Saturday 29th May 2021
Focus on oil multi
The Shell ruling does little to help the climate
A comment by Timo Pache
Courts put pressure on in the fight against climate change. However, the verdict against Shell does not only make environmentalists happy. Russia and China should also be happy.
For large corporations in dire straits, the former boss of the former cell phone giant Nokia, Stephen Elop, painted a very clear picture ten years ago: The situation of his company is comparable to “a burning oil platform”, wrote Elop in a letter to the Employee. The company must change much faster and more radically if it does not want to go under. Elop remained CEO for two years and then moved to Microsoft with Nokia’s remaining cell phone business. Nokia itself still exists today, and business has even stabilized in the meantime – but as the world market leader for mobile phones, the group is history.
The image of the burning oil platform has persisted, and since this week it has been fitting like the lid on the pot to the big oil companies of this world – yes, possibly also to all companies that with their production or their products for high output of the greenhouse gas CO2.
On Wednesday, a district court in The Hague sentenced the Dutch oil company Royal Dutch Shell to reduce its CO2 emissions far faster and more ambitiously than previously planned. By the year 2030, Shell should reduce the CO2 emissions from oil and gas production and the subsequent use of its fuels by 45 percent compared to 2019. So far, the group had targeted a reduction of 20 percent by 2030.
Shell needs to change business model
The judges did not say how the company should do it. But the consequences of the judgment, should it last, are pretty clear: The Shell group, whose turnover has fluctuated between 150 and almost 300 billion British pounds per year due to the oil price in recent years and which has brought a lot of prosperity to the country over many decades has, has to shrink dramatically in its traditional business, at the same time build new businesses and invest billions.
Even more remarkable than the requirements for the company, however, was the justification of the judges: The Paris climate protection agreement not only binds states and governments, but also companies. For the first time, a company was not condemned to compensate for damage but to change its entire business model. The verdict can still be challenged, but lawyers and environmentalists already consider it “historic”. There will be a flood of further lawsuits, possibly also in Germany, and the first lawyers came forward immediately after the verdict.
Because even if the legal framework in the Netherlands is different from ours, we also have a precedent judgment: Four weeks ago the Federal Constitutional Court in Karlsruhe ordered the federal government to set much more precisely, such as the CO2 reduction targets from the Paris climate agreement in particular should be achieved. At that time, too, the judges’ reasoning was astonishing: The current generation should not take any more time with climate protection, otherwise the heating of the atmosphere would be more and more difficult to stop and future generations would have to interfere with their fundamental rights and freedoms – climate protection as a fundamental right. The hustle and bustle that broke out in the Union and the SPD after the Karlsruhe decision, in order to satisfy the judgment before the federal election, was one of the more embarrassing moments in Berlin’s political life.
And the judges are by no means the only ones who suddenly speed up. Also on Wednesday, albeit late by European standards, the small hedge fund Engine No. 1 successfully started a revolt at the US oil giant Exxon Mobil: With the support of large pension funds and the asset manager Blackrock, the investors, against the will of the management, pushed through two candidates for the Exxon Board of Directors, who are to push for a more climate-friendly business model at the top of the group in the future . And the shareholders of the US oil company Chevron committed the company this week to “substantially reduce” CO2 emissions – their own and those that result from the use of its products.
All these reports are also so remarkable because the climate discussion in Germany is so often characterized by bitter party disputes and the struggle for sentences, half-sentences and keywords in election programs: feed-in tariffs, expansion targets, 1000-roof programs, admixture quotas for biofuels, minimum distances, levies for building renovations. We in Germany can argue about all of this for years and decades (partly rightly). And we still consider ourselves to be model students worldwide, even if our progress is rather modest. And then judges and investors come and quickly take over the direction.
The power of capital
The restructuring of the economy towards lower CO2 emissions and lower resource consumption, that is the message of this week, will come, regardless of who wins the election in Germany this September. The resolutions, the agreements, the rules and quotas are all there, passed at international climate conferences and in various Brussels EU rounds. Even the International Energy Agency, by its self-image more of a lawyer for the industry and less of a climate protector, warned two weeks ago not to open up any new oil and gas fields with immediate effect, the emphasis was on: from now on.
These goals are enforced, sometimes with a little delay, but they come – and if politics fail, then the power of the courts and capital will cause business to change.
So is this a heroic story – the lawyer before whom corporations tremble, David versus Goliath, as has been written in many places? Is everything going to be okay now? No, not at all. Shell will certainly sell conveyor systems in the coming years and thus be able to reduce its own CO2 emissions if the company has to implement the judgment. But then presumably corporations in Russia or China will extract and refine the oil – unfortunately this does not help the world climate at all. Shell had warned in court against such a development, and it cannot actually be dismissed out of hand. The judges, however, did not accept the argument.
So there is a second uncomfortable truth in the judgment: The USA and Europe can set good examples in the fight against climate change – but they will not win it alone. Without Russia, without China, without India and all the large and equally important emerging countries like Brazil, the heating of the atmosphere will not stop. They too have formally approved all of the international agreements, but implementation there is at best stalled or not at all.
It does not follow from this that we can leave it alone in this country with climate protection. But this week’s jubilation that the decisions in The Hague and New York triggered include this honest view. The binding involvement of all the other major CO2 emitters in the world is the real task of climate protection.
This text first appeared at Capital.
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