May 27, 2022
May 27, 2022

Big Oil’s ‘Black Wednesday’ One Year On

By Emma O’Brien, Associate
By Emma O’Brien, Associate

‘Black Wednesday for big oil’, as the media1 dubbed it on 26 May 2021, was the day when some of the biggest players in the industry – ExxonMobil, Chevron, and Shell – suffered a “stunning series of defeats” which appeared to mark a turning point in attitudes towards the fossil fuel industry.2

Within the space of 24 hours, ExxonMobil faced a coup from activist hedge fun Engine No.1, which replaced three board members with its own candidates who favored a transition towards a greener strategy for the company;3 Chevron shareholders voted 61% in favor of a proposal which would force the company to cut its ‘Scope 3’ carbon emissions;4 and, in a landmark decision in the Netherlands, Shell was forced to reduce its carbon emissions by 45% compared to 2019 levels by 2030 5 after Milieudefensie (Friends of the Earth Netherlands) and others won their court case.

These dramatic and unprecedented moments took place against the backdrop of the International Energy Agency’s publication earlier that same month of the report ‘Net Zero by 2050: A Roadmap for the Global Energy Sector’, which warned (among other things) that oil companies must stop all new projects immediately in order to curb global warming.6 The prevailing feeling at the time was one of cautious optimism, with widespread commentary suggesting that the fossil fuel-based economy was beginning to unravel.7

But, one year on, can it be said that ‘Black Wednesday’ represented a true inflection point for the fossil fuel industry? Has the internal and external pressure on big oil been translated into meaningful change? Have we seen any indication that carbon supermajors are shifting their business models, or have such intentions been derailed by unprecedented factors outside their control over the past 12 months?

The impact of ‘Black Wednesday’


There have been several climate milestones in the 12 months since ‘Black Wednesday’, the most significant being COP26, which was held last autumn in Glasgow and had fossil fuels (particularly coal) at the top of the agenda.

Representatives from nearly 200 countries came together to formulate goals to combat climate change, with a number of concrete plans materializing in the Glasgow Climate Pact, which included agreements to ‘phase down’ coal production, cut methane emissions and stop deforestation. Pledges were made by richer countries to assist vulnerable countries financially in adapting to a world less reliant on fossil fuels,8 and the parties agreed to come together again in Egypt in November 2022 to build on the progress made at COP26.

Now, six months after the conference, there has been little evidence of substantive progress on the part of the largest polluting countries.9

The pace of change at a global level is inevitably slow, but some of the goals emerging from COP26 seem unconscionably unambitious, such as India’s pledge (as the world’s third largest emitter of greenhouse gasses after the US and China) to achieve net-zero by 2070,10 and the limitations of the global methane pledge to reduce emissions by just 30% by 2030.11

Ambitions to ‘phase down’ coal (softened from the original wording of ‘phase out’ to win the support of India and China) have been impeded by the war in Ukraine; the global rise in energy and food prices means resources earmarked for climate finance have been diverted; and deforestation shows no signs of slowing.12

In short, Alok Sharma’s repeated assurance in his closing speech at COP26 that “[w]e are making progress” has not been borne out in reality.13

Intergovernmental Panel on Climate Change’s report

This is confirmed by a February 2022 report by the Intergovernmental Panel on Climate Change, which examined the threats posed by climate change and found that countries are not doing nearly enough to mitigate the impact of global warming.14

According to the report, vulnerable areas already suffering from the effects of record droughts, devastating floods, and rising sea levels will continue to experience increasingly frequent natural disasters, and the geographical spread of these disasters is expanding. The report was described as “an atlas of human suffering and a damning indictment of failed climate leadership” by UN secretary general António Guterres and is a stark warning of what is to come if the world does not grapple with its reliance on fossil fuels.15

Russia’s invasion of Ukraine

Another significant event of the past year which is inextricably linked to the fortunes of the fossil fuel industry is Russia’s invasion of Ukraine on 24 February this year. The war precipitated a “global energy crisis” and has prompted renewed conversations about the world’s reliance on fossil fuels, particularly Russian oil and gas.16

Western powers have made commitments to reduce their fuel imports from Russia:

  • The UK is committing to phasing out Russian oil in 2022;17
  • The US is banning imports of Russian oil, liquified natural gas and coal;18
  • and the EU is moving toward a total import ban.19

Corporations have also moved away from Russian oil, with international oil majors like Shell Plc and Total Energies SE pledging to stop sourcing oil from Russia altogether.20

Although exports of fossil fuels have been reduced by such measures, continuing global reliance on Russian oil and gas means Russia can charge higher tariffs 22,  creating a ’catch-22‘ where sanctions on Russia contribute to higher fuel prices for the countries imposing such sanctions.

