In January, ExxonMobil launched a lawsuit against U.S.-based Arjuna Capital and Netherlands-based Follow This. The shareholder advocacy groups had filed a proposal calling on ExxonMobil to set targets and to reduce its Scope 3, or end-use, carbon dioxide emissions. The two organizations represent small shareholders in the company.

In response to the suit, the shareholder groups withdrew the proposal, but ExxonMobil continued its action.

“Exxon is sending a clear message – dissidents will not only be fought, they will be punished,” legal blogger Zachary Barlow writes.

The lawsuit is unusual because companies ordinarily appeal to the U.S. Securities and Exchange Commission (SEC) for rulings on the permissibility of shareholder resolutions. In this case, which is a first for ExxonMobil, the company asked the U.S. District Court rather than the SEC to rule that the Arjuna and Follow This proposal falls outside of normal shareholder proposals, which can be disallowed if they deal with day-to-day company business.

In recent years, the Biden administration has loosened Trump-era regulations that made it easier for companies to ask the SEC for permission to exclude shareholder proposals. There has been an increase in proposals on climate change and other environmental, social and governance issues as a result of the Biden reforms.

In a media statement, ExxonMobil characterized this increase as a “breakdown of the shareholder proposal process, one that allows proponents to advance their agendas through a flood of proposals.” In its lawsuit, the company also asked the court to direct the shareholder groups to cover legal costs for both sides, a burden that could amount to hundreds of thousands of dollars.

The request for fees and costs “exacerbates the perception that Exxon’s intention is to utterly silence dissenting investors,” said Christina Herman, program director for the Interfaith Center on Corporate Responsibility (ICCR), a U.S. coalition of faith-based investors that file shareholder proposals and engage with corporations on social and environmental issues.

Growing numbers of multinational corporations are taking advocacy groups to court in so-called strategic lawsuits against public participation, or SLAPP suits. The London-based Business and Human Rights Resource Centre identified 437 SLAPP suits brought or initiated by 144 companies or business organizations between 2015 and 2023.

Exxon is sending a clear message – dissidents will not only be fought, they will be punished.

 

– Zachary Barlow, legal blogger

“This aggressive action is nothing less than a SLAPP suit intended to intimidate perceived opponents,” said Josh Zinner, CEO of ICCR, in regard to the ExxonMobil lawsuit.

Nicolai Tangen, CEO of Norway’s US$1.5 trillion national oil fund, the world’s largest sovereign wealth fund and one of the world’s largest stock market investors, said ExxonMobil’s action is a worrisome development. “We think it’s very aggressive and we are concerned about the implications for shareholders rights,” he told the Financial Times.

ExxonMobil filed the lawsuit in a U.S. District Court in the Northern District of Texas, which has a reputation for conservative legal rulings. Judge Mark Pittman was assigned to hear the case. Pittman, appointed to the court by former president Donald Trump, has made notable rulings against student debt relief and restrictions on the rights of 18- to 20-year-olds to carry handguns.

ExxonMobil has faced a number of investor actions in recent years, including a Follow This proposal voted down by investors at last year’s annual meeting to adopt a medium-term greenhouse-gas-reduction plan. Three years ago, ExxonMobil suffered a historic defeat on a proposal from hedge fund Engine No. 1, which was successful in ousting three of its directors on a demand for more stringent climate change action.

The post Exxon lawsuit a sign of more punishing tactics against climate activist investors appeared first on Corporate Knights.

But then a man with bushy black eyebrows and a heavy Eastern European accent took the stage. Speaking in measured terms, the nuclear physicist Edward Teller – known for his central role on the Manhattan Project – rained on the entire parade. Fossil fuels, he explained, could not be relied on for the energy of the future. Not only was their supply finite, but they were also “contaminating the atmosphere.” The carbon dioxide released in their combustion was causing a “greenhouse effect” that threatened to melt ice caps and submerge coastal cities. 

