Simultaneously, big investors forced Exxon to diversify its board and embrace sustainability. This was in defiance of the CEO’s appeal not to do so.

This is a shortened version of Nik’s interview for Climate Action’s Energy Transition summit on 27 May 2021.

JM: We’ve seen historic changes just in the last 24 hours. The Shell case represents a tipping point. It’s the first time that you’ve had a corporate held accountable for its emissions, and ordered to immediately start reducing those emissions to what the IPCC says is needed. This is even while Shell appeals. And to put something that is more important than their corporate profit first, which is the well being of people, especially younger people around the world.

Acceleration of change is underway

So I think if you combine that with the other things that you noted, it’s just very clear that the acceleration, the pace and the scale of the change to phase out fossil fuels in a just way - those transitions that occur have to be done with workers at the table and have to be done in a just way, a socially just way - this is happening. Look at the 1.5 degree target. The scientific consensus is that 1.5 degrees and staying low is still possible. Yes, there may be a year when that increases or goes across that threshold. But what will make the difference is what we do today, what we do tomorrow. What we do next year, what policymakers do. That’s really the focus. The costs, of course, are just immense if we don’t go in this direction.

But I think it is one of those moments where you feel the earth shift slightly after years, really years of efforts by social and environmental movements.

NG: But I can imagine that if this hadn’t happened we would be having a discussion where quite understandably you’d be saying what we’ve got to do is … But what you saw for Exxon yesterday, is three pension funds, two big advisory services, three of the biggest fund managers, essentially saying, Exxon, you’ve got to have a different board so that you think differently about sustainability, the climate emergency, and possibly reverse or qualify the extraordinarily committed development that Exxon has at the moment to keep expanding on hydrocarbons.

Actions are now following words

JM: Yes: those are important developments. But look at BlackRock [world’s largest asset manager]. It’s nice to see the words followed with actions now. Last year they talked about phasing out financing for coal. But we know that their actions are not following as quickly as their words. So I think it was good to see them active in the way that they were.

Look at what Exxon has been doing over decades of bringing doubt into the public debate. So it’s about time that they started shifting. But they need to completely transform. They have to phase out fossil fuels. They have to stop doing exploration. So it’s a good start, but the pace and scale have to be just much greater. It’s good to see the investors out there. But they also need to stop investing in coal, oil and gas in order to keep us within a stable future.

NG: But what about the very clear red flag and fist which have gone up in a very peaceful way though. A fist which has gone out saying, thus far, no further. In other words, you’re seeing mobilisation in the Dutch Shell case which obviously depended on the judge as much as anything else. But a two year campaign by a lot of environmental groups, 17,000 citizens as well, producing that kind of decision by a judge, telling Royal Dutch Shell, a major global corporate, they’ve got to reduce their carbon footprint over the next eight years by 45% as a legal expectation now. Could you ever have imagined that a couple of years ago, or even a couple of months ago?

JM: I think it’s hard to grasp. There have been cases for many years. The Philippines Human Rights Commission is considering a case against the carbon majors for the damages that they’ve caused. But to have a company like Shell being held accountable for its emissions is definitely historic.

Power shift to the People

I think what you’re talking about is, I think, this power shift that is happening. People, youth, parents, everyday people are realising what’s at stake. So you’re seeing that kind of mobilisation. It has never been seen before for a just and fair of future.

You had another case a couple of weeks ago in Germany. The Federal Constitutional Court found in favour of nine young people that the government was not acting quickly enough to reduce emissions. Therefore the intergenerational equity issues were such that they ordered the German government to reduce emissions more quickly. Amazingly in just about a week Germany went from a 55% reduction to a 65% reduction.

So it is possible. I think these are the types of shifts that we’re seeing of social movements, racial justice movements, environment movements, coming together because Shell is not just bad for the environment, Shell is bad for people. It’s bad for development. It’s bad for health. I think now you’re seeing something that we haven’t seen before. I think it is really a building of people power around the world for a better future for their kids.

NG: Let me quote you Donald Pols, Director of Friends of the Earth Netherlands. He said the verdict meant that “climate litigation has now become a material risk to all major polluters, who should address this by implementing plans to reduce emissions”. So a material risk now is not just the risk of investments being left high and dry. There is now a material risk of litigation, not least for violation of human rights.

The new material risk

JM: Indeed. A material risk for violation of human rights, which is what we’ve seen in the Shell case. A material risk. In the Philippines’ Human Rights Commission the plaintiffs are seeking costs to cover the damages for loss and the damage that they are experiencing. And that is why you see oil companies in policy debates asking for an out for that. This material risk exists but what the Shell case does - and I agree with Donald Pols, is it is it just puts it from theory into business right there on the table. It will have repercussions I think all over the industry. If they weren’t taking this seriously before, they must be now, I hope they maybe didn’t sleep very well last week.

