Investor group exposes ExxonMobil fraud with emission reduction plan
– Says to be in violation of the Paris Agreement
By Kiana Wilburg
ExxonMobil CEO Darren Woods
Kaieteur News – Following intense calls from its shareholders for more action in the fight against climate change, America’s largest energy company, ExxonMobil, announced it would reduce its emissions by 2025. In this regard, the shareholders can expect to do so to see its greenhouse gas emissions upstream fall by 15 to 20 percent compared to 2016 levels.
The oil king said this will be supported by a 40 to 50 percent reduction in methane intensity, and a 35 to 45 percent reduction in torch intensity across its global operations. He followed the above by noting that these actions relating to Scope One and Scope Two emissions of operated assets are anticipated to be consistent with the aims of the Paris Agreement to bring global temperatures to 1.5 degrees Celsius.
However, these statements have done nothing to allay shareholder concerns. In fact, there is one investment group, Engine No. 1, has come forward to expose the company’s fraud.
In a letter to ExxonMobil’s Board of Directors, Engine No. 1 that scrutinizing the company’s claims reveals that its efforts are failing to reach what it needs to position it for long-term value creation in a rapidly changing, and distracting world substantial. – term risks associated with the company’s current business model. In fact, the investment firm noted that claims of consistency with the Paris Agreement were well below target net zero emissions by 2050.
In his letter, Engine No.1 stated, “None of the Company’s new claims are changing its long-term trajectory that would grow total emissions for decades to come. This is not consistent with the aims of the Paris Agreement, but rather contradicts the aims of the Paris Agreement. We also continue to believe that without new Board members with the necessary expertise and experience, ExxonMobil will have little choice but to continue to seek to create a transformative long-term change, rather than work to realization. ”
He continued, “This is not just a climate issue but a fundamental investor issue – no different than capital allocation or management compensation – given the tremendous risk to ExxonMobil’s current business model in a rapidly changing world,” her letter.
Engine No. 1 concluded in conclusion that while the company pointed out how often the Board renews itself, “we believe it says that such refreshments over the years have not come with a new direction or significant progress on these issues. We believe that improving the company’s long-term future requires a clean break with the past, and we look forward to continuing to argue for real change at ExxonMobil. ”
It should be noted that Engine No. 1’s position is supported by the Church of England and the State of California Teacher Retirement System – one of the largest public sector pension schemes in the US.
The activist investment firm, launched by two hedge fund industry veterans, had this month announced its intention to nominate four directors to Exxon’s 10-person board with expertise in clean technology and running energy companies. They are: Gregory Goff, Kaisa Hietala, Alexander Karsner, and Anders Runevad.
New York Provincial Manager Thomas P. DiNapoli, whose fund owns an approximately US $ 300 million stake in Exxon, according to Refinitiv data, has expressed support for this move by Engine No. 1. In a comment published by Reuters, it said, “Exxon’s refusal to adequately address climate risk is a serious concern for many shareholders and signals significant governance issues. The company board needs to be revamped. We are looking forward to reviewing the slate of new directors. ”
Apart from pushing Exxon to add new directors with more relevant experience in the energy industry to the table, the investment firm has said in the past two months that it wants Exxon to cut costs on projects that are unlikely to win funding, creating a better plan for success in the renewable energy sector and revamping management compensation to better align with shareholder value creation.
What are Scope Emissions 1, 2 and 3?
Greenhouse gas emissions are categorized into three groups or ‘Scopes’ by the most widely used international accounting tool, the Greenhouse Gas (GHG) Protocol. Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from electricity generation, steam, heating and cooling purchased by the reporting company. Scope 3 includes all other indirect emissions that occur in a company’s value chain.
There are a number of benefits associated with measuring the scope of Scope 3. For many companies, most of their greenhouse gas (GHG) emissions and opportunities to reduce costs are outside their own operations. By measuring Scope 3 emissions, organizations can:
• Assess where the emission hotspots are in their supply chain;
• Identify resource and energy risks in their supply chain;
• Identify which suppliers are leaders and which laggard in terms of their sustainability performance;
• Identify energy efficiency and cost reduction opportunities in their supply chain;
• Engage and assist suppliers in implementing sustainability initiatives
• Improve the energy efficiency of their products
• Positive employee engagement to reduce emissions from business travel and employee commuting.
It is important to note that ExxonMobil is not committed to doing anything above that would certainly bring it in line with the objective of the Paris Agreement.
(Source on Scopes: www.carbontrust.com)