By Marco Poggio
In a bid to reassure its shareholders, ExxonMobil suggested in its latest climate risks report that it is on its way to curbing greenhouse gas emissions. But the oil giant fell short of proposing a plan for tackling climate change, emboldening the skepticism of climate scientists and energy experts who say the company is dispensing hollow promises.
In a report titled “2019 Energy and Carbon Summary” published this week, Exxon touted its support for the Paris Climate Agreement, and a carbon tax. It also emphasized its joining last year of the Oil and Gas Climate Initiative (OGCI), an organization representing 13 of the world’s largest oil and gas producers that vows to reduce carbon dioxide emissions, which has not laid out a specific strategy on how to achieve such reductions.
“They (Exxon) face a lot of risk, climate is just one of them. They’re not taking it seriously as they say,” said Tom Sanzillo, director of finance at the Institute for Energy Economics and Financial Analysis, an organization researching financial and economic issues related to energy and the environment.
“When they’re saying, ‘we’re doing this and we’re doing that’ they’re also spending the most money on more drilling than any other company in the world,” he said.
The report also avoided mentioning the current wave of climate liability suits targeting the company, as well as the lawsuit filed by the New York State attorney general accusing it of defrauding investors over climate risks. Exxon has also failed to block Massachusetts’ investigation into consumer fraud and faces increasing political scrutiny from countries around the world, including from the European Union, which has been leading the world in targeting emissions.
“I didn’t see anything in that report that addresses potential climate liability,” said Bob Litterman, former head of risk management at Goldman Sachs and current chairman of the risk committee at Kepos Capital, a New York investment firm.
Kathy Mulvey, accountability campaign director for the Union of Concerned Scientists (UCS), said the report met her low expectations.
“Instead of demonstrating that it understands the reality of climate change and the need for swift and deep cuts in emissions, the oil giant recycled much of its climate risk report from last year,” she said in a statement.
“Shareholders have every right to be fed up with this exercise, as the company tinkers around the edges instead of taking the bold action that is needed to prevent the worst effects of climate change.”
The company said it is “taking significant steps to minimize the greenhouse gas (GHG) emissions from our own operations,” mentioning its planned reductions in methane emissions by 15 percent and flaring by 25 percent by 2020, and a 10 percent GHG emissions reduction at the Canadian oil sands facilities it owns, by 2023.
“There are few challenges more important than meeting the world’s growing demand for energy while reducing environmental impacts and the risks of climate change,” the newly released 84-page reports reads, “ExxonMobil is committed to doing our part to help society meet this dual challenge.”
For more than 25 years, Exxon has faced calls from shareholders to address potential financial risks to the company stemming from climate change. In 2017, one of those shareholder resolutions finally passed. It demanded Exxon produce an annual report detailing the financial risks the company faces as countries around the world cut their fossil fuel consumption to prevent the global temperature from increasing more than 2 degrees Celsius, a goal set by the Paris Agreement.
The company responded last year with a climate risks report, which concluded there were no risks to the company’s bottom line.
However, New York’s lawsuit, which was filed in October, alleges the company uses two sets of numbers on climate risk: one for internal use and the other it shares with the public. The state alleges that is proof the company is being dishonest with investors.
Litterman said the new report does represent a significant departure from the company’s usual lack of transparency, perhaps in response to the latest legal challenges.
“I think they’re acting in good faith,” he said, “This report says it’s possible that the world will move aggressively to limit fossil fuels and that will mean there’s less demand, lower prices; it will be a more competitive economy and there’s a risk that some of their reserves won’t be economic.”
Sanzillo, whose organization’s mission is to facilitate the transition from a fossil fuel economy to an environmentally sustainable one, acknowledged some Exxon initiatives focusing on renewable energy, in particular biofuels, that were mentioned in the report.
But the company still argues that the CO2 emissions reduction aimed for in the Paris Agreement is not realistically achievable, and that risks related to climate change will not affect the company, he said.
“These are arguments from a declining company with a very week investor rationale,” Sanzillo said.
“They say, ‘Yes, there’s going to be climate change, and things are changing rather rapidly, but it isn’t going to affect our company.’”