WASHINGTON - U.S. energy giant ExxonMobil is now alone among the world's four largest oil companies in refusing to take meaningful action to lessen the growing risks to its share value posed by global warming, according to a study released Tuesday by a London-based investment consulting firm.
The report, "Sleeping Tiger, Hidden Liabilities," said that the three other major oil and gas companies--Shell, BP and ChevronTexaco -- are leaving ExxonMobil far behind in addressing the implications of global warming for their current and future operations.
The bottom line for investors is that to all appearances, ExxonMobil has no plan for managing the risks of climate change. Investors should support disclosure because if ExxonMobil has a plan they should tell shareholders what it is. If they don't, it's time for shareholders to know that.
The report was released two weeks before the annual ExxonMobil shareholders meeting, at which owners of the company's stock will be asked to vote on resolutions that call on management to issue reports on how the firm plans to address financial risks posed by its dependence on production of fossil fuels--such as oil and gas, whose combustion creates greenhouse emissions that contribute to global warming--and how it will respond to pressure to develop renewable energy sources.
The company's three competitors have all begun to address these issues, according to the report, while ExxonMobil is still raising questions about the underlying and increasingly overwhelming scientific evidence that links greenhouse gas emissions with the warming of the Earth's climate.
"ExxonMobil is alone among its peers in continuing to deny the risks posed by climate change," said Mark Mansley, director of Claros Consulting and author of the report. "It appears to be relying on a hope-for-the-best strategy--one that works as long as the risk of climate change evaporates."
Over the last several years environmental activists have turned increasingly to shareholder resolutions as a way of forcing companies to address the issue of global warming and its possible financial impact on share value.
A report by the World Resources Institute last July warned that most oil and gas stocks could lose several percentage points of their share value if they failed to address the issue by, for example, moving more aggressively into the production of renewable energy, such as wind and solar power.
Last year shareholders at seven meetings of different U.S. companies, including ExxonMobil, voted on resolutions calling for greater attention to the global warming issue. The average resolution gained the support of 18 percent of the shares.
While that total is significantly less than a majority, it constitutes an unusually large share. Until just a few years ago most shareholder resolutions gained far less, in part because management often controls a large portion of shares through proxies and direct ownership, and most institutional investors and money managers traditionally vote with management.
But the situation has changed dramatically since the late 1990s, particularly on global warming resolutions. Last year's 18 percent average was almost double the percentage of shares voted for similar resolutions the year before.
In several votes during the stockholder meeting season this year, global warming-related resolutions have done even better. Last month a first-time resolution calling on American Electric Power--the biggest U.S. private electrical utility--to take early action to reduce its emissions, garnered almost 27 percent of the vote in what one veteran analyst called a "stunning result."
Financial analysts and environmental activists say that key institutional investors, especially pension funds with hundreds of billions of dollars in assets, have become increasingly persuaded that U.S. companies risk losing heavily to foreign rivals in the international marketplace over time if they do not begin to reduce their emissions and their reliance on fossil fuels, particularly now that the Kyoto Protocol --which requires developed countries to reduce emissions--is on the verge of taking effect.
As the Claros report argued, "The regulatory risks associated with climate change have become a reality. Carbon caps and fines in Europe begin in 2005. The Kyoto Protocol has 106 signatories, and Russia's statement of intent to ratify means the treaty is likely to come into force soon. Renewable energy mandates are now in force in 15 countries and 13 states, and more appear to be on the way. Climate change litigation appears increasingly likely, with actions taken by several state Attorneys General, and the filing of the first climate-related legal case in the United Sates."
Last year owners of more than 20 percent of Exxon-Mobil's shares--worth more than US$55 billion--voted for a resolution that called on the company to provide more information about its plans for renewable energy. Analysts believe that this year's percentage could be substantially higher.
"The bottom line for investors is that to all appearances, ExxonMobil has no plan for managing the risks of climate change," said Peter Altman, national coordinator of Campaign ExxonMobil, an activist group that co-sponsored the study with the Coalition for Environmentally Responsible Economics (CERES).
"Investors should support disclosure because if ExxonMobil has a plan they should tell shareholders what it is. If they don't, it's time for shareholders to know that," Altman said.
Copyright 2003 OneWorld.net