ao link
0 £0.00
This item was added to your basket
Credit Strategy homepage
Intelligence, Insight and community for responsible professionals in credit

Climate change causes credit risk for oil producers

A number of recent events have highlighted the increasing credit risk facing major oil producers over concerns about climate change, according to credit rating company Moody’s.

This includes a court ruling against Royal Dutch Shell, which ruled it must deepen planned greenhouse gas emissions cuts. On the same day - 26 May 2021 - ExxonMobil elected two climate-activist candidates to the company’s 12-member board of directors, while a large majority of Chevron shareholders called on the company to limit emissions from the combustion of oil and natural gas.

These actions, according to Moody’s, represent a “substantial shift” in the landscape for oil companies, which had previously prevailed in courts, and largely fended off significant shareholder votes on climate-related matters.

Of the three developments, Moody’s considers the seating of board members at ExxonMobil as the most important as the outcome is binding and cannot be appealed. Its shareholders elected two candidates among four that small climate-activist shareholder Engine No. 1 - which owns 0.02% of ExxonMobil’s outstanding shares - had nominated, despite the company’s concerted efforts to defeat the nominees.

On the same day, Chevron’s shareholders voted 61% in favor of a resolution calling on the company to cut its Scope 3 emissions - which are indirect emissions that occur in a company’s value chain.

Meanwhile, Shell will likely be forced to curtail some aspects of its business. This ruling from a Dutch court - which states that, by 2030, it must cut its CO2 emissions by 45% from 2019 levels - came after a lawsuit from several climate activist groups.

According to Moody’s, the ruling amplifies its sense that the industry will have to decarbonise substantially more quickly than companies are currently planning. This will require companies to shift businesses swiftly away from oil generation. This will likely reduce debt capacity at a time when outsized spending may be necessary to fund acquisitions, capital spending and research and development oriented toward renewable energy and efforts to decarbonise.

Please login to continue reading this article.

Not a member?

Become a member

FREE registration. No credit card required

Register now
  • Stay up-to-date with industry news and appointments
  • Hear about events first
  • Read 1 free Premium article per month

Become a premium member

From as little as £3.48 per week

Become Premium
  • All the perks of a standard member plus:
  • Access to the entire Credit Strategy website
  • 12 months subscription to Credit Strategy Magazine
  • 25% discount to all conferences
  • Exclusive access to Premium Member only roundtables
  • 50% off award entry fees



Phillips & Cohen launches new data management platform

Phillips & Cohen launches new data management platform

Women in Credit 2021 shortlist confirmed

Women in Credit 2021 shortlist confirmed

Hurricane Energy net free cash position "proves liquidity" 

Hurricane Energy net free cash position "proves liquidity" 

Upcoming events

Credit Strategy
LinkedIn page

Member of

Did you find our website useful?

Thank you for your input

Thank you for your feedback – an online news and information service for the UK’s commercial and consumer credit industry. is published by Shard Financial Media Limited, registered in England & Wales as 5481132, Axe & Bottle Court, 70 Newcomen St, London, SE1 1YT. All rights reserved. Credit Strategy is committed to diversity in the workplace. @ Copyright Shard Media Group