Regardless of outcome, oil CEOs testifying will help Biden in climate talks

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The CEOs of some of the world’s largest oil companies were called to Washington Thursday to explain their organizations’ roles in what lawmakers charge has been a long-running campaign of disinformation about the science underpinning climate change.

Having this play out days before global leaders meet to discuss the next steps in the fight against a warming planet only added to the drama.

Despite widespread positive messaging from the industry now that climate considerations are a priority, even via video link the executives seemed uncomfortable being grilled on their companies’ records.

It’s no wonder. Democratic members of the House oversight and reform committee quickly put them on the defensive. Exxon Mobil Corp. CEO Darren Woods asserted that his company’s statements about climate change have been fact-based and consistent with mainstream science. He said it has devoted significant resources to addressing the risks.

But he was unwilling to say definitively that assertions by former CEO Lee Raymond dismissing the link between burning fossil fuels and a warming planet were a mistake.

When pressed by committee chair Carolyn Maloney, a New York Democrat, Mr. Woods and the CEOs of Chevron Corp. and the U.S. units of Royal Dutch Shell PLC and BP PLC declined to pledge not to spend any more money, directly or indirectly, opposing efforts to reduce emissions and fight climate change.

Of course, doing so unequivocally would mean legal risks, and no corporate lawyer would recommend doing so. It could also handcuff a company down the road if it wanted to oppose what may be well-intentioned but bad policy on the emissions front.

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Still, the optics for them are poor with committee members seeking to identify a few villains in a climate fight that has multitudes. Despite their own positive words about actions they are taking, such as investing in renewable energy, the CEOs still look out of step as the world gets set for talks aimed at heading off the worst effects of global warming, including more intense storms, heat waves and wildfires.

Exxon Mobil’s own research dating back to the 1970s established a scientific link between CO2 emissions and climate change. Yet, publicly, executives and spokespeople said for years that the connection was at best still a matter of conjecture. The industry lobbied intensively for the government to avoid policies that would force it to take tough action to reduce emissions.

The congressional proceedings are being compared to those held three decades ago, when the heads of tobacco companies were summoned to the Capitol, and, under oath, denied that smoking in general, and nicotine in particular, was addictive. Of course, it was not only revealed that their own research concluded that it is, but that they used the information to hook more consumers.

It set the stage for government and the courts to hold the industry accountable for its actions.

In the case of oil and climate, the hearing is just the latest in a series of attempts to seek redress from the U.S. industry. The sector is also being targeted with legal action by state and municipal governments. Last month, Vermont’s attorney-general sued Exxon Mobil and Shell, alleging that their marketing to consumers concealed their products’ effects on climate change.

Of course, Republican members of the congressional committee are no fans of the inquiry. They argue that the industry and America’s energy independence are already jeopardized by President Joe Biden’s climate agenda, and that consumers are paying higher energy costs because of it. Rep. Andrew Clyde of Georgia said it amounted to “one big public shaming campaign” against private individuals and companies.

Outside the hearing room, the oil companies are being targeted in other ways by those who seek tougher climate measures. Early this year, an activist investor took aim at Exxon Mobil, complaining about insufficient action for dealing with climate-related risks. After winning support from other shareholders, the investment firm managed to get three of its nominees appointed to the board of directors.

A Dutch court ordered Shell to cut emissions by more than double its own target. The case was brought by Friends of the Earth Netherlands along with 17,000 co-plaintiffs and six other organizations. Shell has said it plans to appeal the ruling. It now faces an activist shareholder seeking to break the company up.

Mr. Biden is getting set to take his place among world leaders at the COP26 summit in Glasgow, after pulling the United States back into the fold. It is clear his intention is to be seen as a leader in the quest to push other countries to take tough action in a race to net zero by 2050. This, after former president Donald Trump withdrew the country from the Paris Agreement.

It hasn’t been easy for Mr. Biden. His administration’s plans for a series of tough new measures to help halve emissions from 2005 levels by 2030 have bogged down in a broader budget debate, opposed by some members of his own party. As it stands, it appears the President will travel to the meeting without tough new legislated climate measures.

The congressional hearing may not lead to concrete financial or legal repercussions for the oil companies in the short term. But it doesn’t hurt Mr. Biden to have his party members on the committee turn up the heat on the CEOs as climate talks get under way.

Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. E-mail him at jeffjones@globeandmail.com.

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