Comments due by Feb. 14, 2015
BP will support a shareholder resolution calling on the company to release information about how climate change could affect its business. It’s the second big win for climate-conscious investors this year: Shell agreed to support a similar resolution last week.
Both the Shell and BP resolutions were submitted by a coalition of activist investor groups representing more than 150 major shareholders in Europe and America, including the U.K.’s Environment Agency and the Church of England, for a combined $300 billion in assets.
The resolution asked Shell and BP to reduce emissions, to invest in renewables, to provide transparency about bonuses that reward “climate-harming activities,” and to test how their business models would hold up if governments were to take action to limit global warming to 2 degrees Celsius. These steps are good business, the resolution argues, “given the recognised risks and opportunities associated with climate change.”
Analyses suggest that in order to stay below the 2 degree level, much of the fossil fuel in the ground will have to stay there — including all of the oil remaining in the Arctic, which both Shell and BP are hoping to tap. If governments take more stringent action to confront climate change, these resources could end up stranded, despite the high value oil companies place on them. That’s led some, like U.N. climate chief Christiana Figueres, to suggest that investors in extractive industries should worry about a “carbon bubble.”
“Climate change is a major business risk,” said James Thornton, CEO of ClientEarth, one of the investor groups behind the push, when the resolutions were filed last month. “BP and Shell hold our financial and environmental future in their hands. They must do more to face the risks of climate change. Investors can help them by voting for these shareholder resolutions.”
JJ Traynor, Shell’s executive vice president of investor relations, sent a letter on Jan. 29 to shareholders in the company urging them to support the resolution. And yesterday, Reuters reported that a spokesperson for BP said his company would also support the resolution. “We consider the resolution to be non-confrontational, and it gives us the opportunity to demonstrate our current actions and build on our existing disclosures in this area,” the spokesperson said in an email.
Elspeth Owens, a representative of ClientEarth, called BP’s decision “great news” and said that the victory “confirms the potential of shareholder engagement.”
Both oil companies rank among the largest, by revenue, in the world. Investor activists withdrew a similar resolution filed with ExxonMobil last year after the company agreed to publish publicly a report on how future regulations, like carbon pricing, could affect its bottom line. (If you’re curious, ExxonMobil more or less said regulations won’t affect that bottom line much at all, really, because regulations aren’t actually coming. Ben Adler summarized the company’s position thusly: “Governments will allow us to keep extracting and burning fossil fuels because the economy.”)
As for BP and Shell, both resolutions still have to be voted on by their shareholders. BP will recommend that its investors support the resolution at a meeting on April 16. Shell, meanwhile, is encouraging shareholders to vote for the resolution at its annual general meeting in May.
17 comments:
I support the resolutions being discussed in this post and I think it is very important that oil companies are made to understand what their business does to the world and they should take some responsibility for climate change caused by the oil they dig up. In particular, I liked the specific limitations that were set, such as the no more than 2 degrees Celsius temperature increase, though I am worried how exactly this will be achieved without spelling out how to reduce the amount of oil being consumed. The article did mention that in order to create this decrease, the oil that remains in the Arctic would probably have to stay there, and I also support this decision.
However, my concerns regarding this resolution are two fold: First, I hope that details are being laid out about what the resolution is asking. It is one thing to ask for transparency, reduced emissions, and investments in renewables, and it is another thing to actually see these goals realized. Wording in cases where you are dealing with big business is everything because any available loop holes can and will be exploited. What here qualifies as transparency, reductions, and investments? Has it been concluded that even if both BP and Shell reach these goals will there be a valuable impact on climate change? The two companies have publicly stated their support and intentions to comply, but are those words sincere? Sincerity might not matter so much if they publicly and legally agree to conform to a well-defined, strict set of rules.
My other issue with this resolution is enforcement and who will be handling it. ExxonMobil claims they are not worried about regulations being placed on them because they know that the economy (and therefore the government) wants them to produce more oil. This poses a threat to our resolution. If ExxonMobil is correct, and the ones asking for the resolution do not really care if it is followed through, then how can we expect reduced emissions from any oil company? This problem lies in the details, too.
Overall, this resolutions must say what needs to happen and what happens if what needs to happen does not happen.
