Holding Corporate Carbon Producers Accountable
When assessing responsibility for global warming, politicians, journalists and others tend to think in terms of nations. China, as we all know, is the world’s largest carbon emitter, the United States — the top emitter until 2006 — is No. 2, and so on.
Some researchers, however, are now focusing on the role played by fossil fuel producers. After all, nations do not emit carbon dioxide and methane. Hydrocarbon fuels, extracted and marketed by companies, do.
Thanks to the groundbreaking work of geographer Richard Heede, we also know that a relatively small number of investor- and government-owned companies are responsible for two-thirds of human-caused carbon emissions since the beginning of the Industrial Revolution. Heede’s 2014 study found that just 90 companies accounted for 65 percent of worldwide carbon emissions between 1854 and 2013. What’s more, half of those companies’ total emissions have occurred since 1988 — long after the scientific community and the public became aware of the threat posed by global warming.
In light of Heede’s findings, what responsibility do these fossil fuel giants bear for climate change? And what role should they play now, given that the December 2015 Paris climate accord has committed nearly 200 nations to move to a low-carbon future?
The Union of Concerned Scientists (UCS) recently compiled a scorecard to help answer these questions. In its new analysis, UCS rated the business practices of the top eight U.S. investor-owned fossil fuel companies on Heede’s list that are U.S.-based or have a North American affiliate. In order of emissions magnitude, the UCS scorecard evaluated Chevron, ExxonMobil, BP, Royal Dutch Shell, ConocoPhillips, Peabody Energy, Consol Energy and Arch Coal. Together, they are responsible for nearly 15 percent of worldwide industrial carbon emissions since the 1850s and have spent tens of millions of dollars over the last two decades to deceive the public about the reality of climate change.
UCS graded the companies on a five-point scale — ranging from “advanced” to “egregious” — in four broad categories, including the accuracy of their public statements about climate science; their support for trade associations, think tanks and advocacy groups that spread disinformation about climate science and try to block government action on climate; their position on proposed government climate policies; and their willingness to disclose the risks climate change poses to their business as required by the U.S. Securities and Exchange Commission.
The overall finding? Unlike the children of Garrison Keillor’s fictional Lake Wobegon, the companies in the UCS survey are all below average.
“These companies are substantial contributors to the problem of climate change and, if we’re going to achieve swift and deep reductions in carbon emissions, they will have to take responsibility for their climate-related actions,” said Kathryn Mulvey, a senior UCS analyst and lead author of the scorecard. “We found some differences in the climate-related positions and actions among the companies but, by and large, they all have a long way to go.”
Renouncing Climate Disinformation
For a fossil fuel company to retain the public trust and social legitimacy to do business, step one is to make accurate public statements about climate science and renounce support for trade associations and advocacy groups that mislead the public about climate change.
How have the companies performed in these areas?
Only BP and Shell earned a passing grade for their public positions on climate science. In June 2015, BP, Shell, and four other European-based oil and gas companies sent a letter to the United Nations acknowledging that much more needs to be done “to limit the temperature rise to no more than 2 degrees [Celsius] above pre-industrial levels” and urging governments to set a price on carbon. “We want to be part of the solution,” they wrote, “and deliver energy to society sustainably for many decades to come.”
The lowest mark in this category went to ExxonMobil, which has consistently disparaged climate science and recommended that societies learn to adapt to global warming. “Mankind has this enormous capacity to deal with adversity,” ExxonMobil CEO Rex Tillerson said at the company’s 2015 annual shareholder meeting, “and those solutions will present themselves as the realities become clear.” Never mind that the realities of climate change have been clear for many years — and the company’s own scientists warned Exxon’s upper management decades ago about the “potentially catastrophic” risks posed by global warming.
UCS also ranked ExxonMobil the lowest — a designation of “egregious” — for its longtime support of climate science denier groups. The company has spent at least $33 million since 1998 on a network of more than 60 think tanks, advocacy groups and trade associations, many of which continue to distort climate science and denigrate renewable energy to this day.
