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Hermes EOS Director Talks Climate at AGMs



All eyes have been on the oil and gas industry this week as Annual General Meetings (AGMs) of industry giants got underway. There has been significant push in recent weeks for businesses to adopt climate resolutions in line with the Paris Agreement. Tim Goodman, Director at Hermes EOS, the stewardship team of Hermes Investment Management, discusses the positives progress made and the areas that still need to improve at companies Total and Chevron, below.

At the AGM of Total, Hermes EOS welcomes the publication of the company’s climate report, Integrating Climate into our Strategy, which has been produced in response to the reporting framework of the Aiming for A investor coalition.

We commend the leadership that Total has demonstrated on climate change, especially its strong support of the UN Global Compact’s Business Leadership Criteria on Carbon Pricing, the Oil & Gas Climate Initiative and the Carbon Pricing Leadership Coalition. We are encouraged that the company will spearhead ambitions in the electricity value chain by expanding its midstream and downstream gas activities, as well as investments in renewable energy and energy efficiency.

We are also encouraged by the company’s swift response to our engagement and the constructive dialogue we have had with Total over the past year, which has included meetings with the company’s chair and senior members of its executive. While this is only the beginning of the journey for the company in managing the risks it faces as a result of climate change, it is certainly an important step in the right direction.

To achieve this outcome, Hermes EOS, on behalf of its 42 clients, worked with a number of asset owners and managers, including CalPERS and Établissement de Retraite Additionnelle de la Fonction Publique (ERAFP), with more than $2 trillion of assets under management who are welcoming the publication of the Integrating Climate into our Strategy.

At Chevron’s AGM, Hermes EOS presented a shareholder proposal that it has co-filed with the UMC Benefits Board which manages $20 billion in assets on behalf of 92,000 United Methodist Church pension participants and more than 100 United Methodist institutional clients.

The resolution focuses on one aspect of the Aiming for A reporting framework, reporting on how the company’s business model will be affected by a world in which global warming is limited to two degrees Celsius. BP, Royal Dutch Shell and Statoil shareholders voted almost unanimously to adopt the Aiming for A framework in 2015 and have begun to report on this and the other aspects of the framework. In addition, oil and gas companies such as ConocoPhillips and Suncor have also begun to report on their resilience to a world in which global warming is limited to two degrees Celsius.

We aim to encourage Chevron to keep in step with developing best practice in the oil and gas industry on reporting on climate change risk. We also wish to have collaborative and constructive dialogue with its board and senior management on how the company plans to evolve as we move to a low carbon world. We seek to be a friend to the industry and look forward to publicly praising Chevron in future as we are doing with Total.

We expect stricter reporting on asset portfolio resilience to the climate scenarios outlined by the International Energy Agency to become a standard requirement for companies exposed to the effects of the transition to a low-carbon economy. Companies should look to embrace these changes sooner rather than later, not least because the Taskforce on Climate-Related Financial Disclosures, convened by Mark Carney as chair of the UK’s Financial Stability Board and chaired by former New York City Mayor Michael Bloomberg, is consulting on climate change disclosure by companies.”

In addition to reporting on scenarios relating to how their businesses may be affected by global warming that is limited to two degrees Celsius, the Aiming for A investor coalition also asks that extractive industry companies report annually on:

– Ongoing operational emissions management;

– Low carbon energy research and development and investment strategies;

– Relevant strategic key performance indicators and executive incentives; and

– Public policy positions relating to climate change.

The oil and gas industry will be one of the most affected by the transition, with direct impacts on, among others, demand for fossil fuel and commodity prices. The ratchet mechanism agreed as part of the COP 21 climate change agreement in Paris in December 2015 also means that companies will need to be prepared for stronger policy action on climate change over time.



Are the UK Governments Plans for the Energy Sector Smart?



The revolution in the energy sector marches on, wind turbines and solar panels are harnessing more renewable energy than ever before – so where is it all leading?

The UK government have recently announced plans to modernise the way we produce, store and use electricity. And, if realised, the plans could be just the thing to bring the energy sector in line with 21st century technology and ideologies.

Central to the plans is an initiative that will see smart meters installed in homes and businesses the length and breadth of the country – and their aim? To create an environment where electricity can be managed more efficiently.

The news has prompted some speculation about how energy suppliers will react and many are predicting a price war. This could benefit consumers of electricity and investors, many of whom may be looking to make a profit by trading energy company shares online using platforms such as Oanda – but the potential for good news doesn’t end there.

Introducing New Technology

The plan, titled Smart Systems and Flexibility is being rolled out in the hope that it will have a positive impact in three core areas.

