from shareholders to make companies factor global warming into their
long-range strategies "has the potential to change the entire
economic landscape of exploration and production," according
to an industry analyst.
"The structure of the industry increases its risk," said
Andrew Logan, an analyst with CERES, a coalition of investors and
environmental groups that promotes investor awareness of global
"Companies are making investments today that will pay out
over "0-40 years — they’re making a massive bet that
climate change will have no effect on those investments," Logan
One form of pressure on companies is a record number of global
warming shareholder resolutions in 2004, with an expansion of such
proxy measures to smaller independents. State, city, religious and
other institutional shareholders have filed 13 resolutions requesting
risk disclosure and plans to reduce greenhouse gas emissions with
10 oil and gas companies, five of which are facing questions on
the issue for the first time.
In addition to targeting household names such as ExxonMobil and
ChevronTexaco, resolutions have been filed with smaller, independent
exploration and production companies, such as Devon and Apache.
These companies, the shareholders say, which only drill for and
produce oil and gas and are not diversified with distribution or
retail operations, are even more vulnerable to regulatory- or market-based
limits on carbon dioxide emissions worldwide.
The shareholder filers, collectively representing over $250 billion
in assets, include four state and city pension funds, a foundation,
"socially responsible" investment firms and a number of
religious pension funds associated with the Interfaith Center on
Corporate Responsibility, a coalition of 275 religious institutional
investors that helped coordinate the filings.
Most of the resolutions seek reports on how the companies are responding
to and preparing for rising regulatory and competitive pressures
to reduce greenhouse gas emissions. ExxonMobil and ChevronTexaco
also received resolutions requesting reports on the companies’
efforts to invest in renewable energy (similar resolutions received
votes of 21 percent and 32 percent, respectively, last year).
Shareholders also filed a resolution with ExxonMobil requesting
full disclosure of the science supporting the company’s policies
on climate change.
Logan said that in deciding whether to invest in a given field,
companies make a conservative estimate of the price of oil. They
should include a similar prediction about the price of carbon, he
"Carbon will have a cost … billions invested in new fields
will not be profitable in a carbon-constrained world," Logan
Exploration companies may consider shifting their focus to less
carbon-intensive targets, such as pure-play natural gas or light
oil, he said.
Some companies have responded to resolutions in recent years. Last
year’s resolution at ConocoPhillips spurred the company’s
board to create a strong climate change policy, Logan said. ChevronTexaco
established a policy that included assuming a price per ton of carbon
when assessing new projects, a practice in place at foreign competitors
BP and Shell Oil.
A February news briefing on the resolutions included representatives
from the New York state and New York City comptrollers’ offices
and the state treasurers of California and Maine.
A sampling of their comments:
- Bill Thompson, New York City comptroller: "These
oil and gas companies have not taken the issue of global warming
seriously and have not planned alternative strategies. We have
a fiduciary responsibility to ensure that long-term investors
will not be harmed by these shortsighted business decisions."
- Dale McCormick, Maine state treasurer: "Once companies
and their investors are made aware of a risk or a trend that requires
clear business strategy, it is a breach of our fiduciary responsibility
to ignore it. The U.S. oil industry’s inattention to this
issue borders on corporate scandal."
- Alan Hevesi, New York state comptroller and sole trustee
of New York State Common Retirement Fund: "As sole trustee
of the nation’s second largest public pension fund, it is
my fiduciary responsibility to consider all long-term investment
risks, including those associated with the proliferation of greenhouse
"The fact is, sound environmental policy translates directly
into sustainable long-term profits. This is the first climate change
related resolution we have filed, and I believe it1s going to become
a major issue for institutional investors."
Resolutions for 2004 have been filed at ExxonMobil, ChevronTexaco,
Marathon, Anadarko, Apache, Devon, Imperial, Petro Canada, Unocal