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Capitalism in Synchronicity with Climate Change?

[fa icon="calendar'] Feb 4, 2014 9:02:38 AM / by Carol Pierson Holding

By Carol Pierson Holding

Last Thursday, environmentalists won a major victory when Royal Dutch Shell halted oil ice photodrilling operations in the Chukchi Sea. An environmental coalition successfully sued to reverse the U.S. government’s 2008 decision that opened Alaska to drilling. The decision was only a partial victory, but it was enough to stop Shell’s operation at least through 2014.

Despite the possibility of a reversal, environmentalists are celebrating. In the week after the decision was handed down, Shell determined that drilling in Alaska might not make economic sense after all. At the same time that Shell’s Alaskan equipment failures have cost the company billions, the US market for natural gas and crude markets remain low and refinery margins are being squeezed. Shell spent $2.1 billion investing in drilling licenses and billions more in exploration and legal costs. The company has already written off $1 billion for its Alaskan adventure.

Alaska isn’t the only place Shell has encountered the double rub of environmental adversaries and falling profit potential. Shell’s previous CEO spent $26 billion buying up U.S. shale properties. Now, $2 billion has to be written off to reflect their drop in value.

After Shell announced it would cut spending and sell more assets, its stockholders reacted positively, pushing shares up 2%. As reported in the Seattle Times, Investec analyst Neill Morton predicted further writedowns for Shell in North America.

Still, environmentalists would love to have absolute assurance that Alaska is safe from drilling. "President Obama now has the chance to do right by the Arctic and the planet by keeping oil drilling out of the Chukchi Sea," said Earthjustice attorney Eric Grafe, who represented the groups.

Is Earthjustice realistic? President Obama seems to be positioning himself as the environmental champion. His State of the Union address has been praised for his support of climate change, and his most stirring statement on the subject has been widely quoted: “Climate change is a fact. And when our children's children look us in the eye and ask if we did all we could to leave them a safer, more stable world, with new sources of energy, I want us to be able to say yes, we did.”

However, one of Obama’s achievements to win bi-partisan praise has been to bring America close to energy independence. He’s opened more areas to drilling than his predecessor. And though his address made him sound like a climate change warrior, he failed to mention the Keystone Pipeline decision.

On Friday, we found out why, when his State Department announced its findings that the pipeline, despite releasing between 147 and 168 million metric tons of greenhouse gas emissions annually, would not “significantly increase carbon in the atmosphere.”

Predictions are that Obama will most likely allow the Keystone Pipeline to go through.

Why then would Earthjustice believe that Obama will stop drilling in Alaska?

A far more likely scenario is that other drilling projects in Alaska will be withdrawn for the same reason that Shell pulled out. Operational costs are high and the appetite for fossil fuels is falling, at least in the U.S. Investors are losing their passion for the industry, accusing the extraction industries of lacking capital discipline — investing in new projects even when it’s clear they’re not going to pay out.

And environmentalists are lining up to keep the pressure on, inflicting legal and reputational costs. The next wave of Keystone Pipeline protests starts Monday night. The fossil fuel divestment movement continues to gain support. Just last week, 17 foundations with investments of almost $2 billion joined the movement, citing portfolio risks posed by climate change. A juggernaut of moral imperative has been released, creating a lever that sometimes works in synchronicity with business and investors and definitely leads the government.

Photo courtesy of NASA/Kathryn Hansen via Flickr.


Carol2Carol 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 104 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.

 

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[fa icon="comment"] 0 Comments posted in Alaska, CSR, energy independence, environmentalists, extraction industries, Uncategorized, Royal Dutch Shell, sustainability, U.S. shale, investment, 17 foundations, Carol Pierson Holding, Chukchi Sea, CSRHub, Earthjustice, Investec, Keystone Pipeline, Neill Morton, oil drilling

Assigning Corporate Blame for Global Warming Now Possible

[fa icon="calendar'] Nov 26, 2013 10:08:51 AM / by Carol Pierson Holding

By Carol Pierson Holding

Three recent headlines offer disturbing news to climate advocates. Together, they show climate changecatastrophic 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 HoldingCarol 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.

 

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[fa icon="comment"] 0 Comments posted in BHP Billiton, Climate Accountability Institute, climate change, Exxon, fines, fossil fuel companies, global warming, Huffington Post, International Energy Agency, Polish government, JP Morgan, Naomi Oreskes, Suzanne Goldenberg, Uncategorized, oil production, penalties, Royal Dutch Shell, The Guardian, UN Framework Convention on Climate Change, BP, Carol Pierson Holding, Chevron, global emissions, Peabody energy, stock buyback

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