Climate change is already impacting all continents. But it isn’t yet impacting all companies. The latest installment of the Intergovernmental Panel on Climate Change’s Fifth Assessment Report released on Monday confirmed the former. A report released by Exxon Mobil the same day about how greenhouse gas emissions and climate change factor into its business model found that climate change, and specifically global climate policies, are “highly unlikely” to stop it from selling fossil fuels for decades to come.
Exxon is the first major oil and gas producer to publish a Carbon Asset Risk report to address investor concerns over how market forces and environmental regulations might impact the production of some of its reserves. The company agreed to publish the report several weeks ago after Arjuna Capital, a sustainable wealth management platform, and As You Sow, a non-profit promoting environmental corporate responsibility, agreed to drop a shareholder resolution on the issue. These shareholders have concerns that Exxon Mobil’s assets will become worth less as fossil fuel restrictions come into place in coming years and climate change becomes an even more immediate and dire societal problem.
In the report, Exxon didn’t feel the need to sound any alarm bells.
“We know enough based on the research and science that the risk (of climate change) is real and appropriate steps should be taken to address that risk,” Ken Cohen, Exxon’s government affairs chief, told the AP in an interview Monday. “But given the essential role that energy plays in everyone’s lives, those steps need to be taken in context with other realities we face, including lifting much of the world’s population out of poverty.”
Exxon said they take the risk of climate change seriously, but steps to address the problem “will be most effective if they are informed by global energy demand and supply realities, and balance the economic aspirations of consumers.”
Balancing these economic aspirations means that carbon dioxide emissions from energy sources peak around 2030 and begin to decrease within a decade after that as demand for access to electricity and heat is offset by increased efficiency and advances in low-carbon and renewable technologies.
Natasha Lamb, director of equity research at Arjuna Capita, told the AP that while the report is a milestone, she was disappointed that it failed “to explain what would happen if society did in fact adopt policies that would lead to sharply lower emissions, something known broadly as a low-carbon standard.”
The world will require 35 percent more energy in 2040 than in 2010, according to the report, and Exxon Mobil does not believe that new forms of energy will be able to supplant traditional hydrocarbons in that period.
“Exxon Mobil has acknowledged the significant risks climate change poses to its business, the likelihood of a price on carbon, and growing momentum to address climate change — yet still calls a low-carbon scenario unlikely,” Andrew Logan, director of the Oil & Gas Program at Ceres, said in a statement. “Investors disagree, and will continue to push Exxon Mobil to align their planning with this reality.”
“This reality” being the one depicted in the new IPCC report that warns of the breakdown of food systems, new and prolonged poverty traps, and increased risks of violent conflicts and civil war. These warnings go far beyond investor’s concerns, and would require a commitment from Exxon Mobil to address — not just a statement of acknowledgement.