Guest essay by Eric Worrall
Exxon Mobile has courageously rejected suggestions that it should include the impact of the Paris Accord on its business model, in its financial disclosures to shareholders, by dismissing the possibility of meaningful global action to curb CO2 emissions.
ExxonMobil has challenged a shareholder resolution that calls for the company to show how its business will be affected by the global commitment to dramatically slow global warming.
The resolution—filed by the New York State comptroller’s office and four co-filers—also seeks an explanation of how Exxon will address those impacts. Exxon notified the Securities and Exchange Commission that it wants to block a vote on the proposal at its annual meeting in May. The fossil fuel giant argued that it’s unlikely that strict emissions restrictions will be imposed to meet the goal of holding global warming to less than 2 degrees Celsius that world governments agreed to in last year’s Paris climate accord.
By challenging the resolution, Exxon positioned itself as an outlier in the oil industry’s growing acceptance of the consequences of burning fossil fuels and the urgency to halt global warming, some industry analysts said. The SEC recently denied a request by AES Corp., a generating company in Virginia, to block a similar shareholder resolution.
“It’s a little bit like a toddler putting their fingers in their ears and saying if I can’t hear you then what you’re saying isn’t true,” said Shanna Cleveland, manager of the Carbon Asset Risk Initiative at the nonprofit sustainability advocacy group Ceres. Exxon’s position signals that while nearly 200 countries around the world agreed to the Paris accord, Exxon remains on the sidelines, she said.
The bullying sometimes works; AES corp, referenced in the quote above, as a company which complies with green demands, included the following statement in its most recent annual report;
Regulators, politicians, non-governmental organizations and other private parties have expressed concern about greenhouse gas, or GHG, emissions and the potential risks associated with climate change and are taking actions which could have a material adverse impact on our consolidated results of operations, financial condition and cash flows.
As discussed in Item 1.— Business , at the international, federal and various regional and state levels, rules are in effect and policies are under development to regulate GHG emissions, thereby effectively putting a cost on such emissions in order to create financial incentives to reduce them. In 2015 , the Company’s subsidiaries operated businesses which had total CO 2 emissions of approximately 67.6 million metric tonnes, approximately 27.4 million of which were emitted by businesses located in the U.S. (both figures ownership adjusted). The Company uses CO 2 emission estimation methodologies supported by “The Greenhouse Gas Protocol” reporting standard on GHG emissions. For existing power generation plants, CO 2 emissions data are either obtained directly from plant continuous emission monitoring systems or calculated from actual fuel heat inputs and fuel type CO 2 emission factors. The estimated annual CO 2 emissions from fossil fuel electric power generation facilities of the Company’s subsidiaries that are in construction or development and have received the necessary air permits for commercial operations are approximately 7.8 million metric tonnes (ownership adjusted). This overall estimate is based on a number of projections and assumptions which may prove to be incorrect, such as the forecasted dispatch, anticipated plant efficiency, fuel type, CO 2 emissions rates and our subsidiaries’ achieving completion of such construction and development projects. However, it is certain that the projects under construction or development when completed will increase emissions of our portfolio and therefore could increase the risks associated with regulation of GHG emissions. Because there is significant uncertainty regarding these estimates, actual emissions from these projects under construction or development may vary substantially from these estimates.
The non-utility, generation subsidiaries of the Company often seek to pass on any costs arising from CO 2 emissions to contract counterparts, but there can be no assurance that such subsidiaries of the Company will effectively pass such costs onto the contract counterparties or that the cost and burden associated with any dispute over which party bears such costs would not be burdensome and costly to the relevant subsidiaries of the Company. The utility subsidiaries of the Company may seek to pass on any costs arising from CO 2 emissions to customers, but there can be no assurance that such subsidiaries of the Company will effectively pass such costs to the customers, or that they will be able to fully or timely recover such costs.
Foreign, federal, state or regional regulation of GHG emissions could have a material adverse impact on the Company’s financial performance. The actual impact on the Company’s financial performance and the financial performance of the Company’s subsidiaries will depend on a number of factors, including among others, the degree and timing of GHG emissions reductions required under any such legislation or regulation, the cost of emissions reduction equipment and the price and availability of offsets, the extent to which market based compliance options are available, the extent to which our subsidiaries would be entitled to receive GHG emissions allowances without having to purchase them in an auction or on the open market and the impact of such legislation or regulation on the ability of our subsidiaries to recover costs incurred through rate increases or otherwise. As a result of these factors, our cost of compliance could be substantial and could have a material adverse impact on our results of operations.
Read more: Yahoo Finance
NOTE – this is NOT the complete AES statement on climate risk, it is just the part I found interesting.
If a company complies with green bullying, they seem to end up spending ridiculous amounts of management time and effort producing environmental financial impact reports. If they fight the bullies, they risk spending ridiculous amounts of management time and effort, challenging government backed climate zealots in the courts. Either way, companies lose – the only question is by how much.
I applaud Exxon’s brave decision to fight this lunacy; but on a macroeconomic level, you have to wonder how much harm this utter waste of corporate time and effort is doing to the US economy, to the reputation of the USA as a good place to invest, and to US jobs growth.