The true impact of boycotts and embargoes has yet to be seen, however, with Russian oil revenue reportedly up 50% in the first few months of 2022.21

The war has been presented by some as an opportunity to move away from reliance on fossil fuels altogether. skeptics note that the Covid-19 pandemic presented a similar opportunity, which was ultimately wasted as energy consumption returned to pre-pandemic levels following a short-lived dip.23

Nonetheless, there has been some more optimistic rhetoric, such as Germany’s finance minister noting the country’s intention to accelerate investment in renewables, calling clean energy the “energy of freedom”.24 The sense of urgency around the transition away from Russian energy sources has the potential to be framed as a general move away from fossil fuels and a further impetus to invest in cleaner, greener energy.

The fallout from the Shell decision? 

Following the Dutch court’s ruling last May, Shell confirmed it would file an appeal,25 which it did on 22 March 2022.26 This was followed by a letter from the claimants (Friends of the Earth/Milieudefensie) on 24 April to Shell’s boards and individual representatives, including CEO Ben van Beurden, claiming that the company was not acting to implement the verdict pending appeal.27 (The court had made clear that their decision was provisionally enforceable and so had an immediate effect, despite any appeal that Shell might pursue.28)

Since the decision, Shell has also moved its headquarters to the UK, a decision they claimed would “make the company more agile, improving its ability to respond to the demands of the transition.”29 However, this has been seen by some as a reflection of the deterioration in relations with the Dutch government following the court’s decision.30

Relatedly, on 15 March 2022, ClientEarth launched legal action against the Board of Directors of Shell in the English courts, seeking to hold the company liable for mismanaging climate risk and failing to prepare for the transition to more sustainable energy sources.31 They are challenging Shell’s board using a ‘derivative action’, which is a claim brought by a shareholder on behalf of the company.32

They argue that, by failing to adopt and implement a climate strategy that meaningfully aligns with the Paris Agreement goal to keep global temperature rises to below 1.5°C by 2050, the Board has breached its duties under sections 172 and 174 of the UK Companies Act, which legally requires it to act in a way that promotes the company’s success, and to exercise reasonable care, skill and diligence.

Legal action against corporations has typically represented a small proportion of rights-based climate litigation to date, but as ClientEarth’s action against Shell shows, this type of case is becoming increasingly common.33

The growth of climate-related litigation against companies

The growth of climate-related litigation against companies is one of the positive takeaways from the past 12 months. Notable examples include:

  1. A case was taken by 11 NGOs against the French supermarket chain, Casino, for violating France’s duty-of-vigilance law by supporting South America’s cattle industry which contributes to deforestation (March 2021);34
  2. A challenge to pork producer Danish Crown’s claims of how ‘climate friendly’ its pork is (May 2021);35
  3. Securities litigation in the US against Oatly for greenwashing (July 2021);36
  4. A case was filed against German gas and oil company Wintershall Dea AG challenges its carbon emissions target (October 2021)37.

The diversity and proliferation of these cases show the exciting potential of legal action against corporations, particularly in Europe, where 2022 has already been described as a “banner year” for climate litigation.38

We are no strangers to taking legal action against large multinationals for their impact on the environment, such as against BHP over the Mariana Dam disaster and the car companies over the Dieselgate emissions scandal.

Legal pressure on polluting corporations (including big oil) through climate litigation, combined with the executive unease evidenced by ‘Black Wednesday’s’ shareholder rebellions, demonstrate an appetite for a transition away from fossil fuels and for holding carbon majors accountable for their environmental impact.

One year on…

Nonetheless, one year on from a reported “sea change” in the climate battle, it remains to be seen whether the tide has truly turned against big oil.39

If urgent, meaningful progress is to be made, the climate-focused energy and intentions demonstrated on ‘Black Wednesday’ need to be harnessed more effectively.

As UN climate advisor Rachel Kyte said recently, “2021 was about ambition – 2022 is about following through.”40


REFERENCES   see e.g. p.20
25 https://https// 
28 at [4.5.7]

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