In an attempt to ensure that oil and gas companies do more to tackle the climate change challenge, global investors are updating guidance on climate risks facing the sector.
Global investors from Europe, North America, Asia and Australia have today published an updated second edition of their guide setting out the challenges facing the sector and investor expectations for how oil and gas companies must act to adapt their business strategies to a 2°C climate change pathway.
Launching Investor Expectations for Oil and Gas Companies: Transition to a Lower Carbon Future
Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change (Europe) said, “Today the global investor community is setting out as clearly as possible their expectations for oil and gas companies on actions required to address climate change risks. Our decision to update this guide directly reflects the requirements of the Paris Agreement. Going forward, asset owners and fund managers will need to know how oil and gas companies – and particularly the boards accountable for overseeing them – see the future impact of climate change on their activities and how they plan to align their business model with the greenhouse gas reductions required to deliver binding international agreements.”
Stephanie Maier, lead author of the revised guide and Head of Responsible Investment Strategy & Research for Aviva Investors added, “The oil and gas sector represents trillions of dollars in market capitalisation. Long-term investors therefore want to ensure that oil and gas companies have appropriate governance and capital discipline to respond to the changing market dynamics that are arising from the policies and actions put in place to limit global warming. Given the transition and physical risks these companies face from climate change, we believe that they have a duty to disclose how they are responding to these changes. We have seen some strategic announcements from oil and gas companies for more resilient low carbon business strategies. However, it is vital for everyone’s long term prosperity that they do more in this respect and do not undermine robust policy action that drives a well-managed transition to a low carbon economy.”
Andrew Logan, Director of the Oil & Gas Program at Ceres and the Investor Network on Climate Risk (North America) said, “No matter the outcome of the US election, global policy momentum and rapid technological change are combining to create significant risks for the oil and gas sector. Investors are increasingly concerned that the current business strategies of many companies may not be financially sustainable given these ongoing trends. During the current proxy season investors are showing unequivocally through shareholder resolutions to companies including Exxon and Chevron that they expect the oil and gas sector to address carbon asset risk by assessing the impact of a 2°C scenario on their future resilience.”
Emma Herd, Chief Executive of the Investor Group on Climate Change (Australia) and speaking also for the Asia Investor Group on Climate Change, said: “Some of the largest oil and gas companies by revenue are based in Asia, in the fastest growing economies in the world. These companies are highly exposed to carbon constraints and will face mounting pressure as investors seek to determine whether they are doing enough to change their capital allocations to curb emissions and align their business strategies to a 2C global warming scenario. The Marrakech Communique adopted at COP22 also explicitly recognised the oil and gas sector as the largest source of methane globally – a potent greenhouse gas – so if we are to stand a chance of meeting the Paris goals these companies will also be expected to demonstrate they are taking steps to curb these emissions from oil and gas extraction, transportation and processing activities”.
About the guide
Investor Expectations for Oil and Gas Companies: Transition to a Lower Carbon Future updates a previous guide (Investor Expectations – Oil and Gas Company Strategy) that was first published in December 2014 and has formed the basis of effective investor engagement over the past two years with the boards and management of oil and gas companies. The revised guide is intended to support further constructive engagement with the sector following the Paris Climate Agreement. It is focused in particular on how companies in this sector are governing and managing the transition risks and opportunities associated with a climate trajectory of no more than 2°C of global warming and are developing the business strategy required to adapt through the transition to a sustainable low carbon energy system. The guide groups investor expectations in five areas of concern:
• Governance – are board and management processes well enough defined to ensure adequate oversight of climate-related risk and effective planning for a transition consistent with 2°C and efforts to pursue 1.5°C?
• Strategy – is the management of climate-related risks and opportunities integrated into business strategy well enough to ensure business models will be robust, responsive and resilient in the face of a range of energy transition scenarios.
• Implementation – is scenario analysis and ‘stress testing’ well enough embedded into key business planning processes and investment decisions?
