Outcome: Successfully Withdrawn
The American Geophysical Union, the world’s largest organization of earth, ocean and climate scientists, states it is “virtually certain” that greenhouse gas (GHG) emissions cause global warming and that the warming will continue.
A 2004 report by the Bush Administration’s Climate Change Science Program stated that increases in human-derived GHG emissions are the only likely explanation for global warming over the past three decades.
The Environmental Protection Agency’s “Climate Action Report – 2002,” concluded that climate change poses risks to coastal communities from sea level rise, water shortages, and increases in the heat index and heat wave frequency. Polls in 2003 and 2004 found 75-80% of Americans favor mandatory controls on GHG emissions.
Carbon regulation is growing. The Kyoto Protocol will cap GHG emissions in 30 industrialized countries beginning in 2005. At least half of U.S. states are addressing global warming through legislation, lawsuits or governors’ programs.
A 2004 Conference Board report declared, “The global economy will become less carbon-intensive over time…The real questions are what the pace of the transition will be and who will be the winners and losers…[B]usinesses that ignore the debate over climate change will do so at their peril.”
We believe our industry is highly exposed to climate change risk; over half of US GHG emissions are from oil and gas combustion, according to the Energy Information Administration.
Analysts at Goldman Sachs, Deloitte & Touche, Booz Allen, McKinsey, Bank of America, and WestLB Panmure have recognized the financial risks of climate change and raised concerns about companies that do not adequately disclose them.
Industry leaders like Shell, BP, ConocoPhillips, Statoil, Amerada Hess and Suncor are taking actions to reduce their exposure to climate related risks, including assuming a cost for carbon in their strategic planning, reporting and reducing their GHG emissions, engaging in emissions trading, and investing in renewable energy. BP reports that its emissions reduction activities have generated savings with an NPV of $650 million. Apache has not taken the basic step of committing to publicly report its GHG emissions for its global operations.
According to Oil and Gas Investor, the industry’s environmental record is hurting its ability to attract strong employees. Companies like BP claim that their proactive stance on climate change helps to recruit and retain quality employees.
RESOLVED: Shareholders request that a committee of independent directors of the Board assess how the company is responding to rising regulatory, competitive, and public pressure to significantly reduce carbon dioxide and other greenhouse gas emissions and report to shareholders (at reasonable cost and omitting proprietary information) by September 1, 2005.
We believe management has a fiduciary duty to assess and disclose to shareholders all pertinent information about its response to climate change. We believe early action to reduce emissions and prepare for standards could provide competitive advantages, while inaction and opposition to emissions control efforts could expose companies to regulatory, litigation, and reputation risk.