This week's news was nothing short of astonishing.
A court in the Netherlands issued a landmark ruling against Royal Dutch Shell — an oil company already pledging to cut its carbon emissions to net zero by 2050 — ordering it to act faster.
At Chevron's shareholder meeting, investors voted to demand that the company reduce its contribution to climate change. The demand was short on specifics, but investors made it clear that it was not enough to use renewable energy to power oil and gas operations: Real action on climate change means selling less oil.
And a much bigger shareholder revolt took place at Exxon Mobil. Activist investors took on the giant and won, delivering a stinging rebuke to the company's management.
The hedge fund Engine No. 1 placed two new directors on the board of what was once the world's most influential oil company — to prepare it for a world that might stop burning oil and gas.
These events shook the oil industry to its core, upending assumptions about the future of the fuel that powers the global economy.
But this moment has been a long time coming. The scientific consensus that burning oil and gas is driving climate change has been firmly established for decades. For just as long, activists have wielded this scientific evidence in a fight against the world's massive oil and gas giants. They have sued in courts around the world. They have picketed. They have held die-ins.
And they've used the tools of business, arguing that oil and gas is a bad long-term investment.
In a world where governments are determined to tackle climate change, a lot of oil and gas investments might never pay off — they'd become "stranded assets," and companies would lose money.
Activists have presented this financial logic to corporate leaders. They have submitted shareholder proposals. Sometimes they've even won incremental victories.
But they've never had a week like this.
So what changed?
"What's different about this moment is that now we have technologies that are cheaper, cleaner and better, and so the market is recognizing that oil and gas are no longer indispensable," argues Fred Krupp of the Environmental Defense Fund. "The argument that used to be somewhat theoretical about stranded assets is now very tangible and real."
The cost of building new wind and solar power has fallen dramatically. Electric appliances and heat pumps could conceivably replace natural gas in homes. And after Tesla proved that battery-powered vehicles didn't have to be glorified golf carts, the entire auto industry is racing to pivot toward electric vehicles.
Meanwhile, governments around the world — particularly in Europe and China — have been promoting green technology through increasingly aggressive incentives and penalties. Outright climate denial, while still prevalent in countries like the United States, is no longer in the political mainstream.
And more and more investors, including giant, influential money managers like BlackRock, are focusing on climate change. Some groups cite moral reasons, while others focus on the bottom line.
"The biggest risk for us as investors is assuming the status quo and not seeing those risks or those technology disruptions that are around the corner," says Aeisha Mastagni of CalSTRS, the retirement fund for teachers in California. The group was a high-profile backer of the shareholder revolution at Exxon.
"I don't know what the price of oil is going to be tomorrow. I don't know exactly when the world's going to transition," she says. "But I do know that change is coming and Exxon Mobil needs to change with it."
This sense of impending change has reached some oil CEOs and boards of directors.
"Certainly in Europe, there has been a real awakening on the part of a growing number of directors," says Karina Litvack, who serves on the board of directors for the Italian energy company Eni and co-founded the World Economic Forum's Climate Governance Initiative.
"We're certainly not there with everybody, but ... directors are aware of the urgency and the complexity and the scale of the climate challenge," she adds.
Increasingly aggressive carbon targets in Europe put pressure on American companies to follow suit; meanwhile, as the Dutch court decision against Shell shows, the bar continues to be raised in Europe.
All these forces have converged to create a remarkable moment of reckoning for oil and gas giants.
This week's dramatic news does not suggest that the fight over climate change is over.
In the sometimes-perverse lexicon of corporate America, the idea that the world will wage a successful battle against climate change is a "risk." Specifically, it's called "transition risk."
If the world decides to tackle climate change and transitions away from oil and gas, then a wide array of companies will need to adapt or go under. It may or may not happen, but if it happens, it will carry costs. So from a corporation's point of view, it's a risk.
Exxon Mobil has repeatedly argued that the odds of this happening were so low that it didn't merit planning for it.
Based on the investor revolt this week, Wall Street clearly thinks that a substantial shift away from oil and gas is possible.
Proxy advisory firms, companies that issue recommendations on how investors should vote on shareholder proposals, even used the word "inevitable." And since beliefs about what's possible can shape what's politically viable, this is no small development.
But there's no consensus on when this change would happen.
The oil industry points out that cutting production too early — before the world's demand for oil has actually decreased — would cause price spikes and shortages that would fall somewhere between disruptive and disastrous.
And for demand to drop quickly enough to ward off the worst effects of climate change would require massive investments in renewable power, widespread adoption of electric vehicles, lifestyle changes to cut energy demand, the political will to make disruptive policy changes and international cooperation among rivals and outright enemies.
The world is not currently on track for that kind of transformation.
In short, the fate of the climate is profoundly uncertain. But this week's boardroom and courtroom decisions point to an expanding sense of what's possible.
A massive shift away from fossil fuels is a prospect that Big Oil can no longer rule out.
Copyright 2021 NPR. To see more, visit https://www.npr.org.