• Transparency & disclosure – does the company disclose its operational emissions in the annual report and/or on the corporate website. How good is the company’s view of, and response to, the material climate related risks and opportunities outlined in the guide?
• Public policy – does the company engage with public policy makers and other stakeholders to support development of cost-effective policy measures to mitigate climate-related risks and low carbon investments? Is there broad oversight and transparency regards the company’s public position, lobbying activity and political spending on climate-related regulatory issues (including carbon/methane emissions, energy and transport)?
Investors expectation – Oil & Gas Company Strategy was developed by the Institutional Investors Group on Climate Change with support from other investor networks in North America (Ceres’ INCR), Asia (AIGCC) and Australasia (IGCC) in the Global Investor Coalition (http://globalinvestorcoalition.org/), an umbrella for more than 250 institutional investors representing assets worth over USD24 tn. It is one of several produced to support investor engagement with key sectors to curb carbon asset and climate risk including mining, utilities and automotive companies. It is intended to be used in tandem with Institutional Investors’ Expectations of Corporate Climate Risk Management.(http://www.iigcc.org/publications/publication/institutional-investors-expectations-of-corporate-climate-risk-management )
Investors groups in the GIC also collaborate to drive climate action in key policy forums, including the G7 & the G20. In August this year investors wrote to the G20 heads of state calling on G20 nations to double global investment in clean energy by 2020, tighten climate disclosure mandates, develop carbon pricing and phase out fossil fuel subsidies. Shortly before COP22 in Marrakech, the GIC published a fact sheet highlighting examples of actions institutional investors around the world have taken during 2016 and since the Paris Agreement was finalised. The Marrakech Communique was adopted at COP 22 in Morocco on November 14, 2016.
Is Wood Burning Sustainable For Your Home?
Wood is a classic heat source, whether we think about people gathered around a campfire or wood stoves in old cabins, but is it a sustainable source of heat in modern society? The answer is an ambivalent one. In certain settings, wood heat is an ideal solution, but for the majority of homes, it isn’t especially suitable. So what’s the tipping point?
Wood heat is ideal for small homes on large properties, for individuals who can gather their own wood, and who have modern wood burning ovens. A green approach to wood heat is one of biofuel on the smallest of scales.
Is Biofuel Green?
One of the reasons that wood heat is a source of so much divide in the eco-friendly community is that it’s a renewable resource and renewable has become synonymous with green. What wood heat isn’t, though, is clean or healthy. It lets off a significant amount of carbon and particulates, and trees certainly don’t grow as quickly as it’s consumed for heat.
Of course, wood is a much less harmful source of heat than coal, but for scientists interested in developing green energy sources, it makes more sense to focus on solar and wind power. Why, then, would they invest in improved wood burning technology?
Solar and wind technology are good large-scale energy solutions, but when it comes to small-space heating, wood has its own advantages. First, wood heat is in keeping with the DIY spirit of homesteaders and tiny house enthusiasts. These individuals are more likely to be driven to gather their own wood and live in small spaces that can be effectively heated as such.
Wood heat is also very effective on an individual scale because it requires very little infrastructure. Modern wood stoves made of steel rather than cast iron are built to EPA specifications, and the only additional necessary tools include a quality axe, somewhere to store the wood, and an appropriate covering to keep it dry. And all the wood can come from your own land.
Wood heat is also ideal for people living off the grid or in cold areas prone to frequent power outages, as it’s constantly reliable. Even if the power goes out, you know that you’ll be able to turn up the heat. That’s important if you live somewhere like Maine where the winters can get exceedingly cold. People have even successfully heated a 40’x34’ home with a single stove.
Benefits Of Biomass
The ultimate question regarding wood heat is whether any energy source that’s dangerous on the large scale is acceptable on a smaller one. For now, the best answer is that with a growing population and limited progress towards “pure” green energy, wood should remain a viable option, specifically because it’s used on a limited scale. Biomass heat is even included in the UK’s Renewable Heat Initiative and minor modifications can make it even more sustainable.
