OAKLAND, CA: Following shareholder pressure, ExxonMobil is to publish its first carbon asset risk report describing how it assesses the risk of stranded assets from climate change.
The report, via the company's web site, will provide investors with greater transparency into how America's largest energy corporation plans for a future where market forces and climate regulation makes at least some portion of its carbon reserves unburnable.
The Intergovermental Panel on Climate Change acknowledges that if catastrophic warming over 2°C is to be avoided, no more than one-third of current proven carbon reserves can be burned. These reserves, currently on the balance sheets of the 200 largest coal, oil, and gas companies are valued at $20 trillion.
Yet, a recent "Unburnable Carbon" report calculates that in 2012 alone, the 200 largest publicly traded fossil fuel companies collectively spent an estimated $674 billion on finding and developing new reserves – reserves that cannot be utilized without breaking the world's carbon budget.
Sustainable wealth manager Arjuna Capital and As You Sow, a non-profit promoting corporate responsibility, agreed to withdraw a resolution at the oil major's forthcoming annual meeting in May if ExxonMobil provided information to shareholders on the risks that stranded assets pose to its business model.
Natasha Lamb, director of equity research and shareholder engagement at Arjuna Capital said companies increasingly were including unconventional 'frontier' assets on their balance sheets, such as deep-water and tar sands.
"Investors are the canary in the coalmine and will move their money to avoid material risk," she said. "Forward thinking companies need to re-assess how they allocate shareholder capital and act strategically to shift their business models. If Big Oil can't redirect capital to low carbon energy alternatives, investors will. "