Big Oil Finds the Climate Has Changed

Over the past month, campaigners have been celebrating moves to get the world’s biggest oil companies to address climate change. In the U.S., shareholders of Exxon Mobil Corp. overruled top management to appoint new board members dedicated to accelerating the firm’s transition away from fossil fuels. At the same time, in Europe, a court in The Hague ruled that Royal Dutch Shell Plc was about to breach its human-rights obligation to reduce carbon emissions, and ordered the company to adopt a much more demanding target for abatement. This week Shell said it expected to appeal the judgment, but nonetheless would take further “bold but measured steps” to cut its emissions faster.

Given the gravity of the challenge posed by global warming, this mounting pressure from investors and the courts is indeed to be welcomed. It pushes in the right direction. And in the Exxon case, at least, it suggests that shareholders can help guide management not just on the need to address climate change but also in judging where the company’s own financial interests lie.