CONTACT: Melanie Mattauch, Europe Communications Coordinator, [email protected], +49151 5812 0184
Following shareholder pressure, oil giant ExxonMobil have published two reports on how climate change will affect their business model yesterday. Exxon announced that while climate change warrants action, they do not see a risk of their oil and gas reserves becoming stranded. The company asserts that “all of ExxonMobil’s hydrocarbon assets will be needed” to meet global energy demand [1].
“Here’s the shorter version of Exxon’s announcement: We are happy to overheat the planet and we dare anyone to stop us. Now you know why we need divestment now,” said 350.org co-founder Bill McKibben in reaction to the news.
Tim Ratcliffe, 350.org European Divestment Coordinator commented: “Exxon have made it very clear that they have no intention of adapting their business model whatsoever. To stay within the 2 °C limit, 80% of the fossil fuel industries’ known carbon reserves need to remain unburnt. Yet, Exxon is spending $33 billion this year alone to discover and develop yet more carbon.”
Toughening climate regulations and other factors such as decreasing costs of renewable energy sources and changing resource landscapes threaten to turn much of Exxon’s reserves into obsolete stranded assets. [2] According to Bloomberg’s Carbon Risk Valuation Tool, stranded assets could make Exxon’s share price decline by 45%.
Exxon made their announcement the same day the Intergovernmental Panel on Climate Change (IPCC) launched its latest report in which scientists highlight that climate change is already negatively affecting every continent and warn that the problems will grow substantially worse unless carbon emissions are reduced drastically.
“It’s incredibly cynical of Exxon to announce that they intend to exploit their reserves until the last drop, the same day scientists highlight the sweeping impacts of climate change on humans on every continent,” said Ratcliffe.
“Institutional investors in particular must start to play a more active stewardship role with the funds they are entrusted with. It’s wrong to profit from an industry that is wrecking our future. Fiduciary duty must reflect that,” Ratcliffe continued.
“350.org is working with partner organisations and communities across Europe and globally, demanding divestment from Exxon and other fossil fuel companies to stop them from executing their catastrophic business model. Investors need to pull their money out of high-carbon assets as quickly as possible.”
Exxon’s disclosure was pushed by 70 global investors managing over $3 trillion of assets who demanded the oil, gas and coal companies asses the risks that climate change poses to their business plans. It is part of an increasing awareness of the high risk of fossil fuel assets.
Just a few weeks ago, Royal Dutch Shell warned that its profitability will be hit as governments step up efforts to reduce greenhouse gas emissions. Shell had previously already reported a 48% decline in expected earnings.
NOTES TO EDITORS
[1] ExxonMobil: ExxonMobil releases reports to shareholders on managing climate risks
[2] University of Oxford, Smith School of Enterprise and the Environment: Stranded asset programme