Chevron, which routinely tries to block federal and state climate initiatives, joined ExxonMobil at the bottom. Both are members of the American Legislative Exchange Council (ALEC), a secretive business lobby group that denies human activity is driving climate change and provides its state legislator members with sample bills to undermine renewable energy. Over the last several years, BP, ConocoPhillips and Shell have quit ALEC. Nonetheless, they each earned poor marks for standing by while the trade groups to which they belong — including the American Petroleum Institute, National Association of Manufacturers and the U.S. Chamber of Commerce — misrepresent climate science and oppose government efforts to curb carbon emissions.
Doing Business in a Low-Carbon World
Because the products fossil fuel companies sell in the marketplace are directly responsible for carbon emissions, these companies have a special responsibility to transform their business models to reduce that threat. Practically speaking, that means publicly acknowledging the international community’s commitment to swiftly move to a low-carbon economy and supporting policies consistent with this goal. It means taking immediate action to disclose and cut emissions from their current operations by, for example, ending the harmful practice of flaring natural gas. And ultimately it will mean transitioning to cleaner energy sources to remain relevant.
How do the companies rank on these metrics?
The companies UCS appraised have made general statements on their websites or elsewhere about the need to reduce carbon emissions, but most have stopped short of supporting specific policies. As mentioned above, BP and Shell now back carbon pricing, earning each of them a middling grade for their stated support of U.S. government action. ExxonMobil also got a middling grade in this category. The company claims to favor a revenue-neutral carbon tax, although its sincerity is questionable given the fact that the majority of senators and representatives the company funds consistently vote against the policy.
The three coal companies reviewed on the scorecard — Arch, Consol and Peabody — ranked low for continuing to support efforts to block U.S. climate action. The largest, the now-bankrupt Peabody Energy, was the worst of the lot. It received an “egregious” rating for denying there is a scientific consensus about climate change in its legal challenge to the Environmental Protection Agency’s Clean Power Plan to cut carbon emissions from coal-fired power plants.
All of the companies received poor marks on disclosing and reducing their own emissions. While more than 180 major corporations have now committed to setting science-based targets to reduce their emissions in line with last year’s international climate agreement, none of the companies UCS evaluated has yet done so. In fact, not a single fossil energy producer is among those companies.
Fossil Fuel Industry at the Crossroads
If the companies UCS surveyed are smart, they will reinvent themselves.
History provides clear examples of success — and failure. Back in the mid-1800s, whaling — which provided oil for the lamps that lighted much of the Western world — was the fifth-largest industry in the United States. By the second half of that century, whale oil was replaced by kerosene, which in turn was rendered obsolete by the electric light. The whaling industry collapsed.
By contrast, the Fisher Brothers, who manufactured horse-drawn carriages at the turn of the 20th century, adapted to the changing times. Realizing that their future was tied to the fledgling auto industry, they redesigned their product to handle the stresses and strains of the new technology. They morphed into the fabulously successful Fisher Body Company, which eventually became a division of General Motors.
The fossil fuel industry is at a similar crossroads today, and at least two of the companies in the UCS survey — BP and Chevron — ventured into the renewable energy business a decade ago. When they did not realize quick profits, however, they sold off their holdings. Others, notably ExxonMobil, flatly reject the idea of diversifying into renewables because, as Rex Tillerson told his shareholders, “We choose not to lose money on purpose.”
Given that scientists project that energy companies worldwide will have to leave 60 to 80 percent of their reserves in the ground to ensure average temperatures do not rise more than 2 degrees Celsius, that’s shortsighted thinking at best. And, in any case, genuflecting to the quarterly earnings report stifles innovation. When Toyota first introduced the Prius, the company lost money on every one it sold. Now it dominates the hybrid market because it was willing to invest in a long-term strategy.
So what should these eight leading energy companies do? The UCS scorecard makes a number of recommendations, including ending their support for climate science disinformation; fully disclosing the risks of climate change to their operations; developing new products and technologies that do not harm the environment; and supporting sensible policies to curb carbon emissions.
“Fossil fuel companies will, in all likelihood, continue to operate for many years to come while we decarbonize the world economy,” Mulvey said. “But they can no longer be allowed to mislead the public and their shareholders about the threat their products pose to the planet. We’ve identified a series of steps these companies should take immediately, and we’re going to keep the pressure on to get them to do so.”
Elliott Negin is a senior writer at the Union of Concerned Scientists.