Guest ContributorThis is part three of a series on Transparency. Read part one and part two.
ExxonMobil was challenged recently to be transparent in their responsiveness to the effects of climate change. The challenge came from some of its largest shareholders. From the ExxonMobil website: “We are committed to positive action on climate change and dedicated to reducing the risk of climate change in the most efficient way for society.”
Their written statement is obviously clear, the company is committed to reducing the risk of climate change. Apparently, however, their perspective is not as transparent as some of their stakeholders believe.
Financial Activism and ExxonMobil
What better way to hold a company accountable is for large investors to bring up the issue. Right? Back in 2014, John D Rockefeller pulled their philanthropic funds out of fossil fuels. And most recently, the Rockefeller Foundation announced they will divest from fossil fuels, and specifically named ExxonMobil holdings.
Old Fashioned Sit-Ins
Large investors enforcing transparency seems quite different than having a bunch of college students protesting and demanding the University of Massachusetts divest its stock in fossil fuel companies. A five-day sit-in resulted in a commitment from the administration and Chairman of the Board of Trustees of the UMass to support a policy to divest from fossil fuel companies.
There are hundreds of campuses worldwide actively discussing or already committed to divestment. Most recently, the Huffington Post, The Guardian, Rolling Stone, to name a few have again created a buzz about divestment of fossil fuel.
So what happened with the recent shareholders’ challenge to ExxonMobil? It didn’t work, the shareholders were defeated and the company president made his statement:
“The reality is there is no alternative energy source known on the planet or available today to replace the prevalence of fossil fuels in the global economy,” Tillerson said during the meeting. “The world is going to have to continue using fossil fuels, whether they like it or not.”
In 2015, The New York Times called the college divestment from the fossil fuel industry controversial, even useless, as it seems divestment doesn’t make a financial dent anyway.
That 521 faith-based, foundations, governmental, colleges and universities, for-profit and NGOs and health institutions, totaling $3.4 trillion divested, isn’t a dent?
What are your thoughts on the issue?
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David Carter
Stephanie Varnon-Hughes
This post hits doubly close to home!
I strongly support anything that helps others make the best decisions possible. It’s very important for a business to be transparent in a meaningful, understandable, and actionable way. I sat through the California-Nevada United Methodist Annual Conferences in 2013 and 2014. In one of those years, the delegates of various local churches hotly debated whether to withdraw the clergy retirement funds from any company that does not support renewable energies. The plenary discussions (think something to the effect of Congressional debates following Robert’s Rules of Order) debated whether it was ethical to support fossil fuels, even if they grew the retirement funds. It is completely appropriate for investors and consumers to choose to place their money where they see fit. (Good for the CalNev UMCs, Rockefeller Foundation, and UMass for sending a message by diverting funds.)
As a Chevron employee, I know that we are the largest producer of geothermal energy, but I doubt that accounts for more than 5-10% of our total energy production. As to our investments towards renewables, I know that Chevron relies on others to do research, but they have tested out several applications and found that they weren’t scalable at a level where it would be cheaper to the consumer than fossil fuels. Natural gas looks promising as the US is the Saudi Arabia of natural gas reserves, and it burns cleaner than coal and oil. It is also a natural by-product of producing oil.
To the ethics of what energy to produce, I must caution that few people understand the assumptions or implications of the Renewables debate. It is assumed that renewables could be scaled to meet global energy demands in the near future. As it stands today, renewables only meet maybe 5% of global energy needs. (My numbers may be off, so consider reading Robert Bryce’s “Power Hungry: The Myths of Green Energy”, albeit a very conservative view.) Renewables cannot produce enough, be transported wide enough, or be integrated quickly enough. In fact, even oil cannot keep up with global energy demands. While we all hotly anticipate a breakthrough in renewables, we still require whatever meets demand today. As Chevron CEO and Chairman John Watson has reinforced, it will take all forms of energy to meet global energy demand over the next 40 years.
To those who want to get rid of fossil fuels altogether today, the cost to the all consumers would increase many times over. So the environmental tradeoff would be the cost to consumers, with a heavy hit to developing nations (currently using coal, trash, and wood) and to the impoverished. Bill Gates said in 2010 that if he could have one wish that would reduce poverty it would be affordable energy (Feb 2010 Ted Talk, “Innovating to Zero”).
To further this point recently, John Watson said in an interview with WSJ in May 2016: “I travel to Africa; I travel to developing Asia. Morality is trying to bring fresh drinking water to these people. Morality is trying to bring affordable energy to these people. We have billions of people that are living in abject poverty, and they need affordable energy. So that’s the morality.” (Source: Wall Street Journals Viewpoints (@21m:07s): http://www.wsj.com/video/wsj-viewpoints-john-watson-ceo-of-chevron/3513577C-0FDA-486E-94A6-CD180932629E.html.) And I think it’s important that ALL energy producers also do so in a safe and reliable manner, engage small businesses, build up local economies, and–yes–try to do so in the most environmentally friendly way as possible.
We can certainly try and shift the efforts of renewables with our investments, but we should also be aware of the immediate implications of a broader decision to abandon certain forms of energy quickly.
Thank you Michelle for responding to my blog post. Your response was respectful and you personally seem open to dialogue on the topic of energy, ethical decision making and transparency. And from a business perspective, I agree with you that “it is important for a business to be transparent in a meaningful, understandable, and actionable way.”
Last year in the Huffington Post, Chevron and ExxonMobil were called out. ExxonMobil, the post suggested that in order for public perception to change, they need to show us they are doing what they claim. And as for Chevron, they are not doing enough to “sing your own praises” and better communicate with the the critics.
My intention was only to bring attention to some of the ways people are voicing their concerns on the lack of transparency. I continue to buy-cott (boycott) ExxonMobil since the Alaskan oil spill. And I have never nor will I ever go into a Walmart store, for a number of ethical reasons. I live by my values.
As the Huffington Post article (http://www.huffingtonpost.com/frankie-rendon/oil-companies-going-green_b_7906638.html) stated:
“Oil companies are making strides in becoming more environmentally friendly, but they still have a long way to go. The first step is for them to take specific, significant action” and to be transparent.
Thanks again for your response.
Anita, thank you for your response! I certainly agree that this is a hot topic for all corporations to be more transparent for a more conscientious world. It is a growing trend that consumers are far more aware of the companies they invest in, even through their purchases if not stock.
I will pass along the feedback to my fellow employees that we could do more to “sing our own praises”. We are mindful that there is always the opportunity to be better in our engagements with the communities we work with, the stockholders that continue to invest in us, and the larger stakeholders.