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Money Talks: Shareholders Must Show Willingness On BP and Shell Remuneration

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Investors at BP and Shell are being encouraged to use binding votes on pay in 2017 to hold the oil corporations responsible on their transition for commercial resilience in a lower carbon world.

In a report released today, ShareAction urges investors not to support executive compensation structures that incentivise the pursuit of high-carbon strategies. Doing so would put shareholder value at risk under low-carbon future scenarios, including the ‘below two degrees’ goal agreed at the Paris climate summit last year.

Catherine Howarth, Chief Executive at ShareAction said: Responsible investors who are serious about climate risk have a crucial opportunity to ‘walk the talk’ at BP and Shell next year, by pushing for remuneration policies designed make these major companies commercially resilient in a low carbon world – and voting down policies which fail that test.”

The votes on pay policy in 2017 are binding ‘say on pay’ votes, introduced by the UK coalition government in 2013. They are the first pay votes to be put to shareholders in BP and Shell since the Paris Agreement on global emissions. If approved by shareholders, the structures will be applicable until 2020 and will be used to determine executive reward each year at the companies.

The issue of high pay dominated BP’s AGM in April this year, with 60% of shareholders voting against CEO Bob Dudley’s £14m pay packet in an advisory vote. The forthcoming binding votes mean the issue is likely to dominate again in 2017, and represents a key test of the investment community at a time when executive pay is top of the political agenda.

Remuneration at both companies is currently linked to a high carbon strategy, which rewards senior executives for replenishing fossil fuel reserves. This fails to acknowledge the scale of the changes required from the companies to achieve long-term commercial resilience and sustainable returns for the millions of British pension savers holding these companies in their retirement funds.

“While incentives in and of themselves will not drive the transition, getting them wrong at this critical point will reaffirm a business model that is unsustainable and damaging to the companies’ long-term viability,” says the report. “The golden thread between strategy and remuneration make it an important ground for setting expectations of low carbon resilience.”

Concerns about incentive structures at oil and gas companies are being echoed around the world. A report released today by Australian finance activist group Market Forces shows how fossil fuel companies in Australia are linking executive pay explicitly to the expansion of new oil, gas and coal reserves. Seven companies in the Australian Securities Index, as well as Chevron, BP and Exxon, have an ‘expansion’ bonus which incentivises risky projects such as drilling for oil in the Great Australian Bight. The group’s research shows that not a single Australian superannuation fund has voted down a remuneration packages on climate change grounds. This is despite the fact that the vast majority of Australian funds have publicly pledged support for keeping the world under two degrees of global warming. The research also found that frequently, funds fail to disclose how they vote, meaning investors can’t even find out what their money is supporting.

Pablo Berrutti, Head of Responsible Investment for Asia Pacific at First State Investments said:

Climate change is an issue that affects us all.

“We believe that companies should be incentivised to reduce carbon emissions and improve energy efficiency. Linking this with remuneration is a logical step for emissions intensive sectors.”

Daniel Godfrey, independent Director and Consultant said:

“The binding votes on pay at BP and Shell pay next spring are a crucial opportunity for shareholders, many of whom want to see evidence of the companies’ ability to adapt to a low carbon economy. Realigning incentives is central to that. ShareAction’s report provides practical recommendations for engagement, to help investors shape remuneration policies that reward long-term, sustainable strategies.”

Juliet Phillips, Campaigns Manager at ShareAction and author of the report said:

“In the context of a decarbonising economy, the pursuit of high-carbon pathways puts significant value at risk for long-term investors in fossil fuel companies. In their engagements with BP and Shell, shareholders must reinforce the need for a climate-smart strategy, reflected in remuneration policies that signal and reward the steps required to achieve low carbon resilience.”

Energy

Is Wood Burning Sustainable For Your Home?

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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?

Homegrown 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.

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Energy

7 Benefits You Should Consider Giving Your Energy Employees

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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:

Financial Advising

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.

Life Insurance

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.

Health Insurance

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.

Final Thoughts

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!

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