“I think that this chemical contamination is more serious than most people tend to believe,” Teller warned. 

Big Oil listened. And carried on. 

Doing so, however, has required promulgating the fiction that fossil fuels are an instrumental force for good, amidst mounting evidence to the contrary. Today the PR industry propping up the sector is considered one of the biggest obstructions to climate change mitigation. As the medium goes digital and the message becomes more subtle and diffuse, pro-oil marketing is being baked into our social media feeds and infiltrating climate conferences. But efforts are ramping up to shut it down.

From Kyoto to TikTok

Over the last half-century, Big Oil’s spin doctors have used every trick in the book to keep the public on side. Initially the mood was oddly boastful. Three years after Teller’s warning, Humble Oil (now ExxonMobil) trumpeted in its ads, “Each day Humble supplies enough energy to melt 7 million tons of glacier!” As climate science advanced, oil companies and trade associations went to every length to undermine it, from running full-page advertorials in The New York Times by front groups like the Informed Citizens for the Environment in the 1980s, to using climate-branded lobby groups to stop the U.S. from ratifying the Kyoto Protocol in 2001. 

But as catastrophic wildfires, floods, droughts and hurricanes began to capture the headlines, climate denialism waned. A twofold strategy replaced it: virtue-signal green in public, lobby black in private. British Petroleum paved the way. Rebranded as Beyond Petroleum in 2001, the company went on to run a campaign, devised by Ogilvy & Mather, that introduced the notion of the “carbon footprint” (not yet in common parlance) and encouraged individuals to reduce their own, even providing a calculator on its website for the purpose. Subtly, the onus of carbon reduction was shifted from the company onto the consumer. 

As climate awareness grew, Big Oil’s advertising budgets exploded. Between 2008 and 2016, the five  biggest oil companies (ExxonMobil, BP-Amoco, Chevron-Texaco, Royal Dutch Shell and ConocoPhillips) collectively spent an average of US$217 million on advertising annually, a sixfold increase from two decades earlier, according to a 2019 paper in the journal Climatic Change. 

In the last decade, the PR push has moved deeper online, engaging all the tools of social media and cyberculture to persuade today’s youth that fossil fuels are cool, fun and virtuous. Oil companies are working with gamers to integrate their logos into virtual racecourses and hiring digital marketing managers to run TikTok and Instagram channels that spool video reels featuring young people interacting with their brands. 

But it’s a tough sell to a climate-conscious generation that is more committed to reducing its environmental impact than any before it. “We’re seen as one of the bad guys,” BP admitted in a leaked presentation that it made to a group of PR companies in 2020, asking the marketing minds how best to make the company seem more “relatable, passionate and authentic” to the next generation, “the people with the biggest voice.” 

Their answer has been to rely heavily on the tactic of misdirection, training attention away from the product and onto nicer things: nature imagery and lifestyle motifs like sports and fashion. Shell in particular has made good use of influencers: online personalities who attract large followings on platforms like TikTok, Instagram, X and, most recently, Twitch.

“When I was younger, I struggled with self-belief,” U.S. Open surfing champion Sage Erickson tells her 308,000 followers on Instagram. Saturated shots of the blonde beauty riding turquoise waves suggest that she has gotten over it. In the accompanying text, Erickson thanks Shell for allowing her to tell her story as part of its “Performance Unbound” series, which features short videos of young athletes achieving greatness in various ways. There is no evident connection to Shell or its products, beyond the little scallop-shell icon and the influencer’s gratitude. 

Shell has also sent British celebrities on global adventures to highlight the company’s investment in renewables. For a five-episode YouTube series launched in the lead-up to Earth Day 2023, former BBC presenter Dallas Campbell travelled the world to tout, in actorly British tones, the “exciting potential of hydrogen.” In 2017, Shell sponsored polar explorer Robert Swan and his son on an expedition to the South Pole to promote biofuel. Photos of the journey were beamed out on Shell’s Twitter account. American PR giant Edelman, which was behind the stunt, boasted on its website that the publicity reached 600 million people and made viewers “31% more likely to believe” that Shell is “committed to cleaner fuels.” 

