System Change
Erik Wohlgemuth, CEO at Future 500. Published May , 2021
For people focused on energy and climate, May 26, 2021, was potentially a big day. On just another ordinary Wednesday in Spring, the world observed the world’s largest investor, a Dutch court, and a major auto company signal to the fossil fuel sector that it’s time to accelerate the shift away from the carbon economy.
Exxon Mobil investors, including Blackrock, installed two climate-friendly directors to the board––despite management’s opposition––signaling to the company that it must more aggressively respond to climate change.
Similarly, 61% of Chevron’s investors overruled management by voting for a resolution calling on the company to cut its scope 3 greenhouse gas emissions––no small task.
And on the same day, A Dutch court ordered Shell to slash emissions by 45 percent by 2030, five years ahead of its voluntary target, which was already among the most ambitious targets of any of the oil majors.
The Dutch Court’s message? 2035 and 2050 targets are too far out to be credible, and the pace and scale of change are insufficient to avert the worst impacts from climate change. If upheld, this ruling holds significant implications for dozens of lawsuits targeting fossil fuel sector companies and their leaders and boards.
And finally, Ford Motor Co announced that 40% of its global vehicle production would be all-electric by 2030. This follows GM’s recent announcement that it will phase out gasoline-powered vehicles by 2035. Taken together, Ford and GM’s commitments will reduce consumer demand for gasoline.
Our sense at Future 500 is that these four announcements on May 26 represent a turning point, given the breadth of global media coverage and the diverse range of people pinging our team.
And while it does seem to be a tidal shift to those who have been watching the sustainability and stakeholder engagement landscape as closely as we have for the past two decades, these events are not all that surprising. We’ve been anticipating them in our annual trend tracker, the Force for Good Forecast, since 2012. The report highlights what we anticipate will be the most significant social and environmental advocacy trends. All with the goal of aligning corporations and their stakeholders to advance business as a force for good.
In our 2012 edition, we noted a shift in the environmental movement towards empowering communities to challenge energy infrastructure, hydraulic fracturing, and corporate control of local water resources. Building upon the Keystone Pipeline protests in 2011, which elevated indigenous rights and environmental justice, funders were backing grassroots, local activist campaigns that would link communities into a collective global movement to accelerate a just energy transition. This was also the year that Occupy Wall Street ignited a growing focus on income inequality and pushing investors on ESG investing.
A year later, in our 2013 report, we noted how technology and AI advancements were leading to radical transparency, allowing activists to scrutinize corporate political giving and global supply chains more easily.
By our 2015 report, we began seeing major companies, especially consumer brands, respond to advocate, investor, and employee pressure to “align tone with deed” by taking public stands on a host of issues.
2018 was the year we saw big passive investors like Vanguard really begin flexing their shareholder power as de facto regulators, supporting majority shareholder votes for climate-related resolutions against management’s recommendations at Exxon and Occidental.
In 2019, the lines between social and environmental issues became even more blurred, with the rise of a growing climate justice movement and Greta Thunberg inspiring a global youth climate movement.
Then, in 2020, a worldwide tidal wave of racial justice activism spawned by black leaders in response to the murder of George Floyd, prompted a host of institutions across sectors to examine their role in systemic racism.
As of 2020, only 52 companies on the inaugural Fortune 500 list back in 1955 remain on the 2020 list. That’s a lot of creative destruction. Of Fortune’s Global 500 in 2020, Shell is 5th, Exxon 11th, Ford 31st, and Chevron 36th. All of them were on the inaugural list except Ford, which joined the list at #3 in 1956.
At Future 500, we believe that companies who embrace the power of robust stakeholder engagement, which is the foundation of stakeholder capitalism, are better positioned to anticipate material risks and opportunities so they can continually innovate and adapt to a tumultuous business landscape. In fact, that’s where our name comes from: those that excel at such an approach will more likely remain or become the Fortune 500 of the future.
Will May 26th, 2021 be known as the date when the world’s decarbonization pivot gained steam? And will Ford, Exxon, Chevron, and Shell remain on the Fortune 500 list for another 75 years?
Only time will tell.
Future 500 is a non-profit consultancy that builds trust between companies, advocates, investors, and philanthropists to advance business as a force for good. Based in San Francisco, we specialize in stakeholder engagement, sustainability strategy, and responsible communication. From stakeholder mapping to materiality assessments, partnership development to activist engagement, target setting to CSR reporting strategy, we empower our partners with the skills and relationships needed to systemically tackle today's most pressing environmental, social, and governance (ESG) challenges.
Want to learn more? Reach out any time.
Blog posts by Clara:
