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By Carol Pierson Holding

The Climate Policy Initiative (CPI) just released an analysis of the “Financial Impact of the Coming Low-Carbon Transition,” which computed the potential value lost to stranded assets, or what fossil fuel companies will have to leave in the ground in oil, gas and coal. The CPI estimated the lost value at $1.1 trillion, plus another $1.8 to $4.2 trillion for the transport sector (think oil trains.) This total of $2.9-$5.3 trillion represents up to one quarter of total U.S. stock market value.

While the CPI report was meant to be positive – operating savings (think of the expense of solar panels vs. a coal plant) would offset stranded assets, creating a net positive of $1.8 trillion—it still sounded terrifying. And while the report claims the worst impact will be on Governments, which own 50-70 percent of fossil fuel companies and generate substantial revenue through taxes and royalties, I felt distracted from my central concern about climate change. Could we absorb the coming disruption?

The oil companies offer a painless alternative. Yes, we have to transition to renewable energy, but who better to lead that transition than the energy giants? Their leadership campaign is three-pronged:

First, acknowledge the need to transition away from fossil fuels.

This tactic was first used by Shell Oil. In its 2013 New Lens Scenario, Shell acknowledged that such a transition was necessary and offered a non-disruptive way to achieve 100% renewable energy by 2100: to minimize economic disruption, transition first to natural gas. Even liberals like Amory Lovins endorsed the strategy.

Now, 1½ years later, the entire fossil fuel industry has followed suit. Even the arch-conservative organization Heartland Institute has dropped its terror tactics (recall their 2012 billboard headlined “(The Unibomber) Still Believes in Global Warming. Do You?”). and gone so far as create the Climate Change Awards, which in July 2014 granted up to $50,000 each to ten scientists, economists and activists who support a “free-market approach to climate change” and “speak out against global warming alarmists.”

Second, address consumers directly with messages of safety and continuity.

Oil companies are running network television advertising not that different from the “Morning in America” calm, optimistic commercials that put Ronald Reagan in the White House.

You do get a sense of peace watching BP’s “Committed to America” spot.

Exxon/Mobil’s “Fuel Connections” ad offers gas that “cleans intake valves, helping engines run smoother and reducing emissions” providing “better fuel economy.” Amazing.

Chevron’s “We Agree” campaign advocates natural gas, with the admonition “We’ve got to be smart about this.”

Third, and this might be a fortuitously-timed accident: they lowered gas prices.

According to Thomas Friedman writing in the New York Times, U.S. and Iraqi oil companies have lowered their price per barrel in order to “bankrupt” Russia and Iran. Putting aside whether it’s a smart strategy to destabilize unfriendly, combative countries, the drop in oil prices could also change the economics of electric cars. Low gas prices coupled with messages about gas that gives “better fuel economy” cast doubt on the e-vehicle and hybrid claims are a better value.

And as oil companies align themselves with the U.S. government’s foreign policy, they’ll have better leverage in their quest to open our East Coast to drilling.

Finally, let’s not forget the threat of major economic dislocation. For stockholders, stranded assets add uncertainty to a stock market that’s already roiling. Another reason not to rock the boat by demanding a transition to renewables that’s too fast and disruptive.

Safety is beginning to look pretty good, even to me. You just have to ignore the reality of a dying planet, which over the last week, has been easier to do. Ebola and ISIS dominate the news. An admittedly small sample of media shows a disturbing lack of climate change news. Even the Huffington Post’s reliable “Green” alerts have seemed stretched away from real climate news to include Ebola coverage, like the nurse’s dog story, and lots of news about the climbers who died in Nepal.

It’s a shame how easy it is to distract us.

Photo courtesy of sporst via Flickr CC.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 9,300+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 9,300+ companies from 135 industries in 106 countries. By aggregating and normalizing the information from 343 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

By Carol Pierson Holding

The sustainable investing community has a saying that their greatest achievement will be to put themselves out of business. The fossil fuel divestment movement could say the same: when fossil fuel companies stop their relentless drilling and all assets currently held in reserves are abandoned, drivers of the movement will be looking for work.

The way things are going with fossil fuel companies, we might be able to halt the divestment movement sooner than we think.

Last week’s news seemed to show the market moving towards an acceptance of climate change’s negative impact on corporate earnings — and a rejection of fossil fuel investments on purely financial terms.

On Wednesday, the Obama administration’s National Climate Assessment, was reported in the Wall Street Journal under the headline “Climate Change Is Harming US Economy, Report Says.” The story does not question the report or offer conflicting scientific opinions, but points specifically to greenhouse gases from energy production as the cause:

The congressionally mandated National Climate Assessment…says…that it isn't too late to implement policies to reduce emissions of greenhouse gases, such as carbon dioxide and methane, and calls on governments at all levels to find ways to lower carbon emissions, particularly from energy production.

That’s from The Journal, probably the most fiercely pro-business publication around.

But even more astonishing is the story in Forbes “Fossil Fuel-Free Index Will Help Investors Manage Climate Risks.” While the article says the fund, the FTSE Developed ex-Fossil Fuels Index Series, is aimed mainly at universities and public institutions, it does acknowledge —

“(The) concept of carbon stranded assets pioneered by the Carbon Tracker initiative contends that fossil fuel companies are overvalued by stock markets because their valuations include assets that cannot be exploited if we are to avoid runaway climate change. …Carbon Tracker sheds further light on the risks, (in its) report… Carbon Supply Cost Curves. Evaluating Financial Risk To Oil Capital Expenditures, setting out the assets most likely to be stranded and the companies best placed to adapt to a low carbon future.”

That Report calls out oil sands, Arctic and deepwater exploration as terrible investments.

Carbon Tracker’s website describes magical thinking in the fossil fuel industry: “Exxon saying there is no risk does not constitute prudent management of shareholder funds – it’s like King Canute assuming he can hold back the tide, but investors can see that a shift in energy is already coming in.”

That’s language you’d expect from activists. But Forbes, that bastion of conservatism, joins in the bashing in choosing to quote analyst Mark Lewis of Europe’s leading broker Kepler Cheuvreux: “The oil industry’s increasingly unsustainable dynamics – as manifested, for example, by ongoing capex (capital expenditure) reductions amid record-high oil prices – mean that stranded-asset risk exists even under business-as-usual conditions: high oil prices will encourage the shift away from oil towards renewables (whose costs are falling) while also incentivising (sic) greater energy efficiency.”

Forbes notes that with BlackRock — the world’s largest asset manager — participating in the fund, the anti-fossil fuel movement has gone mainstream.

Mainstream? From a reporter at Forbes, whose self-reported audience statistics place its readers at higher levels of wealth and power than any other business publication, is calling the FTS ex-Fossil Fuel Index a welcome first step in making the idea of a world without fossil fuels a mainstream notion?

Now that’s progress.

Of course there is still enormous weight on the other side of the argument. Fossil fuel companies recognize the threat to their business in the massive shifts in capital that are coming and are determined to get every last bit out of the ground ASAP. Even here in the hyper-environmental Pacific Northwest, the Black Diamond coal mine is reopening after 15 years and proposed coal ports refuse to die.

But there is growing evidence that fossil fuels are just a dumb investment. As stated in a recent report by HIP Investor, “Since 2011, the global energy sector has diverged from the S&P 500 for the first time in a decade, and dramatically lagged the S&P 500. The Coal Index (KOL) is down 28% since late 2011, and the Oil & Gas Index (BGR) is down 8% as well.”

I see the day coming when investors who hold fossil fuel stocks will be derided for poor money management. The smart money? Managers who bought renewable energy stocks early.

Image courtesy of  thetaxhaven via Flickr CC.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 8,900+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 8,900+ companies from 135 industries in 102 countries. By aggregating and normalizing the information from 300+ data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

By Carol Pierson Holding

One of the more solid tenets of Big Oil dogma has always been that carbon pricing, whether a simple tax or a market-based cap-and-trade system, is terrible and conservatives must stand in unison against it. Daily Caller reporter Michael Bastach, a former Koch Institute Intern, confirmed this recently: “This vote against a carbon tax in the (American Legislative Exchange Council) ALEC meeting in Chicago … comes after Republicans in both the House and the Senate voted unanimously against a carbon tax earlier this year.”

So it was a surprise to read the December 5 New York Times headline “Large Companies Prepared to Pay Price on Carbon.” Seemed a leap from what the real news was: according to the article, Carbon Disclosure Project, now CDP, released research findings that big companies have been figuring a carbon tax into their financial models for some time.

Well, of course they have, and we knew that.

CDP itself said as much. Its 2012 report predicts that companies will act ahead of regulation: “80% of the Carbon Disclosure Leadership Index (CDLI) include climate change information in their annual reports (non-CDLI: 49%).”

Shell’s New Lens Scenarios predicted that in 2020, “emissions are heavily taxed.”

And California is implementing Cap and Trade.

The non-news “news” made the top right hand column of the New York Times front page, placement reserved for the day’s most important story. The same story seemed to appear everywhere at once, from Huffington Post’s Politics Section to Reuters and a week later, Forbes.

But still, why is this major news? And why now?

Certainly, the media has recommitted to environmental coverage. New York Times Public Editor Margaret Sullivan ended her impassioned commitment to environmental reporting with a quote from Al Gore, “The survival of human civilization is at risk. The news media should be making this existential crisis the No. 1 topic they cover.” The heat is on.

But my bet is that the news included, for the first time, the specific price per ton for carbon that each company is using. Exxon’s bet is $60; BP and Shell use $40; the lowest number is $6. CDP’s mission is to give investors data they can use to motivate companies to disclose their environmental impacts and take action to reduce them. It’s difficult for investors to make risk projections based on generalized corporate statements of intent. Much easier when the company publishes actual cost projections, as the respondents to CDP did. More than just another admission of responsibility, this is vital news for investors and confirms that CDP respondents are serious about carbon pricing.

Or maybe CDP respondents finally took a hard look at what’s actually at stake.

According to CDP, if oil and gas companies don’t come out for carbon pricing, the risk is delayed projects, further divestment pressure and, at the worst, threats to their license to operate.

Even when carbon pricing is enacted, profits will be safe. Consumers will end up paying for carbon taxes in any guise through higher energy bills, as they have in the past.

Stock prices won’t be hurt – in fact, investors like the certainty of carbon pricing. MarketWatch said of the announcement, “Big Oil is straying from conservative orthodoxy and making long-term financial plans under the assumption the government will force them to pay a price for carbon pollution as a way to control global warming — and Exxon Mobil Corp is better prepared than others to face the new expense” because of its investments in natural gas, which has lower measurable emissions.

[csrhubwidget company="Exxon-Mobil-Corporation" size="650x100" hash="c9c0f7"]

The potential opportunity from Big Oil embracing carbon pricing and accepting its responsibilities, as Exxon did in openly acknowledging to the New York Times that carbon pollution from fossil fuels contributes to climate change? A reputational turn-around that could result in higher stock prices.

The most cynical explanation for the timing of the “news” is that that Big Oil is looking at carbon prices as a distraction from the real threat that fossil fuel production will be regulated out of business. They stimulated salacious delight in exposing their actual numbers and changed front page chatter from what had been dominant, that major public funding sources from the Ex-Im Bank to the World Bank would no longer lend to coal projects. When the administration nearly doubled its internal carbon price earlier this year, energy companies immediately jumped in – to demand the calculations be open to public comment. Carbon pricing wrangling could divert the media from more important stories.

Photo courtesy of Carbon Visuals via Flickr CC.

By Carol Pierson Holding

Three recent headlines offer disturbing news to climate advocates. Together, they show catastrophic aggression from the fossil fuel producers.

