In Big Oil’s good old days, the annual shareholders’ meetings of Irving-based ExxonMobil, the largest publicly traded oil company on the planet, were polite and lavish affairs. Typically hosted in luxe venues—Dallas’s Morton H. Meyerson Symphony Center was a favorite—the gatherings featured retired small-time investors tucking into buffets of free comfort food and executives congratulating themselves on yet another year’s healthy dividend. A handful of shareholder activists might demand a new direction, notably on climate change, but they were dismissed as crazies with no concept of how big-boy capitalism worked.

That golden era has been waning for a while. The past year has been particularly awful for the oil industry, with the pandemic slashing economic activity and with the rise of alternatives to fossil fuels. The one-two punch sent the returns of ExxonMobil and many of its rivals deep into the red. Wednesday, however, may go down in history as the day Big Oil’s bullish times came to an end. In the span of about twelve hours, climate activists dealt the industry a smackdown of cinematic proportions. Nowhere will the effects be felt more than in Texas.

In a three-act drama, the activists won striking victories at Chevron, ExxonMobil, and Royal Dutch Shell—among the world’s biggest oil producers, and all companies that have major assets, operations, and employees spread across the Lone Star State. These were not the chance wins of some lucky band of hair-shirted outliers. These victories reflect a coordinated strategy by a coalition of some of the most sophisticated financial-asset managers in the world.  

More fundamentally, they mark a shift in the nature of concern about global warming: that it imperils not just glaciers but also economic growth—and thus investment returns. And they portend an explosion in pressure on all industries to slash their carbon emissions far faster and more deeply than they had been planning. For Big Oil, Wednesday’s decisions underscore a question that just a couple of years ago would have been laughable: Is the era of hunting for new caches of black gold over?

Act one on Wednesday took place in the Netherlands, home to Shell. A judge ruled that the company wasn’t decarbonizing swiftly enough to meet targets set out in the 2015 Paris climate accords—a failure she said constituted a human rights violation. Though the Paris agreement applied only to countries, not directly to companies, “even if states do nothing or only a little,” the judge ruled, “companies have the responsibility to respect human rights.”

Shell is no climate-change denier. Befitting its European roots, it won shareholder backing last week for its plan to cut its greenhouse-gas emissions 20 percent below 2016 levels by 2030. But the judge, siding with an activist group, ruled that Shell’s envisioned energy transformation wasn’t transformative enough. She ordered the company to slash its carbon emissions by 45 percent below 2019 levels by 2030—essentially tomorrow in an industry that plans in multi-decade increments. The ruling sent shockwaves as a potential precedent for the proposition that companies may be held legally liable for the carbon they cough into the sky. Shell vowed to appeal, but if the ruling stands, it could dramatically constrain the development of new oil-patch frontiers.

Act two notionally took place in California, where Chevron is based, though lingering COVID-19 precautions meant the company’s annual shareholders’ meeting was held online. Ignoring management’s opposition, the oil giant’s shareholders approved a resolution pushing it to reduce emissions not just from its own operations, but also from its customers’. The collective carbon output of those who burn Chevron petroleum, for instance in planes, trains, and automobiles, dwarfs the amount the company generates in producing that energy. The resolution was floated by Follow This, a Dutch activist group that in recent weeks won shareholder votes forcing emissions constraints at two Houston-based oil concerns, ConocoPhillips and Phillips 66. As with the Shell ruling, the Chevron tally shook fossil-fuel producers. It signaled that savvy investors now have the will and wherewithal to hold companies responsible for the entirety of the pollution resulting from their products.

Act three—the grand finale—also played out online, though channeled through the Irving headquarters of Exxon, which sees itself as the paragon of fossil-fuel-producing focus and efficiency. Exxon had spent months fighting off a seemingly long-shot bid by a small San Francisco–based hedge fund called Engine No. 1 to elect to Exxon’s board four candidates who share experience in alternative energy and a deep concern about climate change. Engine No. 1 had standing to float the slate of dissident directors because it had bought 0.02 percent of Exxon’s shares, about a $50 million slice of the $250 billion company. It argued that Exxon was failing to respond sufficiently to the threat climate change poses to its business—which is just one part, it contended, of a broader failure by Exxon’s management to reposition the company, which last year lost $22 billion, for long-term health in an energy industry that is changing fast.

Each side in the ExxonMobil fight spent extraordinary sums, tens of millions, on its campaign to persuade shareholders. A couple of weeks ago, Darren Woods, Exxon’s strong-willed chief executive, implored shareholders to defeat Engine No. 1’s candidates, saying they would “derail our progress and jeopardize your dividend.” But major players, among them BlackRock, the world’s largest asset manager, rallied behind the Engine No. 1 effort. (Stock analysts at investment bank Cowen last week titled a report on the drama “The Little Engine That Could,” calling on Exxon to “better align emission reductions strategy with investor and societal pressure.”) Sure enough, shareholders thumbed their noses at Woods, approving two of Engine No. 1’s four candidates during Exxon’s online annual meeting Wednesday. (They rejected a third. The fourth remained in the running as of Thursday afternoon, as votes continued to be counted.) “We welcome all of our new directors and look forward to working with them constructively and collectively on behalf of all shareholders,” Woods said in a statement that was more clipped than contrite.

Precisely how quickly Wednesday’s losses will change business at Shell, Chevron, and ExxonMobil remains to be seen. But Big Oil’s endgame is coming increasingly into focus. Last week, in what at the time seemed shocking, but in the wake of Wednesday’s events seems like just an early act in the drama, the International Energy Agency, a Paris-based organization respected as a policy adviser to industrial and emerging countries alike, declared that if the world is to have any chance of stanching climate change, there must be “no investment in new fossil-fuel-supply projects.”

For decades, the biggest oil companies have been cash machines. Their operations have been complex, but their strategy has been simple: fight like hell against shocks to the system—particularly calls to curb carbon emissions—and use the billions in profits to pay shareholders rich dividends and to invest in finding ever more oil. But the calls for climate consciousness in recent days by the IEA and by shareholder activists would, if heeded, fundamentally alter that business model. They would push Shell, Chevron, ExxonMobil, and the entire industry to cease what for decades has been core to their business: developing new turf.

Hanging in the balance is the fate of a sector that, more than any other, has defined Texas’s economy and persona. Still, those counting the oil industry as dead—and, in the wake of Wednesday’s events, that group is growing—are likely to be proved wrong. By virtually every expert prediction, the world will continue to burn massive quantities of oil and gas from existing fields for decades to come. Moreover, those oil-and-gas firms with sufficient heft and expertise already have begun diversifying, as well as shifting jobs, into fields such as geothermal, wind, solar, and carbon capture that are growing more important amid the drive for decarbonization. To the extent that the investor-led climate revolt that made significant headway on Wednesday succeeds in throwing a permanent wrench in the oil industry’s plans to lock down and drill more acreage, it all but certainly will goad the sector into exploiting low-carbon alternatives. A buck, after all, is a buck.