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Big Oil’s Bad Week

Forbes

Big Oil’s Bad Week

The world’s largest integrated oil and gas companies are the so-called supermajors or more commonly “Big Oil.” In order of descending market capitalization these companies are ExxonMobil XOM -0.3%, Chevron CVX +0.8%, Royal Dutch Shell, TOTAL SE, and BP.

Last week three members of the Big Oil club were each dealt blows regarding the status quo of their businesses.

The Shell Decision

The lawsuit was filed in 2019 by Milieudefensie, the Dutch arm of Friends of the Earth. More than 17,000 Dutch citizens and six environmental groups joined the lawsuit, which argued that Shell’s business practices violated the “unwritten standard of care” that required it to protect Dutch residents.

The court agreed with the plaintiffs, ruling in part:

“The court considers that the CO2 emissions for which RDS can be held responsible by their nature pose a very serious threat, with a high risk of damage to Dutch residents and the inhabitants of the Wadden region and with serious human rights impacts. This applies to both current and future generations. The compelling common interest that is served by complying with the reduction obligation outweighs the negative consequences RDS might face due to the reduction obligation and also the commercial interests of the Shell group, which are served by an uncurtailed preservation or even increase of CO2-generating activities.”

Shell had previously committed to reduce the carbon intensity of its products by 20% by 2030, and to reach net zero carbon emissions by 2050. The court ruled that this wasn’t fast enough.

Shell announced that it will appeal the ruling to the Supreme Court of the Netherlands.

The credit rating agency Moody’s MCO +0.5% weighed in on the series of decisions and votes against Big Oil, indicating that this poses a credit risk to the energy sector.

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