Climate Change Disinformation Are Fossil Fuel Companies Misleading Us?

As nations around the world (excluding the United States) are now in the early phases of implementing their obligations under the Paris climate accord, shareholders are demanding transparency from the world’s major carbon producing companies, the world’s major oil, natural gas and coal companies. The Union of Concerned Scientists, a collaborative group that in includes more than 20,000 physicists, ecologists, engineers, public health professionals, economists and energy analysts and who believe that rigorous analysis is the best way to understand the world’s problems and find solutions for them, has released the 2018 edition of its Climate Accountability Scorecard.  This information is critical to investors since the fossil fuel industry is facing significant external pressures to stop using disinformation to lull investors into a false sense of security regarding their investments and to make meaningful changes to its business model that will result in lowered carbon emissions.  The UCS scorecard analyzes eight of the world’s major and most influential fossil fuel producing companies and evaluates each of them on four key areas that consist of 28 metrics including:

1.) Disinformation – have these companies stopped spreading disinformation about climate science and policies?

2.) Business Planning – do these companies’ business plans align with a world that is free from carbon pollution?

3.) Policies – Do these companies support fair and effective climate policies?

4.) Disclosure – Are these companies fully disclosing the financial and physical risks of climate change to their business operations?

The companies in the report include:

1.) BP

2.) Chevron

3.) Conoco Phillips

4.) ExxonMobil

5.) Peabody Energy

6.) Royal Dutch Shell

7.) Arch Coal

8.) CONSOL Energy

Since the report is extremely lengthy and very detailed, for the purposes of this posting, I will focus on one of the major metrics in the study, disinformation, since the investment community and the world as a whole relies on an accurate portrayal of the risks of global climate change to ensure that prudent decision-making is implemented.  

When ranked on whether companies make “consistency accurate public statements on climate since and the consequent need for swift and deep reductions in emissions from the burning of fossil fuels”, the authors of the report scored the eight companies as follows with the small number above the ranking showing their respective scores on a five point scale with Advanced scoring a 2, Good scoring a 1, Fair scoring a 0, poor scoring a -1 and Egregious scoring a -2:

Interestingly, the scores for this metric dropped for Arch Coal, Chevron, Conoco-Phillips and Peabody Energy since UCS released its last climate accountability scorecard in 2016, suggesting that fossil fuel companies are not particularly taking their responsibility to be open and truthful about the repercussions of their businesses on the global climate.  Let’s look at each in turn:

1.) Arch Coal‘s statement on climate change in its annual filings included qualifiers such as “…the relationship that greenhouse gases may have with perceived global warming…”

2.) BP removed a statement from its website that included the phrase “possible impact on global climate via the ‘greenhouse effect’…” (note the quotes around greenhouse effect which suggests that the greenhouse effect doesn’t exist) and replaced it with text that cited the Intergovernmental Panel on Climate Change (IPCC) which acknowledges the scientific evidence of climate change and the need to reduce emissions from fossil fuels.

3.) Chevron downplayed the role of human activity in climate change and the need to reduce emissions of heat-trapping gasses.  Chevron also stressed the uncertainty regarding the impact of fossil fuels on climate.  Chevron’s 2018 climate risk report mischaracterized the IPCC finding that human activity is extremely likely to be the dominant cause of global warming by stating that climate change is “due in part” to human activity.

4.) Conoco Phillips claimed that increased concentration of greenhouse gases in the atmosphere “can lead” to adverse climate effects and discusses the use of managed emissions rather than reduced emissions on its website.

5) CONSOL Energy does not mention climate change in any of its documents created after its split from the company’s natural gas division.

6.) ExxonMobil included qualifiers in its public statements on climate change including “current scientific understanding provides limited guidance on the likelihood, magnitude or time frame of these events” and promotes a false choice between climate change and economic development.

7.) Peabody Energy‘s “Position Statement on Energy and Climate Change” emphasizes the essential role of fossil fuels, particularly coal, in the global energy mix.  It does describe the emissions from the burned of fossil fuels as a “concern” but does not acknowledge that rapid and deep emissions reductions are necessary.  Its “Position” statement also includes no information climate change

8.) Royal Dutch Shell consistently acknowledges the scientific evidence of climate change and the need for swift and deep reductions in emissions from the burning of fossil fuels.  It also acknowledges the need to achieve global net-zero carbon dioxide emissions to keep the global temperature rise to less than two degrees Celsius.  This is not terribly surprising given that in the early 1990s, Shell created this documentary on climate change and the oil industry:

One additional way that these eight companies are complicit in spreading disinformation about climate science is their affiliations with trade associations, think-tanks and industry groups that act on their behalf to spread disinformation or take actions that block the passing of climate change legislation.  Here is a graphic looking at the links between the eight companies and six major U.S.-based industry groups and trade associations that have a documented role in opposing climate change policies and the spreading of disinformation:

As you can see, all eight companies have significant ties to industry organizations that are affiliated with the spreading of disinformation about climate science and/or the blocking of legislation related to climate change that may negatively impact their membership.  One of the most powerful lobbying groups, the American Legislative Exchange Council or ALEC brings together state lawmakers and corporations to draft legislation that can be introduced in state legislations.  Many of these bills are aimed at ending emissions reductions efforts.  ALEC is largely funded by Koch Industries and Peabody Energy Corporation and has the following influential legislative members:

In December 2017, ALEC proposed a resolution that called on the Trump Administration to reverse an EPA finding that global warming emissions endanger public health.  Interestingly, ExxonMobil came out strongly against ALEC’s proposal and left the organization in July 2018.  Royal Dutch Shell announced that it was leaving ALEC in August 2015 because of its continuing denial of the science of climate change because “its stance on climate change is clearly inconsistent with our own.”.  BP announced in March 2015 that it was leaving ALEC and ConocoPhillips departed in 2013 although it donated to ALEC under the guise of Phillips 66 (a spin-off of ConocoPhillips) as a Director Level sponsor. 

I believe that is sufficient information for this posting.  Research by the Union of Concerned Scientists does show that at least some fossil fuel companies are being pragmatic about their business model in light of global climate change.  That said, without shareholders pushing them to be transparent, one has to wonder how many fossil fuel companies would just as soon live in the past when their businesses were unencumbered by an inconvenient truth.

In a future posting, I will examine whether the business plans of these eight companies are evolving to reflect the reality of reduced greenhouse emissions in the future.

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