Belief is what matters here; advertising aims to win hearts, not minds. By its own account, Shell invested some 14% of its total expenditure in 2022 in “renewables and energy solutions” – a figure that environmental groups say is vastly inflated. Either way, the amount is a marginal fraction of its total business.  A 2022 analysis by Harvard University and the Algorithmic Transparency Institute found that almost three-quarters of the social media posts by 22 leading oil and gas companies promoted green technologies – on which those same companies had, on average, invested less than 2% of their total expenditure in the decade previous. 

Cancelling oil industry greenwash

There’s a growing consensus that the PR companies involved in greenwashed campaigns need to be held to account. Addressing the UN General Assembly in 2022, Secretary-General António Guterres took aim at the “massive PR machine raking in billions to shield the fossil fuel industry from scrutiny.” Clean Creatives, an initiative founded in 2020 to break the PR industry’s support of fossil fuels, publishes an annual “F-list” detailing which agencies are working for which fossil fuel companies. This year’s worst offender, with 55 fossil fuel contracts, is the British holding company WPP, which, in a gross contradiction, has pledged to achieve net-zero emissions in its operations by 2025.

For companies in the business of image management, naming and shaming can be effective. More than 700 agencies in 38 countries have signed Clean Creatives’ pledge not to work with fossil fuel clients. But for many, oil and gas is their bread and butter. Founded in 1952, Edelman built its brand with clients like ExxonMobil, Shell and the American Petroleum Institute. More recently, it was instrumental in greening up the image of the United Arab Emirates (UAE); the campaign, launched in 2007, laid the groundwork for the petroleum-exporting country’s successful bid to host COP28 last December. 

 Each day Humble supplies enough energy to melt 7 million tons of glacier!

 

– Humble Oil (Now ExxonMobile) advertisement in Life magazine, June 1962

Edelman remains intransigent. It dismissed a petition that circulated at COP26, asking it to cut ties with the fossil fuel industry. CEO Richard Edelman argued that oil companies need PR support through the energy transition and added that, since 2015, Edelman has refused to work with outright climate deniers.

“They claim, ‘We’re good corporate actors. We don’t need regulation,’” said Christine Arena, one of six executives who quit Edelman in 2015 after learning of the company’s deep involvement with the fossil fuel industry. She went on to testify before a 2022 U.S. congressional hearing into the role of PR companies in climate misinformation and obstruction. In conversation with Drilled podcaster Amy Westervelt, Arena calls the factual distortions, greenwashing and omissions that characterize fossil fuel advertising “uniquely harmful.” 

But they’re not without precedent. The tobacco industry used much the same tactics – and many of the same agencies – to promote its products. This parallel has served as inspiration for the Canadian Association of Physicians for the Environment (CAPE), a coalition of medical doctors and concerned citizens that has petitioned  Ottawa to ban advertisements for fossil fuels, gas utilities and gas vehicles. Echoing the reasoning that led to Canada’s near-complete ban on tobacco advertising, CAPE cited, in an open letter in 2022, the impact of air pollution from fossil fuels: an annual death toll of somewhere between 15,000 and 34,000 Canadians, according to Health Canada. 

The coalition has also filed a greenwashing complaint with the federal Competition Bureau against the Canadian Gas Association’s promotion of gas as an affordable, sustainable and clean energy source, arguing that the production of natural gas in fact causes air and water pollution, while gas stoves have been shown to increase the risk of asthma in children. 

