Big energy companies and utilities are under increasing pressure from investors to disclose how rising global temperatures and mitigating associated climate risks may impact their businesses.
Just two weeks ago a majority of Occidental Petroleum’s shareholders (67%) approved a resolution calling for the company to produce an assessment of the long-term business implications of climate change, marking the first time more than 50% of shareholders at an oil and gas company voted in favour of such a proposal against management recommendations.
The FSB’s Task Force on Climate-related Financial Disclosure (TCFD) has shone a light on the issue of climate-related risk and comes at a time when many companies are busily trying to get ahead of the curve and placate investor concerns.
Carbon Tracker analysed Glencore’s latest report, “Climate change considerations for our business 2017” released this month ahead of its AGM.
It found it fell woefully short of the expectations of the TCFD and that the paper spends more time discounting the low-carbon transition than explaining its implications for the company. Glencore’s Chairman, Tony Hayward, recognises in his foreword the importance of climate-related scenario analysis for investors but much of the piece focuses less on such a scenario and more on why it is unlikely to occur.
While revealing that the world was unlikely to limit warming to 2 degrees, the basis for its report conclusions raised more questions than answers in terms of managing risk. The paper is a second stab into how actions to mitigate climate change might impact its business and is a step back from the most promising elements of last year’s report, in Carbon Tracker’s view.
Senior utilities & power analyst Matt Gray said:
“Glencore’s report both falls short of the expectations of the FSB-Task Force and spends more time discounting the low-carbon transition than explaining its implications for the company. The company clearly views a two-degree outcome as unlikely, but the basis for its conclusions raise more questions than answers about how well Glencore is preparing for the risks.”
Senior utilities & power analyst Gray said:
“The risks and the opportunities related to the low-carbon transition are becoming clearer; but Glencore’s report is a prime example of companies cherry-picking the good bits and ignoring the bad. Failing to properly assess the business implications of structural shifts in the seaborne coal market and the continued competitiveness of alternative, low-carbon fuels puts its investors’ value at risk.”