I think that the resolution proposed by environmentally conscious investors is a huge step in the world of energy. Non-renewable energy companies are famously known for not following in climate conscious decision making, and rather focusing on economic growth. This economic growth is a major catalyst for the ecological devastation of our planet. The resolutions proposed provide a chance for these companies to perhaps still function in their high rankings (which I may not agree with), but with renewable forms of energy, and that is a foot in the right direction. However, what worries me from this is the perseverance of the companies for the oil in the Arctic. BP and Shell have been in competition for years to tap into the last remaining oil supply hidden in the Arctic circle. They have also been aware of the damage it would cause by doing so. It seems that with this proposal the companies may realize they truly need to change their course of action, but I know from the past it is not always the case. BP had a horribly damaging oil spill in the Gulf and continues to drill for oil today. I hope that they can hear the statistics given in the resolution and realize that renewables are a greater investment then continuing to source for non-renewables. Regardless of my fears, the resolution proposed is a groundbreaking effort in the world of environmental science, and I hope that both Shell and BP sign on their allotted dates.
This is a great first step for climate activists. To limit the carbon footprint is not just going to be on the oil and energy companies though. Every person must contribute in some way shape or form to help with the carbon footprint of the human population.
It was upsetting that one of the companies said that nothing will change because the economy will let them continue how they are operating as they are at present. The sad part is that, to a degree they are right, as long as people want to live a certain way they do not care how they about the cost if they cannot see the immediate impact of their choices.
If this control of the carbon footprint is going to happen, it must be regulated, and controlled very thoroughly to ensure that nothing will upset the goal and the consequence of disregarding the resolution, once it will be set up and in place must be enough so that companies follow it to a-T, to ensure that the companies will not just pay a fine and continue like nothing has happened.
But, if this can continue quickly and efficiently, then this will be absolutely wonderful. The positive affects of not harvesting the oil will prevent so much damage.
Beverly Levine
It's interesting to see that the oil industry is starting to take a second glance at the environment. It is, indeed, a first step in the world of energy as other people have stated.
However, that may well be the only thing that it is--a first step. Somehow I don't see huge oil companies wanting to invest in green technology at this time; maybe in the future, but right now they are making too much money to give up any profit that they're receiving right now. However, one of the benefits that can consider is public awareness; if BP were to become "environmentally friendly" (whatever that means in an oil company) then people will notice and be more likely to buy BP than from other companies. But, that all depends on how much they are receiving still, and how much they are willing to sacrifice at this time.
Leanna Molnar
I think the resolution discussed in this article is a well thought out and important proposal. The part asking BP and Shell to construct new business models can be a game changer. If the companies are able to see the profitability in renewable energy, it will be much easier to convince them to start changing their approach to the environment. By allowing transparency into their operations, the companies will decrease unnecessary degradation therefore improving the public view of their companies. By agreeing to support the resolution both companies are making a positive step forward. The final vote for the shareholders is rapidly approaching. I think that if the shareholders can be convinced that there are long-term profits to be made in renewable energy, then this vote could turn out in favor of this resolution.
-Frazer Winsted
The resolutions are a big step and I fully support them. Cutting down on our fossil fuel extraction and leaving the oil in the Arctic undisturbed can only have positive environmental benefits. Although it is upsetting that ExxonMobil basically stated that they could care less about the harm they are causing, they are not technically wrong. Not enough of our capital is being used to support alternative energy resources and we still rely on big oil companies like them. Hopefully this initiative to reduce our carbon footprint can ultimately readjust our thinking and start promoting renewable sources of energy.
-Emma Weis
BP and Shell have been asked to "reduce emissions, to invest in renewables, to provide transparency about bonuses that reward "climate-harming activities," and to test how their business models would hold up if govt limits global warming to 2 degrees C." However, I doubt that they are going to reduce emissions to a environmentally reasonable level, or provide transparency about bonuses that reward "climate-harming activities" which I don't fully understand. Does that mean that they will reward people for not adding to our pollution rates or will they reward people who buy more gas? Because shell already rewards people with discounts on gas if they do their grocery shopping at stop and shop. I understand this because all three of the vehicles in my house (mine, mom and dads) will go to shell at the same time to fuel up after our points go up. It makes the burden of buying gas much much easier, but I do realize that it promotes a terrible thing which is: BUY MORE GAS DRIVE MORE PLACES. If BP and Shell were smart, they would have already heavily invested in renewable energy because eventually fossil fuels will run out and these companies have more money than I could ever imagine, so why not put up solar panels ontop of your gasstations, invest in wind turbines elsewhere to increase the renewable energy output to our nation, and why are you still concerned about not changing your current actions? because of the economy! Government, big business, and the mainstream want the economy to grow and constantly increase the amount of money in the economy. We need to value better things and do all that we can to support the better alternatives. Still not sure on how we can do it, but if there is anything that would be more productive in my mind, it would be to somehow force these big oil companies to either invest, support, or partner up with renewable energy resources.
