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Research Question

What is the effect of societal pressure on moving towards environmental sustainability efforts? What factors cause energy companies to change their direction?

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Overview

Green Initiatives

Impact of Societal Pressure

Categories of Societal Pressure

Strategies for Social Pressure

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Societal Pressure in the Energy Transition

Normative

Pressure

Regulatory

Pressure

Normative pressure changes societal norms

Rules and laws that dictate economic action

Leads to

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Societal Pressure can be accomplished through Collective Action Initiatives

E.g. The Divestment Movement

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The Divestment Movement: Regulatory Implementation

Normative Shift

Government Action

The Fossil Fuel Divestment Act 2018: Requires the Irish Strategic Investment Fund (sovereign fund) to divest from its fossil fuel holdings as soon as practicable (The Guardian, 2018).”

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Normative Pressure Tool: Stigmatization

Activism

Increasing reputational risk

Negative Publicity

Risk of association for suppliers, customers and politicians

Stigmatization turns socially acceptable companies into undesirable companies.

Socially-accepted company

Perceived as risk

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Regulatory Pressure Method:

The Pincer Attack

ESG (Environmental, Social, Governance issues) values: critical for companies to embrace.

TSR (Total Shareholder Return): groups with large company shareholdings

Influences

Corporate Governance

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Financial activism: Exxon Case Study

In May of 2021, a small ETF startup, Engine No. 1, leveraged ESG to win three board seats.

On ly held 0.02% of Exxon shares. This displaced three incumbent directors.”

Gathered support with ESG and TSR

Gained 3 ESG-aligned board members

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Extinction Rebellion

Their demands:

Governments should tell the truth and declare an ecological emergency.
Governments must act now to reduce greenhouse gas emissions to Net Zero by 2025.
Creation of a Citizen's Assembly to oversee the changes

A decentralized, international and politically non-partisan movement to persuade governments to act upon the Climate and Ecological Emergency.

They do so through direct civil non-violent disobedience.

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Uses demonstrations to expose environmental issues and achieve a greener future.

Demands:

For the fossil fuel industry to place workers’ rights, community health, and our shared climate before oil and company profits.
A 100% renewable energy country by 2030.

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City of Houston

Actions being taken:

Houston Climate Action Plan (2020)

Partnerships with local education to repower school districts in Texas

Creation of Citizen’s Climate Lobby: organization for people to exercise their personal and political power with a focus on climate change.

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Marketized Action Plan:

Achieving Net Zero by 2050 or sooner (removing all greenhouse gas emissions from the atmosphere)
Supporting reforestation projects to offset emissions
Using lower-carbon energy products to reduce emissions

Charging for electric vehicles
Providing hydrogen & electricity generated by solar and wind power

WARNING

Greenwashing:

This ad may contain misleading information

Tree planting will only offset their emissions by less than 10%

Since 2010, Shell has only dedicated 1% of its investments to renewable energies

The company plans to grow their fossil gas business by 20% in the coming years

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Major oil companies are not taking the concrete steps to transition to clean energy.

Chevron, ExxonMobil, BP, and Shell are guilty of greenwashing, by using terms like “climate”, “low-carbon” and “transition” frequently in reports.

The transition to clean energy business models is not occurring.

Greenwashing

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Committees that raise and distribute funds to influence political campaigns based on the political goals of its members. The funds contributes for or against candidates and specific legislation.

Other forms of regulatory pressure:

Political Action Committees (PACs)

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Growth Energy PAC

Supports pro-biofuels candidates. Elects and re-elects to influence push towards renewable energies.

Impact: Growth Energy reaches settlement with EPA to regulate the renewable fuel standard.

https://www.transparencyusa.org/tx/pac/centerpoint-energy-incorporated-political-action-committee-17120-mpac/

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EDP Renewables North America (PAC)

A renewable industry leader, fourth-largest wind developer in the United States.

