Guest essay by Eric Worrall
An activist shareholder push to force Exxon to include climate risks in their company reports has spectacularly backfired: Exxon has demonstrated that there is no threat to their business, for the foreseeable future.
Exxon Studies Climate Policies and Sees ‘Little Risk’ to Bottom Line
By BRAD PLUMER and HIROKO TABUCHIFEB. 2, 2018
WASHINGTON — In one sign of the pressures that companies face to understand the business risks of stricter climate-change policies, one of the world’s biggest energy companies on Friday offered its thoughts on how it would fare in a low-carbon world.
Exxon Mobil’s shareholders — concerned that the company’s main businesses, oil and natural gas, may be imperiled — had demanded last year that the company give a more detailed accounting of the consequences of global policies aimed at curbing emissions of earth-warming gases. Those policies include the goal of the Paris climate agreement to prevent global temperatures from rising more than 2 degrees Celsius above preindustrial levels.
Exxon’s conclusion: Even aggressive climate policies pose “little risk” to its investments. It stressed that it expected healthy demand for its products for decades to come, regardless of how strongly countries move to cut emissions.
Exxon’s vast fossil fuel reserves “face little risk” of being left in the ground, the company said. Less than 5 percent of its reserves would be affected under a 2-degree scenario, the company estimated. Under that scenario, Exxon sees the world’s oil consumption dropping only slowly in the next two decades or so, and sees demand for natural gas rising slightly.
Some climate campaigners were unimpressed with Exxon’s climate analysis. “The range of risks that Exxon faces if climate action is taken is far deeper than what’s being presented here,” said Adam Scott, a senior adviser at Oil Change International, an energy research and advocacy group.
“ExxonMobil’s own analysis assumes the world will continue to burn through oil and gas to drive its profits, keeping us on a path toward global temperatures rising well above the 2 degree Celsius threshold,” said Kathy Mulvey, climate accountability manager at the Union of Concerned Scientists.
Exxon’s climate report is available here.
Poor greens – they thought they had won a significant PR victory when they pushed Exxon to produce a report detailing the impact climate policies would have on Exxon’s business. Instead, they’re now grappling with an unexpected dose of public honesty, a clear headed assessment that all their efforts will be utterly inconsequential to the long term business prospects of a Big Oil company.