--Michael Tierney
For one of the biggest oil producers in the global economy, this is a noble effort. However, I cannot help but wonder if BPs support for the resolution came voluntarily when one of their biggest competitors decided to support a similar resolution a week prior. From a purely speculative standpoint, I think that BP was obligated to keep up with Shell and perhaps to continue to try to regain face after their disastrous management of the oil spill a couple of years ago. Nonetheless, the resolution is a step in the right direction. Perhaps it could lead Big Oil to adopt more conservative or sustainable practices sometime in the future. Oil extraction levels are projected to peak sometime between 2020-2030, followed by an irreversible decline in resource levels. Undoubtedly BP and Shell will continue to produce the oil past peak, but there is an inevitable expiration date on their flagship product. This resolution could indicate their preparation for it.
-Takashi Okamoto
There is truth in the old adage that says "money talks", considering the amount of money represented by these "climate-conscious shareholders". It would be a wise decision by BP as well as Shell, to consider the 'resolution' presented.
I am definitely impressed by the actions of the investors and their worry for climate conservation, and why not Shell and BP deserve a pat on their back because of the response to the request (even when I think that their main concern is losing $300 Billion and not the preservation of the environment)
Putting a Green Face on the dirty business of fossil fuels will only help to appease the global public's conscience and could pave the way for easier oil extraction with less public outcry.
My main concern is the Arctic' crude oil reserves. By now there has not been a direct human impact on its environment even with the rising temperatures caused by pollution around the globe, but the Arctic remains the last frontier for these NonRenewable Energy Companies, and if drilling there represents Economic-Growth, I am certain that this "resolution" will fade away as the smoke from the oil-wells disappear on the skies, because in the end even those "climate-conscious shareholders' need to have a good return for their investments.
Just recently "we the people" had a proposal to drill on the Florida Coast, these fell apart for now. We have a bill in the Senate and Congress for a new pipeline to benefit a few pockets that 'advertise' the creation of thousands of jobs. Certainly these projects will not heal our broken Economy.
If BP was indeed environmentally conscious the Gulf spill would have not happened, and if Shell would at least pretend to be it, they would have not drilled on Yasuni Reserve, the last untouched Amazonian territory of the small Ecuadorian nation promising an Economic boom.
Do not misinterpret my opinion, I completely agree with the investors request, we all need to have a healthy planet for future generations, we all have to do something to avoid the annihilation of the Earth. But while there is no honest governments regulations, as Exxon's Ben Adler mentioned, the oil extraction will continue as long as there is money to be made for the sake of Economic Growth.
Christian Ordonez
The resolution being discussed in this post is a really big win for the environmental movement. It's really exciting that investors are not only environmentally conscious, but that they are able to propose a resolution calling for so much change. The article states that in order to stay below the 2 degree increase oil must stay where it is. This goes without saying. We live in a very critical time. Everything our governments do in the next decade will have a lasting impact on the natural world. While I am overjoyed by the proposal of this resolution, I am concerned that it is too little too late. Instead of focusing on ways to make oil companies more sustainable, we should be trying to make our economy a sustainable circular system. We need to rely on renewable energy sources and stronger regulations is the only way to do so. The quote from the ExxonMobil representative shows that these companies do not care about the earth. They are only concerned with increasing their income. It's great that both Shell and Exxon are meeting to discuss the resolution later this year, however the decision should not be up to them. It is common knowledge that the oil industry is degrading the environment and speeding up climate change, it is up to the various governments around the world to take a stand and place stringent limitations upon this sector of industry.
Haylei P.
Although a great first step, I think this resolution is aiming very low and failing to tackle all agitators of climate change. Setting margins for big oil is indeed crucial in regulating "climate harming activities"; however, the responsibility to be responsible must not rest solely on big industry. Let’s not forget, oil is extracted, processed and manufactured to provide fuel for us, the energy hungry bunch. Demanding oil companies to stop extracting oil from the Earth for the sake of preserving the climate, is wrongfully misplacing and isolating the blame, barely scratching the surface of our issue. The day-to-day activities of average citizens must also be factored into the equation and should also be categorized as “climate-harming”, as we are the driving force behind oil. As the consumer economy, we are actively perpetuating the degradation of our climate. This responsibility must represented equitably and individual citizens must be made to make changes to their day to day, making it less appealing to big industry to seek profit from the increasing climate of our Planet.