Marc Bishai, a lawyer with the Centre québécois du droit de l’environnement, a Montreal-based organization that offers legal expertise on environmental and climate-related issues, says CAPE’s medical tack is smart from a legal standpoint. But overall, he feels that Canada is profoundly ill-equipped to tackle the problems of green- and climate-washing. “It’s an exercise in Whac-a-Mole,” he says of a system that relies on complaints, rather than proactively monitoring the marketplace. Furthermore, he argues that Canada has to refine its standards for corporate claims, much as it has financial disclosure standards. There is still no regulatory consensus, for instance, on what conditions have to be met to label something “climate-neutral” or “net-zero.”

They claim, ‘We’re good corporate actors. We don’t need regulation.’

 

– Christine Arena, one of six executives who quit Edelman in 2015

In the last two years, at least three climate-washing complaints have been filed with the Competition Bureau. One was lodged against Shell Canada’s “Drive Carbon Neutral” campaign of 2020, which encouraged drivers to purchase carbon credits for nature protection projects as they tanked up. Greenpeace, which launched the complaint, challenged Shell’s emissions mathematics. In December, the Bureau said it was closing its investigation because Shell had pulled the advertising from its Canadian website and app, a move that Greenpeace celebrated. 

Meanwhile, jurisdictions with more specific standards have been decisive. In 2021, the Dutch Advertising Code Committee – which draws on a Sustainable Advertising Code – ordered Shell to discontinue the Dutch version of its “Drive Carbon Neutral” campaign, arguing that the neutrality claim could not be proven. 

The U.K.’s Advertising Standards Authority, which expanded its guidance on green claims last summer, recently banned a Shell ad campaign promoting the company’s green activities on the basis that it “misrepresented the contribution that lower-carbon initiatives played . . . as part of the overall balance of a company’s activities.” The ruling was significant because it challenged the campaign not for what it said, but for what it failed to say. 

This is the kind of rigour needed to combat Big Oil’s powers of persuasion. The industry is on a roll. With its invasion of Ukraine, Russia has served the fossil fuel industry a silver tablet of record profits and heightened concerns about energy security, which it has used to justify prioritizing hydrocarbons over renewables. 

Climate Action Against Disinformation, a global coalition of organizations opposed to climate obfuscation, analyzed oil companies’ Facebook ads in the 10 months leading up to COP28. It found millions of dollars in ads steeped in “delayism,” implying that global energy insecurity and the high cost of living justified an expanded role for fossil fuels. 

In the last year, amid soaring oil and gas returns, Shell, ExxonMobil and BP all reduced their commitments to renewables. BP announced a US$1-billion annual increase in its investment in oil and gas for the rest of the decade, jettisoning its ambition of cutting oil production by 40% in that time period. In all, the International Energy Agency has forecast that 2023 will see global investment in fossil fuels increase by 11%, reaching its highest level since 2015. 

Many consider the UAE’s hosting of COP28, under the aegis of oil titan Sultan Ahmed Al Jaber, proof that the fossil fuel industry and its marketing agencies have fully co-opted the climate conversation. Now more than ever, governments and regulators have to ensure that the conversation is shaped by transparency and facts and not profit-driven bluff.  

Naomi Buck is a Toronto-based writer. 

The post How Big Oil’s spin doctors are influencing influencers appeared first on Corporate Knights.

Environmental advocates have had good reason to scorn Exxon at least as far back as 1989, when the Exxon Valdez spilled roughly 11 million gallons of oil into Alaska’s Prince William Sound. More recently, a 2015 investigative report from Inside Climate News revealed that Exxon scientists knew about the climate impacts of fossil fuel use back in the 1980s and undertook a massive lobbying and advertising campaign to sow seeds of doubt and uncertainty around the science of climate change.

Exxon is facing numerous lawsuits from cities and states across the U.S. who want the company to pay up for climate adaptation measures.  The lawsuit that I’m tracking most closely comes from the state of New York State’s Attorney General, which argues that Exxon misled investors by failing to accurately disclose and incorporate climate change risks into its business decisions. At Exxon’s annual general meeting coming up at the end of the month, New York State’s Comptroller and the Church of England will be voting against the company’s board in what has become, as Forbes put it, “a referendum on Exxon’s paltry engagement with investors on climate risk.”