  • To offer consumers greater control by making smart meters available for all homes and businesses by 2020. Energy users will be able to monitor, control and record the amount of energy they use.
  • Incentivise energy suppliers to change the manner in which they buy electricity, to offer more smart tariffs and more off-peak periods for energy consumption.
  • Introduce new standards for electrical appliances – it is hoped that the new wave of appliances will recognise when electricity is at its cheapest and at its most expensive and respond accordingly.

How the Plans Will Affect Solar Energy

Around 7 million houses in the UK have solar panels and the government say that their plan will benefit them as they will be able to store electricity on batteries. The stored energy can then be used by the household and excess energy can be exported to the national grid – in this instance lower tariffs or even payment for the excess energy will bring down annual costs significantly.

The rate of return on energy exported to the national grid is currently between 6% and 10%, but there are many variables to take into account, such as, the cost of battery storage and light levels. Still, those with state-of-the-art solar electricity systems could end up with an annual profit after selling their excess energy.

The Internet of Things

Much of what the plans set out to achieve are linked to the now ubiquitous “internet of things” – where, for example, appliances and heating systems are connected to the internet in order to make them function more smartly.

Companies like Hive have already made great inroads into this type of technology, but the road that the government plans are heading down, will, potentially, go much further -blockchain technology looms and has already proved to be a game changer in the world of currency.

Blockchain Technology

It has already been suggested that the peer to peer selling of energy and exporting it to the national grid may eventually be done using blockchain technology.

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

Don and Alex Tapscott, Blockchain Revolution (2016)

The upshot of the government’s plans for the revolution of the energy sector, is that technology will play an indelible role in making it more efficient, more flexible and ultimately more sustainable.

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4 Case Studies on the Benefits of Solar Energy




Demand for solar energy is growing at a surprising rate. New figures from SolarPower Europe show that solar energy production has risen 50% since the summer of 2016.

However, many people are still skeptical of the benefits of solar energy.Does it actually make a significant reduction in our carbon footprint? Is it actually cost-effective for the company over the long-run?

A number of case studies have been conducted, which indicate solar energy can be enormously beneficial. Here are some of the most compelling studies on the subject.

1.     Boulder Nissan

When you think of companies that leverage solar power, car dealerships probably aren’t the first ones that come to mind. However, Boulder Nissan is highly committed to promoting green energy. They worked with Independent Power Systems to setup a number of solar cells. Here were the results:

  • Boulder Nissan has reduced coal generated electricity by 65%.
  • They are on track to run on 100% renewable energy within the next 13 years.
  • Boulder Nissan reduced CO2 emissions by 416,000 lbs. within the first year after installing their solar panels.

This is one of the most impressive solar energy case studies a small business has published in recent years. It shows that even small companies in rural communities can make a major difference by adapting solar energy.

2.     Valley Electric Association

In 2015, the Valley Electric Association (VEA) created an 80-acre solar garden. Before retiring from the legislature, U.S. Senate Minority Leader Harry Reid praised the new project as a way to make the state more energy dependent and reduce our carbon footprint.

“This facility will provide its customers with the opportunity to purchase 100 percent of their electricity from clean energy produced in Nevada,” Reid told reporters with the Pahrump Valley Times. “That’s a step forward for the Silver State, but it also proves that utilities can work with customers to provide clean renewable energy that they demand.”

The solar energy that VEA produced was drastically higher than anyone would have predicted. SolarWorld estimates that the solar garden created 32,680,000 kwh every year, which was enough to power nearly 4,000 homes.

This was a major undertaking for a purple state, which may inspire their peers throughout the Midwest to develop solar gardens of their own. It will reduce dependency on the electric grid, which is a problem for many remote states in the central part of the country.

3.     Las Vegas Casinos

A number of Las Vegas casinos have started investing in solar panels over the last couple of years. The Guardian reports that many of these casinos have cut costs considerably. Some of them are even selling the energy back to the grid.

“It’s no accident that we put the array on top of a conference center. This is good business for us,” Cindy Ortega, chief sustainability officer at MGM Resorts told Guardian reporters. “We are looking at leaving the power system, and one of the reasons for that is we can procure more renewable energy on the open market.”

There have been many benefits for casinos using solar energy. They are some of the most energy-intensive institutions in the world, so this has helped them become much more cost-effective. It also helps minimize disruptions to their customers learning online keno strategies in the event of any problems with the electric grid.

4.     Boston College

Boston College has been committed to many green initiatives over the years. A group of researchers experimented with solar cells on different parts of the campus to see where they could produce the most electricity. They discovered that the best locationwas at St. Clement’sHall. The solar cells there dramatically. It would also reduce CO2 emissions by 521,702 lbs. a year and be enough to save 10,869 trees.

Boston College is exploring new ways to expand their usage of solar cells. They may be able to invest in more effective solar panels that can generate far more solar energy.

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