Exxon Mobil has agreed to requests from green groups to report on the impact that rules fighting global warming will have on their business.
A green investors and activists agreed to withdraw a shareholder proposal if Exxon Mobil, the largest U.S. energy company, agreed to publish information to its shareholders about the risks of potential “stranded assets” that would occur if governments continued to push regulations aimed at curbing carbon dioxide emissions to combat global warming.
The groups behind the push are Arjuna Capital, the “sustainable” wealth management arm of the investment firm Baldwin Brothers Inc. and the environmental non-profit As You Sow, which advocates for “environmental corporate responsibility.”
“Companies need to acknowledge that preparing for a low-carbon future is a necessity, not a choice,” said Danielle Fugere, president of As You Sow. “Companies that prepare early for a future with reduced carbon emissions will likely perform better than those who delay — and investors need transparency and disclosure about these company choices.”
Environmentalists and politicians have been pushing the idea that energy assets like coal, oil and natural gas will become increasingly uneconomical as governments begin to put strict limits on carbon dioxide emissions. Greens say that two-thirds of fossil fuel reserves must be left in the ground to avoid global warming of more than two degrees Celsius this century.
Green investment firms have jumped on such arguments, using them to play up their own portfolios which would benefit their holdings in renewable energy sources like wind and solar — which would not be “stranded.” Even former Vice President Al Gore warned that fossil fuel assets would become uneconomical due to climate regulations.
“The transition to a low carbon future will revolutionize the global economy and present significant opportunities for superior investment returns,” Gore wrote with his investment partner David Blood in the Wall Street Journal last year. “However, investors must also acknowledge that carbon risk is real and growing. Inaction is no longer prudent.”
The United Nations is trying its best to buoy green investment firms by calling for more investments in renewable energy. Estimates by the green investment consulting firm Ceres said that such investments must reach $1 trillion a year by 2030 to limit global warming.
But such calls by green groups have fallen on deaf ears. According to Bloomberg, green energy investment has fallen off in the past two years. “The value of deals to finance clean energy and efficiency projects fell 12 percent to $254 billion last year,” reports Bloomberg. “That’s quicker than the 9.1 percent drop in 2012 from record level of $318 billion the year before.”
The energy boom occurring in the U.S. and the possibility of it occurring in other countries have harmed renewable investments as the price of natural gas has plummeted and the potential to sell the relatively clean burning fuel abroad mean more investment opportunities in the future.
But green groups seem undeterred when it comes to boosting their own portfolios. Ceres and the Investor Network on Climate Risk have coordinated shareholder resolutions to more companies besides Exxon. The green advocates have filed resolutions with the utility Southern Co. as well as “Devon Energy Corp, an oil and gas producer based in Oklahoma, and the Ohio-based utility FirstEnergy Corp,” Reuters reports.
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