Energy companies are in for a rough ride as climate activism threatens to pummel business activity and drive negative publicity in the beleaguered sector.
The last decade has seen a significant increase in climate-related litigation cases focused on energy companies, propelled by activists like Greta Thunberg and movements like Extinction Rebellion. And while climate change litigation is unlikely to result in financial sanctions, it can attract negative publicity for companies involved.
“Activist accusations that oil and gas companies, mining firms, financiers and complicit governments are jeopardising the world’s future [are] capturing imaginations and, for many people, [legitimise] targeted action against those perceived to be dragging their feet,” said Rory Clisby, environment analyst at risk consultancy Verisk Maplecroft.
“With more protests on the cards, the risk of disruption to business activities will likely increase in 2020, which, in turn, will drive more negative publicity in the international media for an industry that is already under pressure from environmentally conscious investors.”
In the past year, Extinction Rebellion has targeted companies like Shell, BlackRock, Barclays, Greenpeace, and the BBC. That broad range of targets – spread across businesses actively engaged in fossil fuel extraction and those who are perceived to support them – means that most business could conceivably be the focus of action.
And if you can’t beat them, you might have to join them.
“Given that many organisations previously seen as strong performers in the climate sphere have been targeted, businesses can adopt robust internal climate change mitigation strategies and rigorous climate disclosures to avoid legal action and public ‘shaming’ by activist groups,” Mr Clisby said.
“Investors may consider divestment from higher risk carbon-intensive holdings and boost investment in greens bonds, blue bonds and renewables in order to soften portfolios.
Mr Clisby also notes that a series of climate-related natural disasters at the end of 2019, including the bushfire emergency, has also increased public discord over international inaction on climate change.