Exxon was also hit with another climate risk-related investor suit this month (the third so far). It’s impossible to guess the liabilities from these lawsuits, but any ruling against Exxon will have a negative impact on its share price (which have tumbled ever since the price of oil collapsed in 2014).

Curiously, Exxon’s latest strategy has involved pledging to donate US$1 million towards a Republican-backed pro-carbon tax plan. Forgive me if I’m not impressed. Thinkprogress.org reported that the plan would end other regulations on carbon emissions and protect oil companies from further lawsuits. have declared they’ll vote against the board.

I will give Exxon credit for one tiny glimmer of green. It recently announced a $100 million joint partnership with the U.S. Department of Energy to fund research and development into breakthrough technologies to improve efficiencies and reduce carbon emissions. However, the cynic in me knows that $100 million is a drop in the bucket for a company that made over US$285 billion in 2018, and that this strategy falsely presumes that we don’t already have all the technology we need to transition away from fossil fuels.

Knowing that many investors want to ditch their shares in Exxon, Corporate Knights’ research team and I started looking for the most sustainable fossil fuel company on the stock market. We found Neste (NTOIY), a Finnish oil refiner that is now redefining what an energy company looks like. Although it still earns most of its revenues from oil refining and gas stations, biofuels like renewable diesel are now the fastest growing part of its business, comprising half its total profits. Its biofuels are made from a combination of waste sources (animal fat and used cooking oil) and plant sources (rapeseed oil and palm oil).

Because of concerns around natural forests being cleared to make room for palm oil plantations, Neste has been working to decrease the percentage of palm oil in its formula and claims to be using 100% certified and traceable sources (it even discloses the exact coordinates of all of its supplier mills). Still, environmentalists have raised concerns about state-owned Neste buying from an Indonesian supplier that has been repeatedly caught using illegal rainforest harvests. Neste has said it considers the sustainability of its supplier to have been “sufficiently restored,” but full transparency: palm oil does remain a liability for Nestle.

I really like renewable diesel as a transitional renewable energy source since it can fuel any regular diesel engine. It’s a much easier sell since companies don’t have to spend money to upgrade vehicles. Renewable diesel also fits in nicely with European Union fuel standards that require reductions in CO2 emissions and air pollution, which should give Neste a leg up. Though Neste will have to keep an eye on the fact that E.U. is planning on phasing out palm-oil derived biodiesel from transport fuel by 2030.

On the bright side, Neste is investing heavily in the growth of its renewable division, announcing a $1.8 billion biofuels production plant in Singapore. I’m also excited that they’ve started producing renewable jet fuel that will drastically reduce emissions in the aviation sector. It’s no surprise to me that Neste was named #3 on the 2019 Corporate Knights Global 100 Most Sustainable Corporations in the World list.

I’m not the only person who’s excited – investors have sent the share price soaring over the last five years. Some will argue that Neste is currently overvalued, and they’re not wrong. However, there’s still lots of room for the company to grow as the world shifts away from fossil fuels towards renewable sources.

If you’re looking to divest your portfolio from fossil fuels entirely, Neste may not be the company for you. But by showing the world how an oil and gas company can successfully transition into a renewable energy powerhouse, Neste wins this week’s Sustainable Stock Showdown.

Beta is a measure of a stock’s volatility in relation to the market. By definition, the market has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market. A stock that swings more than the market over time has a beta above 1.0. Lower beta means less risk.

Have a company in your portfolio that you want to replace with a more sustainable option? Write us an email or send us a tweet!

Tim Nash blogs as The Sustainable Economist and is the founder of Good Investing.

The post Tim Nash’s sustainable stock showdown on ditching Exxon for greener oil appeared first on Corporate Knights.