What's going on?
The green revolution continued its uprising this week, as three major oil companies were forced to feel the winds of change.
What does this mean?
It’s been a tough few days for oil companies. First up, a Dutch court stepped in and ordered Shell to start accelerating reductions in its carbon emission. Then Chevron’s shareholders followed up with an uppercut of their own, voting in favor of a drastic cut in its emissions.
Still, maybe the most notable was ExxonMobil, which was put under pressure by its investors to start rolling out a greener agenda. Or more specifically, by one activist investor with just 0.02% of its shares. If you think that doesn’t sound like much, you’re not wrong: investors usually need a much bigger stake to throw their weight around. But despite having no history of activism in the oil and gas industry, this one managed to rally ExxonMobil’s second-biggest shareholder – BlackRock – to its cause, and the rest fell like dominoes.
Why should I care?
For markets: Investors just care too much (about money).
Make no mistake, investors’ sudden enthusiasm for energy companies’ transition to cleaner energy isn’t out of the goodness of their hearts. There’s a financial incentive at play (tweet this): oil companies could attract a fresh wave of climate-minded investors if their eco-friendly efforts are successful in the longer term, and that could push their share prices up.
The bigger picture: Making a difference from the inside.
One way for investors to make sure their investments have a positive impact is to avoid those that might have a negative one, but it’s not the only option. Some of the biggest investors in the world use an “engagement” strategy, where they take a big enough stake in dubious companies – poor employers or high polluters, say – to gain a seat at the table. That way, they can use that newfound influence to push them toward positive change.