ExxonMobil says that global policies to combat climate change won't be strict enough to stop the company from selling all of the oil and gas it has found -- and all that it will find in the foreseeable future -- because the fuels are too important for global economic development.
Exxon issued a report Monday on the risks that climate change policies could pose to the company's assets and future profitability in response to contentions of some shareholders and environmental activists that the assets that underpin the value of Exxon and other fossil fuel companies will be worth less as society restricts consumption of fossil fuels to fight climate change.
Exxon's report, the first detailed response to these concerns by a major oil company, acknowledges the need to adopt policies to address climate change. But it concludes that because oil and gas are so critical to global development and economic growth, governments are "highly unlikely" to adopt policies that cut emissions so sharply that oil and gas consumption would be severely restricted.
"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, said 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."
Natasha Lamb, director of equity research at Arjuna Capital, a sustainable wealth management group that filed the shareholder resolution with Exxon, called Exxon's report a "milestone."
"It's a huge first step in the right direction and it shows a lot of leadership," she said. Arjuna and As You Sow, a non-profit that promotes environmental corporate responsibility, agreed to withdraw their resolution after Exxon agreed to issue a report on climate risks.
But Lamb said she was disappointed that Exxon declined 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 question is not whether or not we'll face the low carbon standard, but whether they are prepared to address it. We need to know what's at stake," she said. "But at least now investors know that Exxon is not addressing the low carbon scenario and (is) placing investor capital at risk."