New Exxon Report Is a Step Forward for Investor Disclosure on Climate Change, but Falls Short on Detail
February 5, 2018 /3BL Media/ - A new climate report released by ExxonMobil, which explores the risks the company would face in a low-carbon transition, represents “a significant step forward for institutional investors who have long engaged with the company on climate change but falls short on key details,” Andrew Logan, director oil and gas at Ceres, said today in a statement.
The report, 2018 Energy & Carbon Summary, “adopted a whole new climate-related frame,” Logan added, “providing the clearest accounting yet of how Exxon is—and is not—planning for a low-carbon future.”
Logan said Exxon’s report provides its most detailed disclosure to date on how a low-carbon transition would impact the company’s business, including the potential for high-cost resources to be stranded.
The report also includes insight into the company’s assumptions around electric vehicle penetration, energy efficiency and renewables. It details, for the first time, how sensitive the company’s projections are to changes in key variables—illuminating vulnerabilities in the company’s approaches in the context of a decarbonizing world. The company’s assumptions around Carbon Capture and Storage are likely to be of particular interest, given how slow that technology has been to reach commercial viability.
The report makes clear that, unlike many of its competitors, Exxon views climate change as a very long-term challenge rather than as a near-term threat. Its Energy Outlook, released the same day as the Energy and Carbon Summary, anticipates a future where the world fails to fulfill the goals of the Paris Agreement to keep global warming “well below” 2-degrees.
"We welcome what is the most information that Exxon has disclosed on climate risk to date,” said Patrick Doherty, co-director for Corporate Governance for New York State Comptroller Thomas P. DiNapoli. “Exxon's new energy reports provide baseline material for ongoing shareholder engagement. That said, the company offers too many generalizations and too few specifics on how it plans to participate in a low carbon economy."
"The reports rely on optimistic assumptions of undiminished growth in demand for fossil fuels in certain economic sectors, and lack a discussion of the company's goals for reducing greenhouse gas emissions," added Doherty. "In 2017, a wide majority of Exxon shareholders joined with us to compel Exxon to explain what it is doing to address climate risk. In the coming days, we will discuss Exxon's response with company officials, and will continue to push the company and others to address the need to decarbonize."
Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. For more information, visit: www.ceres.org and follow: @CeresNews.