Big Oil Making Bigger Moves to Alternatives

SRI investors can easily have doubts about whether their investment actions are really making a difference. It is, after all, very difficult for each of us to see or discern the impact our actions have in the world. This can be especially true about climate change, a global problem that is already upon us, and the ongoing dangers from which could be catastrophic. When we divest from fossil fuel companies and/or engage them in shareholder advocacy initiatives, are we moving the needle at all?

We look for hopeful signs, and sometimes they appear. Earlier this week, Bloomberg New Energy Finance published research showing the world’s major oil companies more than doubled the number of acquisitions and investments made in clean energy companies in 2016 from the year before, spending $6.2 billion in the process.* The clear indication is that when big oil discerns the time has come for profitable development of alternative energy, it will be ready with the expertise and the additional investment dollars to ramp up quickly.

Investments in solar and wind projects led the way, while interest and investment in biofuels is on the decline. Venture capital is also going increasingly into new digital energy and storage – the technology that is making the deployment of solar and wind energy much more efficient and less costly.

To be sure, the major oil companies continue to spend much, much more on their core business, the development and distribution of oil and natural gas. Yet, they are also seeing more clearly the handwriting on the wall and are responding.

The future dangers and present damage from climate change are everywhere, the recent major hurricanes the most obvious and visible examples. SRI investors who have avoided oil and coal investments for decades, and the many who have recently divested more completely by implementing fossil free portfolios, can certainly not take most of the credit for these recent moves by big oil.

Yet, the fossil free divest and reinvest movement has gained traction all over the world and has sent a very visible message to the fossil fuel companies. In addition, the numbers of environmental shareowner proposals presented at company annual meetings have increased steadily in recent years. Some of these proposals received unprecedented shareowner support in 2017. Three of them – introduced at ExxonMobil, Occidental Petroleum, and PPL – received majority shareowner support, the first time this has happened.

SRI investors certainly ARE having a positive and significant impact.

*See https://www.bloomberg.com/news/articles/2017-10-24/big-oil-is-investing-billions-to-gain-a-foothold-in-clean-energy. Mention of specific companies is not intended and does not constitute a recommendation to invest.