Follow This Suspends Climate Push on Oil Majors Amid Weak Investor Support

The Dutch climate activist shareholder group Follow This has put its longstanding campaign to get big oil and gas majors to cut emissions more aggressively on ice for the time being. After nearly a decade of filing climate-related resolutions at shareholder meetings, the group said lack of investor interest is the primary reason to step back. Follow This began its campaigns in 2016 and gained traction slowly, with high shareholder support—80% at Phillips 66, 60% at Chevron, roughly 33% at ExxonMobil, and lower but substantial percentages at BP and Shell.

In more recent times, investor sentiments have shifted due to global energy market trends. The war in Ukraine, which led to a spike in oil and gas prices, has made fossil fuel investments more financially attractive in the short term. Meanwhile, some renewable energy projects have not met expectations, leading institutional investors to prioritize short-term profitability over long-term sustainability goals. This change in investment trends has led major energy companies to downscale their energy transition plans. These companies, including BP, Shell, and Equinor, also re-upped their climate promises with plans more consistent with fossil fuel growth than they had previously committed to transitions towards renewable energy.

Institutional investors, who once appeared to prefer climate solutions, now are not only hesitant to back activist proposals but also do so with less urgency. This aversion has hence lessened the potency of shareholder campaigns calling for climate action. Follow This has seen that efforts currently are still hampered by this lack of engaged investor activity, even if various funds and companies continue making public statements about complying with environment, social, and governance (ESG) criteria.

Obstacles confronting the group have also been heightened by court processes. In 2023, ExxonMobil had sued Follow This and Arjuna Capital after the groups had filed a climate resolution. Even though the suit was ultimately dropped by a judge, it only followed after the proposal had been withdrawn and the groups promised not to resubmit or sponsor future similar proposals. The legal pressure has raised concerns about the threats and barriers facing climate advocacy groups operating within the corporate shareholder system.

Even with suspending its filing campaign for a resolution, Follow This plans to revisit its approach. The alliance is already collaborating with allies who are investors to understand better the pitfalls in voting and seeking alternative ways of overcoming such limitations. The group wishes to identify systematic pitfalls that prevent large investors from maintaining their public statements and to develop alternative methods of applying pressure to oil and gas companies.

The suspension of this campaign is a revealing moment for the broader climate activist movement, and particularly the shareholder advocacy environment. It shows the difficulties for climate-focused groups in working with large corporations at a time when energy markets are unstable and short-term profits are paramount. The news may also signal a broader realignment of ESG considerations in the investment landscape as banks and other financial institutions deal with complex political, legal, and economic pressures.

The decision of Follow This to put its work on hold does not signal the demise of climate activism in the oil and gas sector, but it does highlight the current limits of shareholder influence when there is not collective investor action. As global temperatures continue to rise and global climate ambitions remain stalled, the ability of institutional investors to influence corporate behavior remains a central, though uncertain, component of global climate action.

Source/Credits:
Reuters, Shadia Nasralla reporting; Editing by Tomasz Janowski