NG: Do you believe that major corporates can be shaken by this kind of thing? Greenpeace has been so active for so long. In some ways, you’ve made progress. Indeed I chaired an event for Climate Action between one of your very senior officials and the chair of Shell, UK and Ireland. See https://www.thinkunthink.org/latest-unthinking/2020-07-28-oil-giants-and-sustainability-campaigners-the-new-common-cause. It was quite clear they agreed remarkably that there was about a 75% coming together on major issues. Is there now a convergence taking place? Are you having impact in a way which is going to hasten energy transition? This at a time when the International Energy Agency said last week that even if everything we’ve committed to is done, it’s nothing like enough. Nothing like enough to achieve what is needed to reduce and mitigate the climate crisis.

JM: I think it’s clear that activism, that people, are having a difference and having an impact like we saw in the case of Shell. Whether corporates are being shaken or not will depend on government. So in some ways you could say the courts have stepped in where government has failed. Because in the case of Shell, in the case in Germany, in the case of many of the instances in the United States where there are also cases being brought against fossil fuel companies, we do not have laws or regulations that require just and fair reduction of those greenhouse gas emissions and fossil fuels.

System has to be shaken

I think corporates will only be shaken if the system is actually shaken. If we see that through these developments governments start putting people and planet first, they stop allowing the corporate interest to be dictating what the laws look like. So we need binding laws. We need financial regulation on these actors that we’ve talked about to have to actually transition plans to move away from funding fossil fuels and deforestation as well if we go into the land use sector. We need laws that actually hold officers to account. In France they have proposed a law that companies who do not actually phase out to zero shouldn’t be able to pay their dividends out to their shareholders. So that’s when I think corporates will start to be shaken. We need governments now to really listen to people and science, and move fast.

NG: Let’s focus on systemic change which includes regulation: the business mood and environment in which everyone’s operating. I was very struck by the reporting which I’m reading in the Washington Post about the chief executive of Exxon Darren Woods. He actively lobbied to make sure no one voted for new members of the board. He appears to have been furious because actually there were two new members of the board. One is a former Harvard professor and former chief executive. They’re not just any old person. These new proposed board members are people with a significant record in leadership. So what you’re seeing there is a rearguard action, a very determined effort to make sure that the way Exxon is operating at the moment: they want to continue it. They do not want to recognise the kind of things you’ve just been talking about.

Yes! We can act quickly.

JM: I think change can happen quickly. We’ve seen that in what happened when the world recognised the emergency around Covid-19. The climate crisis is also an emergency. So yes! We can act quickly because the solutions are actually here and now and they are cheaper. Bloomberg New Energy has documented that renewable energy is cheaper, than new coal or gas. So the solutions are actually there.

The thing that can happen quickly in society is there can be tipping points. A company that used to be the hero old company of the world, all of a sudden isn’t socially acceptable anymore. Who wants to work for a company that goes behind the door and tries to keep people off their board who want to bring climate science in? Or who has been denying, and spreading doubt for decades in the climate science debate?

Those things can happen very quickly. You can change social norms and make it untenable for people to want to work for such a company in the future. We know what needs to happen: there are so many plans that are there. Scientists have been so clear. Politicians now have to put those laws in place. And it’s possible. We’re seeing it. But it will require that kind of courage to create a new system. That is one where you don’t have the majority of funds for COVID recovery still going into fossil fuels, but rather one that really says we want the health and well being of people on the planet first. That means a just and fair transition for workers. It means having them at the table when these things are developed. It means really looking at social inequalities at the same time. And it means climate justice.

NG: There’s a question here from Gardner Hill. He mentions climate justice, He asks: as significant as the Dutch legal case is, in itself, it does not change or make the energy transition any more economic. So what else is needed to make the transition more equal?

JM: Yeah. What’s needed is really seeing across the board the linkages that are occurring which have been exposed during COVID, right? We see even more than inequalities, the gap between rich and poor. We see the racial inequalities and we see the climate crisis that’s happened at once. That means you need through a just transition to have workers at the table, to have the funds coming from the companies, not the taxpayers, from the companies into the retraining, into making sure that they can keep their social health benefits, into community development into those places to have that kind of just transition. But you also really need to be paying attention to the broader economic model of not having this ultra neoliberal capitalism where the most important thing is profit. I think what the Dutch case does, is it puts people in front of that profit.