Impact: Community partnerships, revenues support government services directed towards renewable energies.

https://www.opensecrets.org/political-action-committees-pacs/edp-renewables-na/C00452755/summary/2020

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How do we move on from ?

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Houston, Energy, and Actionable Change

Profitable Emission Reduction: Reaching net-zero without Greenwashing:

Exxon has an enormous $100 billion carbon capture and storage project along the Houston Ship Channel.

The Missing Piece: Govt incentivization

carbon tax over cap-and-trade

Further area for research:

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What Avenues can BNY Mellon take to help?

Considering investing in the Engine No. 1 (e.g. VOTE) or similar styled ETFs
Supporting financial activism: non-profit collective action groups or initiating lobbyist efforts to implement a carbon tax and increase divestment and stigmatization of non-ESG, nonrenewable companies

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Works Cited

Ansar, Atif, et al. “SAP Divestment Report Final - University of Oxford.” Stranded Assets and the Fossil Fuel Divestment Campaign: What Does Divestment Mean for the Valuation of Fossil Fuel Assets?, 2013, https://www.smithschool.ox.ac.uk/sites/default/files/2022-03/SAP-divestment-report-final.pdf.

Arrobbio, Osman, et al. “Collective Action Initiatives as a Tool for a Peaceful Energy Transition.” Energies, vol. 15, no. 7, 2022, p. 2696., https://doi.org/10.3390/en15072696.

Ayling, Julie M., and Neil Gunningham. “Non-State Governance and Climate Policy: The Fossil Fuel Divestment Movement.” SSRN Electronic Journal, 2015, https://doi.org/10.2139/ssrn.2601176.

Bergman, Noam. “Impacts of the Fossil Fuel Divestment Movement: Effects on Finance, Policy and Public Discourse.” MDPI, Multidisciplinary Digital Publishing Institute, 19 July 2018, https://www.mdpi.com/2071-1050/10/7/2529.

Eavis, P., & Krauss, C. (2021, May 27). Activists crashed Exxon's board, but forcing change will be hard. The New York Times. Retrieved May 26, 2022, from https://www.nytimes.com/2021/05/27/business/economy/exxon-board-climate-change.html

Hestres, L. E., & Hopke, J. E. (2019). Fossil fuel divestment: Theories of change, goals, and strategies of a growing climate movement. Retrieved May 26, 2022, from https://www.tandfonline.com/doi/full/10.1080/09644016.2019.1632672?needAccess=true

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Works Cited Continued

Katz, David, and Laura McIntosh. “EESG Activism after ExxonMobil.” The Harvard Law School Forum on Corporate Governance, 23 July 2021, https://corpgov.law.harvard.edu/2021/07/23/eesg-activism-after-exxonmobil/.

Krauss, Clifford, and Peter Eavis. “Climate Activists Defeat Exxon in Push for Clean Energy.” The New York Times, The New York Times, 26 May 2021, https://www.nytimes.com/2021/05/26/business/exxon-mobil-climate-change.html.

Meyer, Robinson. “A Major New Index Fund Should Unnerve Climate-Skeptical CEOS.” The Atlantic, Atlantic Media Company, 22 June 2021, https://www.theatlantic.com/newsletters/archive/2021/06/climate-focused-hedge-funds-new-index-fund-engine-no-1/619264/.

Wade, T., & Driver, A. (2016, March 23). Rockefeller family fund hits Exxon, divests from Fossil Fuels. Reuters. Retrieved May 26, 2022, from https://www.reuters.com/article/us-rockefeller-exxon-mobil-investments/rockefeller-family-fund-hits-exxon-divests-from-fossil-fuels-idUSKCN0WP266

Zeiss, Jan, et al. Who Participates in and Drives Collective Action Initiatives for a Low Carbon Energy Transition?, 2020, https://www.researchgate.net/publication/340777942_Who_participates_in_and_drives_collective_action_initiatives_for_a_low_carbon_energy_transition.

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