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oil firms are 'poles apart' on tackling climate change

September 2003

There are huge differences in the approaches large oil companies are taking to climate change, according to an analysis of corporate responses to global warming.

A study commissioned by the US-based Coalition of Environmentally Responsible Economies found that BP and Shell have taken a large number of actions on climate change, while US-based ChevronTexaco, ConocoPhillips and ExxonMobil have carried out far fewer.

The Investor Responsibility Research Center, which compiled the findings, first identified 14 ‘recommended actions’ on climate change and then looked at how 20 large companies fared against them. The companies, which are in the automotive, oil and gas, electric power and manufacturing sectors, were selected as among ‘the world’s biggest corporate emitters of greenhouse gas’.

Projecting future emissions and setting company-wide emissions targets were among actions the researchers looked for at the 20 companies, which are core holdings in investor portfolios. The US companies, in particular, ‘are pursuing business strategies that discount the [global warming] threat, leaving them – and their shareholders – especially vulnerable to increased financial risks and missed market opportunities’, the study found.

BP and Shell were pursuing all 14 recommendations, while ChevronTexaco and ConocoPhillips were pursuing five and ExxonMobil only four. Report author Douglas Cogan concludes that ‘the world’s major oil companies are poles apart on climate change’.

The response from car makers was more uniform. Most were active in nine or ten of the 14 areas, although DaimlerChrysler was active in only five.

Three of the 20 explicitly linked executive compensation to lower greenhouse gas emissions targets and nearly all (17) had formally considered climate change at board level.

Cogan found that by the end of 2003, all will be taking regular greenhouse gas inventories of emissions from their facilities. However he notes climate change risk also relates to product use, and quotes auto industry figures that 97 per cent of greenhouse gas emissions come from driving and only three per cent from making cars.

Ceres concludes ‘the issue is one of leadership – at board, CEO and shareowner level – to promote and implement responsible governance strategies to achieve emissions reductions’. It suggests investors use the 14 actions as ‘a starting point for evaluating companies, but says its list is ‘by no means exhaustive’.

A record 31 shareholder resolutions on global warming were filed with US companies in 2003.


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