The article in the url below reports on an announcement earlier this year that, it says, is a surprise:
"SIX big European oil and gas firms called on June 1st for a globally co-ordinated price on carbon-dioxide emissions, to restrain the impact on the climate of burning fossil fuels."
Moreover, apparently this is somewhat of an emerging trend:
"Five years ago no one would have expected the move: as producers of much of the world's dirty fuels, their industry was disinclined to join forces and advocate accelerating the switch to cleaner ones. … And it is not just the energy firms. As world leaders prepare to meet in Paris in December to produce an agreement on reducing greenhouse-gas emissions, attitudes towards climate change have altered profoundly among businesses of all kinds."
Since the failed attempts to reach a climate deal in Copenhagen, in 2009, the article reports that three things have changed:
"First, the price of renewable sources of energy—especially solar—has dropped dramatically, and their share in power generation is growing. Second, consumers care more about climate change than before. And third, investors—especially long-term ones such as pension funds—have woken up to the risks of owning firms with assets and business models likely to decrease in value as the world 'decarbonises'."
Most importantly though, I think, is this comment, which is illustrated in the article by several examples across Europe:
"'Our motives are not exactly altruistic,' admits another European boss. 'Our clients and stakeholders demand such initiatives.'"
In the process, the article makes the case for strategic CSR:
"Firms say that besides savings from greater energy efficiency they gain less quantifiable benefits from an enhanced reputation, a motivated workforce and the like."
And, such an enlightened approach to management reflects firms that are simply better run than those that misinterpret the direction in which society is evolving:
"Those with published targets for cutting their CO2 emissions are more profitable, delivering a return on invested capital of 9.9%, compared with 9.2% for those with no targets, according to research published by CDP in May. The Low-Carbon 100 Europe index compiled by Euronext, a stock exchange, which includes the European firms with the lowest CO2 emissions in their respective industries, has risen by 60% since the end of 2010. This compares with a 45% rise in the broader STOXX Europe 600 index, from which its components were selected."
Since initially reading this article, however, I read the article in the second url below (also in The Economist), which paints a more cynical reason for the public shift in the oil firms' position:
"Plenty of oil firms (Exxon among them) are also calling for governments to enact a 'carbon tax' on emitters of greenhouse gases. Their critics argue that this is less altruistic than it appears. For one thing, such a tax would hurt the coal industry especially, thereby boosting the oil firms' gas businesses. And governments, especially in the developing world, where fossil-fuel demand is still surging, may find such a tax politically impossible anyway; the oilmen are calling for it, opponents say, in the knowledge that such countries will never introduce it."
But, as the article continues, there is danger for the oil companies in trying to play that game (see Strategic CSR – Exxon):
"In the absence of a global carbon tax or some other effective measure, however, the risk for the oilmen is that everyone from environmentalists to politicians will simply find other ways to make them pay for global warming. On November 4th New York's attorney-general, Eric Schneiderman, subpoenaed documents from Exxon to investigate how much it has known since the 1970s about the effects of fossil fuels on the climate. … the firm's run-in with the New York justice department may be a portent of what is to come."
Take care
David
David Chandler & Bill Werther
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
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Walking the walk
June 6, 2015
The Economist
Late Edition – Final
57
http://www.economist.com/news/business/21653620-firms-increasingly-believe-saving-planet-good-business-walking-walk
Nodding donkeys
Nodding donkeys
November 14, 2015
The Economist
Late Edition – Final
61
