In ExxonMobil's vision of the future, deep water oil reserves will continue to be tapped, oil sands will still be a (dirty) source of energy, and generally, business will continue as usual—or at least, close enough to usual that climate change will probably continue unfettered. The oil and gas giant is actually concerned about climate change, but according to its first-ever report to shareholders on managing climate risk, it's worried about how an unpredictable climate could harm its infrastructure more than anything else.
The report—which came about after As You Sow, a nonprofit shareholder advocacy group, and Arjuna Capital, a wealth management platform, pressured Exxon with a shareholder resolution—was released on the same day that the UN's Intergovernmental Panel on Climate Change (IPCC) put out its latest report warning about the apocalyptic repercussions of ignoring climate change.
Exxon does reference the IPCC throughout its report, but only the panel's warnings from years past, which aren't quite as dire as the contents of the most recent IPCC statement. "The [2007 IPCC report] before said 'We think there may be a problem.' That's what they've chosen to respond to. That's what interests me. Frankly, I think they should read the new IPCC report and put out another report," says Andy Behar, CEO of As You Sow.
This year's IPCC report warned of weather disasters, increased poverty, erosion of food security, health risks, and other consequences if the world doesn't act now to pursue a low greenhouse gas emissions pathway—and even then, some repercussions are inevitable. The Exxon report shatters any remaining glimmers of hope about a low-carbon future:
Our Outlook for Energy does not envision the "low carbon scenario" advocated by some because the costs and the damaging impact to accessible, reliable and affordable energy resulting from the policy changes such a scenario would produce are beyond those that societies, especially the world’s poorest and most vulnerable, would be willing to bear, in our estimation.
Exxon also dismisses the possibility of world governments curbing greenhouse gas emissions by 80% as unlikely. That's the approximate percentage necessary to prevent temperatures from rising two degrees Celsius. The low-carbon scenario discussed in the latest IPCC report is a rise of no more than one degree Celsius.
As You Sow had hoped that Exxon would model different climate change scenarios and how they might play out, but that didn't happen. "I wish that they had been more forthright about their contribution to climate change and what they're going to do about it. What are the risks?" says Behar.
The obvious problem here is that Exxon is staking its future success as an oil and gas company on the premise that the world will be hungrier than ever for its products a few decades down the line. The company is clearly thinking about climate change, which is a start, but will continue to be part of the problem unless it transitions into an energy company that deals more in renewables than in oil sands.
"If you're an analyst and reading the Exxon report and reading today's IPCC report, I think you're going to have to move money out of that sector," says Behar. "Overall, I think this is going to hasten the movement of capital, which is precisely what needs to happen ."
Read Exxon's full report here.