First, Huffington Post reported on predictions from the International Energy Agency (IEA) that the U.S. will by bypass both Saudi Arabia and Russia in oil production by 2016 “at the latest,” a year earlier than it predicted in 2012. The U.S. will be world leader in oil production, subsuming climate to energy self-sufficiency.

The second astonishing headline covered the Climate Accountability Institute’s most recent study, as reported by Suzanne Goldenberg for The Guardian: “Just 90 companies caused two-thirds of man-made global warming emissions.” The list is topped by state-owned monopolies in China and Russia, with well over 8% each, and includes 50 fossil fuel investor-owned firms, including such widely recognized brands as Chevron, Exxon, BP, Royal Dutch Shell, British Coal Corp, Peabody Energy and BHP Billiton.

[csrhubwidget company="Chevron-Corp" size="650x100" hash="c9c0f7"]

The list’s top 20 produced nearly 30% of historical emissions. Chevron alone produced 3.5% of total global emissions and Exxon produced 3.2%; the U.K.’s BP and Shell are close behind. We’ve known the primary sources of carbon emissions for some time, but this study quantifies the relative damage each has done. It’s shocking all over again.

The third depressing headline is about the failure of the UN Framework Convention on Climate Change which just concluded two weeks of meetings in Warsaw on Friday. As the New York Times reported, talks stalled because the developed countries refused to pay the $100 billion they’d promised to underdeveloped countries, which suffer the worst of climate change impacts.

But it’s not just developed countries that are responsible for emissions. As Naomi Oreskes, professor of the history of science at Harvard and co-founder of the Climate Accountability Institute, explained in The Guardian article, "There are all kinds of countries that have produced a tremendous amount of historical emissions that we do not normally talk about. We do not normally talk about Mexico or Poland or Venezuela. So then it's not just rich v poor, it is also producers v consumers, and resource rich v resource poor ."

Not surprisingly, the entities most at fault for carbon emissions flaunt their disdain for the U.N.’s process. As evidence, the environmental NGO 350.org cites this fact: “The Polish government not only allowed corporate sponsors for the talks, but co-sponsored a major coal summit during the negotiations. It’s hard to see the U.N. gaining any traction around proposed financial consequences for countries.

But there are consequences for investor-owned companies. We know who those companies are, and now we know how much each is to blame.

Compare the problem of assigning blame and penalties for emissions to the 2008 financial crisis. At first, the task seemed impossible. It was too complex. The problem was systemic. Those who might be at fault were just too powerful. There was no way to parse the blame.

But with the force of public outrage and regulatory will and enough time to unravel specific causes, that’s changing.

Five years later, JP Morgan is the first to be fined, $13 billion for corrupt mortgage practices alone. And while many argue that financial penalties have not hurt the bank, it suspended stock buybacks last year and more could happen again to accommodate growing fines and penalties. And at least one analyst, Oppenheimer’s Charles Peabody, cut the bank’s 2013 earnings estimate by 12.5%.

So far, the only blame fossil fuel companies have suffered has been for oil spills such as Chevron’s currently contested $19 billion fine for polluting in Ecuador. But fossil fuel industry hubris towards global warming is pushing the same combination of public outrage and regulatory will as resulted in financial penalties for powerful banks. And now, thanks to the IEA report, we have the piece that took longest in punishing the banks, a way to quantitatively parse blame.

It’s a long game but it looks like the most recent combination of events —the U.S. becoming the world’s top oil producer, specific emissions numbers making it easier to assign blame, and failure at the U.N. — might just enable a remedy, at least in the U.S., forcing financial penalties on fossil fuel companies that more accurately reflect their true costs.