Wood stoves, when embraced in conjunction with pellet stoves, geothermal heating, and masonry heaters, all more efficient forms of sustainable heat, should be part of a modern energy strategy. Ultimately, we’re headed in the direction of diversified energy – all of it cleaner – and wood has a place in the big picture, serving small homes and off-the-grid structures, while solar, wind, and other large-scale initiatives fuel our cities.
7 Benefits You Should Consider Giving Your Energy Employees
As an energy startup, you’re always looking to offer the most competitive packages to entice top-tier talent. This can be tough, especially when trying to put something together that’s both affordable but also has perks that employees are after.
After all, this is an incredibly competitive field and one that’s constantly doing what it can to stay ahead. However, that’s why I’m bringing you a few helpful benefits that could be what bolsters you ahead of your competition. Check them out below:
One benefit commonly overlooked by companies is offering your employees financial advising services, which could help them tremendously in planning for their long-term goals with your firm. This includes anything from budgeting and savings plans to recommendations for credit repair services and investments. Try to take a look at if your energy company could bring on an extra person or two specifically for this role, as it will pay off tremendously regarding retention and employee happiness.
While often included in a lot of health benefits packages, offering your employees life insurance could be an excellent addition to your current perks. Although seldom used, life insurance is a small sign that shows you care about the life of their family beyond just office hours. Additionally, at such a low cost, this is a pretty simple aspect to add to your packages. Try contacting some brokers or insurance agents to see if you can find a policy that’s right for your firm.
Dedicated Time To Enjoy Their Hobbies
Although something seen more often in startups in Silicon Valley, having dedicated office time for employees to enjoy their passions is something that has shown great results. Whether it be learning the piano or taking on building a video game, having your team spend some time on the things they truly enjoy can translate to increased productivity. Why? Because giving them the ability to better themselves, they’ll in turn bring that to their work as well.
The Ability To Work Remotely
It’s no secret that a lot of employers despise the idea of letting their employees work remotely. However, it’s actually proven to hold some amazing benefits. According to Global Workplace Analytics, 95% of employers that allow their employees to telework reported an increased rate of retention, saving on both turnover and sick days. Depending on the needs of each individual role, this can be a strategy to implement either whenever your team wants or on assigned days. Either way, this is one perk almost everyone will love.
Even though it’s mandated for companies with over 50 employees, offering health insurance regardless is arguably a benefit well received across the board. In fact, as noted in research compiled by KFF, 28.6% of employers with less than 50 people still offered health care. Why is that the case? Because it shows you care about their well-being, and know that a healthy employee is one that doesn’t have to worry about astronomical medical bills.
Unlimited Time Off
This is a perk that almost no employer offers but should be regarded as something to consider. According to The Washington Post, only 1-2% of companies offer unlimited vacation, which it’s easy to see why. A true “unlimited vacation” program could be a firm’s worse nightmare, with employees skipping out every other week to enjoy themselves. However, with the right model in place that rewards hard work with days off, your employees will absolutely adore this policy.
A Full Pantry
Finally, having a pantry full of food can be one perk that’s not only relatively inexpensive but also adds to the value of the workplace. As noted by USA Today, when surveying employees who had snacks versus those who didn’t, 67% of those who did reported they were “very happy” with their work life. You’d be surprised at how much of a difference this could make, especially when considering the price point. Consider adding a kitchen to your office if you haven’t already, and always keep the snacks and drinks everyone wants fully stocked. Doing so will increase morale tremendously.
Compiling a great package for your energy company is going to take some time in looking at what you can afford versus what’s the most you can offer. While it might mean cutting back in other areas, having a workforce that feels like you genuinely want to take care of them can take you far. And with so many different benefits to include in your energy company’s package, which one is your favorite? Comment with your answers below!