Climate change poses risks to the operations of oil and gas companies. Yet, large U.S. oil and gas companies are not giving adequate disclosures to their investors about climate-related risks to their operations. Not one of the 23 American oil and gas companies in the S&P 500 index included the potential impact of an international agreement to limit climate change in their most recent disclosures.
Ceres, a nonprofit organization focused on sustainability leadership, launched a new version of its Securities and Exchange Commission (SEC) Sustainability Disclosure Search Tool. The tool is a collaboration with CookESG Research and helps users explore the disclosures oil and gas companies give to investors about carbon asset risk. Ceres defines carbon asset risk as “the risk that the value of extracted and un-extracted fossil fuels, and assets for generating power from fossil fuels, will be impaired or even stranded under various carbon constrained scenarios.”
Playing around with the tool reveals a few disturbing things about ExxonMobil and Chevron, the largest American oil- and gas- producing companies, respectively. ExxonMobil holds nearly a third of the reserves accounted for by S&P 500 companies for 2014. However, in its 2015 10-K report to shareholders, the company only stated, “International accords and underlying regional and national regulations covering greenhouse gas emissions are evolving with uncertain timing and outcome, making it difficult to predict their business impact.” Ceres notes that the statement “appears verbatim” in all of Exxon’s 10-K reports from 2010.
Despite the fact that Chevron holds 11 billion barrels of oil equivalent in developed and undeveloped proven reserves, the oil company stated in its 2015 10-K report: “Continued political attention to issues concerning climate change, the role of human activity in it and potential mitigation through regulation could have a material impact on the company's operations and financial results. International agreements and national or regional legislation and regulatory measures to limit greenhouse emissions are currently in various stages of discussion or implementation.” It’s nearly the same statement repeated in its 10-K filings over the last six years.
There are reasons why investors are concerned with the business-as-usual approach of oil and gas companies, according to Ceres:
The letter cited recent media reports about ExxonMobil that suggest the company publicly questioned climate change science while factoring impacts into its plans. “As members of the House Oversight and Government Reform Committee, we are deeply troubled by recent media reports alleging that ExxonMobil intentionally obfuscated the role of fossil fuels in influencing climate change,” the letter stated.
Image credit: Flickr/Ken Hodge
Gina-Marie is a freelance writer and journalist armed with a degree in journalism, and a passion for social justice, including the environment and sustainability. She writes for various websites, and has made the 75+ Environmentalists to Follow list by Mashable.com.