Picture courtesy of lightsinmotion via Flickr cc.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 8,400+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 8,400+ companies from 135 industries in 104 countries. By aggregating and normalizing the information from 290+ data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

By Carol Pierson Holding

How many of us remember the “Crying Indian” from the early 70s? In that public service ad, a Native American (played by an Italian-American actor) canoes down a gorgeous stream, encountering floating trash, smokestacks and a beach littered with refuse. As he passes a crowded highway, a passenger throws garbage out the window. The camera pans to his face, where one tear makes its way down his craggy cheek.

That unforgettable image marked the start of the mass ecology movement and became a symbol almost as powerful as Earth Day. It also reinforced Native Americans as powerless victims of our culture’s wanton appetites.

Last week, some forty years after the Crying Indian, Native Americans are taking matters into their own hands. Four tribes from the Olympic Peninsula in Washington State hosted a symposium in Washington D.C. at the Smithsonian's National Museum of the American Indian to address climate change.

Called “First Stewards: Coastal Peoples Address Climate Change,” this gathering of coastal tribes from all regions in the US and its Pacific Island territories engaged sponsors from US land management services within the US Department of the Interior and partners from environmental organizations such as The Nature Conservancy.

As I read the daily blog from the symposium, I was struck by the heartbreaking stories of tribes whose livelihoods are built on the rapidly disappearing bounty of nature. These embattled peoples are once again suffering the brunt of our collective rapacity, this time in territory degradation and species loss.

But this time, Native Americans insist on being part of the solution. And some elements within our government agree. Daniel J. Basta, director, NOAA’s Office of National Marine Sanctuaries, says, “Coastal indigenous people have internalized thousands of years of rich, place-based knowledge of climate change and its impact on humans, and adaptive behavior. Their experience is extremely valuable today and can help all of us as the world looks for ways to adapt.”

We need knowledgeable people to offer ideas for adaptation. But we also need passionate leaders to lead the fight for a long-term solution. Native Americans have rarely been successful at holding off those with great power from doing exactly what they want. But Natives are angry. Ann Marie Chischilly, an environmental professional and Navaho tribe member, urges fellow Natives, “Get mad! Get motivated and get involved.” And what better symbol in the fight to stem climate change than America’s first inhabitants?

But any good fight requires an antagonist, the more ruthless the better. And who could we blame that could make any real difference? The car companies have already embraced higher mileage requirements and electric cars. Who else is there?

In his cover story for Rolling Stone, “Global Warming's Terrifying New Math,” Bill McKibben suggests a candidate for villain, the oil companies. His “terrifying new math” estimates the value of fossil fuel reserves held by the fossil fuel industry at tens of trillions of dollars. Hence the seemingly endless resources the oil industry spends to stop any attempt to regulate its businesses.

And if we burn all of those reserves as the oil companies and their investors hope? CO2 levels will rise way past the level at which the human race can survive.

Indeed, this all-powerful adversary can only be stopped through a planet-wide moral outrage not seen since the anti-Apartheid movement. McKibben quotes Bob Massie, a former anti-apartheid activist who helped found the Investor Network on Climate Risk:

"Given the severity of the climate crisis, a comparable demand that our institutions dump stock from companies that are destroying the planet would not only be appropriate but effective. The message is simple: We have had enough. We must sever the ties with those who profit from climate change – now."

The successful battle to end Apartheid had its clear villains, Apartheid supporters, its effective change agents in the international investment community, and its victims and symbols, the “non-whites.” We have our bad guys, a group already resented for spills like the Exxon Valdez and the BP Gulf Oil Spill.

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Click "Oil and Gas Extraction" in the CSRHub Sustainability Ratings widget above to see all the companies and their ratings in this industry.

McKibben suggests a divestment strategy kicked off by students outraged either by the threats to their own future or by the same empathy that drove their reaction to Apartheid.

While Natives have not had a lot of success going up against the powerful, they are effective and deeply moving as symbols as was seen with the Crying Indian. Only this time, they’ll be lending their own images in support of their own cause. And images of suffering Natives will be angry instead of sad. And they won’t be actors.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 5,000 companies worldwide. Carol holds degrees from Smith College and Harvard University.