After reading this article, I feel that the resolution that is being talked about is indeed important. Investors that are very conscious about the environment are making a large contribution in trying to get oil companies to start making better decisions that will affect our the world in a positive way, instead of worrying about their growing revenue. In the past, these major energy companies, especially ones related to oil supply like BP and Shell were only focused on economical growth, which lead to these companies exhausting their emissions to cause harm to the environment.
Ben Adler from ExxonMobil made a comment which read, “Governments will allow us to keep extracting and burning fossil fuels because the economy.” It’s quite sad to hear that some companies are alluding to the idea that nothing will change. They will continue with their operations because in the end it will produce large returns for the global economy. To think that money is getting in the way of these energy companies deciding to go to alternative routes with how they yield and use their resources, is a bit revolting.
The resolution will allow companies such as BP and Shell to be translucent, which will let the public eye to see right through them. Investors will have a better understanding of how these companies conduct operations, which will cause them to be a bit more conscious on how they look. If we can leave that oil in the Artic untouched, and simply reduce the amount of fossil fuel that is being taken from the earth then we are taking bigger steps than we actually realize. It’s good to know that these two companies are heading in the right direction.
In this article I now see how important this resolution is for BP and Shell. I believe this is all happening due to BP realizing it needs to stay in business and have a reputable company like they once did. With that being said, BP realizes a resolution and change must occur in order to stay alive in this vigorous and very competitive market, especially against Shell. I am in full support with this big first step. Cutting down on fossil fuel extraction is a very good thing to do, not only from an economic standpoint but as well from an environmental standpoint. With these new changes in operations and the improvement’s they are implementing will give the public a great image. I do believe that the shareholder’s will be convinced, especially by the long-term profits. Going into green technology I agree with highly.
Derek Fields
This is a huge step in the right direction and i really hope other large energy companies will follow shell and BP. while this is great and important i think that non renewable energy needs to be complexity cut out not just used less. If anything this will allow these large companies to continue profiting and hurting the planet(even if they recede their harm they will still be doing some.) As some others have pointed out in their posts i really hope that the gas companies can realized that renewable is the only way to continue forward, and while there may not be as much money there, plenty can still be made.
Nick Stanton
Good article. This represents a step in the right direction. BP and Shell have had a lot negative press in over the years. Most recently, the BP oil spill of 2010 which struck the Gulf of Mexico. Not only would this be beneficial for the public but it would also provide the two companies to mend their public image.
Personally, I support the shareholder resolution which calls on the companies to "real ease information on how climate change could affect it's business." Specifically, the resolution asked Shell and BP to "reduce emissions, to invest in renewables, to provide transparency about bonuses that reward 'climate-harming activities', and to test how their business models would be able to limit global warming to 2 degree's Celsius." There are many great thing's with this proposal however, there are some major concerns. Most notably, in order to ensure global warming slows, much of the fossil fuel in the ground will have to stay there. Considering that BP and Shell's business relies heavily on oil exploration and profiting from it's production, this provides a major issue. In fact, both companies are currently looking to a large supply of oil in the Arctic that may provide huge profit's for them in the future.
As James Thornton states "climate change is a major business risk." Additionally, he believes: “BP and Shell hold our financial and environmental future in their hands. They must do more to face the risks of climate change. Investors can help them by voting for these shareholder resolutions.”
Considering that's two companies are some of the largest firm's in the world, his argument makes sense. Although this resolution is not perfect, it is a step in the right direction.
-- Dylan Troy
The fact that investors are finally recognizing that digging up more oil and fossil fuels is environmentally harming is a great step ahead. However, only time can tell how far these resolutions can actually be implemented. Shell and BP are two of the largest oil companies in the world and bring in a lot of value to the economy of the country, if they reduce or stop producing oil altogether then this poses a threat to the economy of the country. Governments at the end of the day, are going to be more concerned to keep their country ahead of the pack.
The limitations set are quite plausible. Not only does this affect climate change, but also keeps 'global warming' from becoming a reality. Another reasonable concern is, how they can restrict the amount of oil being extracted.
It would be interesting to see the outcome of this new resolutions being passed out.
I loved the article. Especially the point about limiting the temperature increases to no more than 2 degrees. The only thing is how will the oil companies guarantee this standard? Before going in to effect, they would have to lay out a certain plan that is very transcperant These big oil companies like to hide everything, and always have loop hole to get out of responsibility. However its implanted, we need to know who will be regulating it and enforcing it. We don’t need another false promise by big business, just to have a better public appearance,
- John D’Onghia
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