Archive for the ‘Corporate’ Category

Climate Change Is a Wallflower at the Risk Factor Ball

via Wikimedia Commons

via Wikimedia Commons

Rising seas. Extended drought. Raging floods. Market disruptions. Food scarcity. All these, and more, are predicted consequences of global climate change. Last month’s deluge in Colorado was another foretaste of what may be in store for us.

Publicly traded companies are no less immune to the consequences of global climate change than anyone else. Some companies have largely ignored the implications; others have seized on environmental transformation as a business opportunity. The insurance industry has been notably forward thinking in this respect. But then, insurance companies have a vested interest in assessing other companies’ risk factors. Either way, it’s a rare industry which won’t be affected one way or another.

Three years ago, the Securities and Exchange Commission issued guidance on how publicly traded companies should disclose the climate change risks they face. Recognizing the current and potential effects on companies’ performance associated with both climate change and with efforts to ameliorate the change, the commission laid out steps companies should take to inform the public how they intended to deal with future environmental disruption.

The SEC’s guidance seems to be honored in the breach by the great majority of U.S. companies.  According to a report by Inside Climate News, nearly 75 percent of  the nation’s publicly traded companies are ignoring the commission’s disclosure requirements.  This figure comes to us compliments of a retired database developer named Lawrence Taylor, a one-time assessor of air pollution data for the Orange County and San Diego land planning departments. Taylor spent five months and 1,100 hours poring over company filings on the SEC website. Of the 3,895 companies whose most recent annual reports he reviewed, only 27 percent mentioned “climate change” or “global warming” at all. Of the businesses which mentioned climate change, fewer still provided any real specifics. The general exceptions to the rule were carbon-intensive businesses like coal, oil, and natural gas companies, but even they tended to shy away from discussing long-term environmental or regulatory risks. For the most part, the disclosures focused on taxes or changes in market demand.

Seattle’s NPR station, KUOW followed up on Taylor’s research and found that the heavy corporate hitters in Washington State likewise tend to ignore the disclosure requirement. KUOW’s reporter searched the annual 10-K filings of Washington’s biggest companies, looking for the words “climate,” “warming,” “greenhouse” and “carbon.” Of the Fortune 500 firms based in Washington, only Weyerhaeuser revealed how climate change will affect its operations, which makes sense given that it’s a forest products company at heart. Microsoft contented itself with noting that “Changes in weather where we operate may increase the costs of powering and cooling computer hardware we use to develop software and provide cloud-based services.”

The SEC guidance covers a sobering list of climate change disclosures, including the impact of legislation and regulation, international accords, the indirect consequences of regulation and business trends, rising insurance costs, and the myriad physical impacts of climate change including violent storms, rising sea levels, the arability of farmland, and the availability and quality of water. The commission points out that the consequences of climate change can cause catastrophic harm to physical plants and facilities and can disrupt manufacturing and distribution processes. In understated terms, the commission concludes that, “Registrants whose businesses may be vulnerable to severe weather or climate related events should consider disclosing material risks of, or consequences from, such events in their publicly filed disclosure documents.”

But apparently the great majority of firms are breezily ignoring the SEC’s guidance. General Mills, for instance, mentions climate change only in passing as one of a list of disruptions (along with fire, terrorism, strikes, and import restrictions) that might “adversely affect” its business. For a company so heavily dependent on grains from a region experiencing record-setting drought, this seems like whistling past the graveyard.

Ignoring the potential impacts of climate change isn’t going to make them go away, and it isn’t doing investors any favors.

I would like to underscore the 1,100 hours Taylor spent searching filings on the SEC website. If he had gone to our Risk Factors page, he could have finished his research in a fraction of the time. 

Exxon Makes Its Priorities Clear

Photo via Wikimedia Commons

Photo via Wikimedia Commons

The great muck-raking American novelist Upton Sinclair once wrote that it is difficult to get a man to understand something when his salary depends upon his not understanding it.

Sinclair’s trenchant observation sprang to mind when I came across the astonishingly revealing statement by Exxon Mobile’s CEO to a shareholders meeting this week. Responding to a proposal to reduce the company’s greenhouse gas emissions, Rex Tillerson laid down a marker by demanding “What good is it to save the planet if humanity suffers?”

Perhaps Mr. Tillerson’s salary depends upon his not understanding the imperatives of global climate change. Perhaps the gleam of their dividends make it difficult for Exxon shareholders to grasp what the future might hold for their grandchildren: they agreed with Tillerson and voted nearly 3-to-1 against the proposal.

If quoting Upton Sinclair seems a tad cynical, consider that Exxon Mobile was the second most profitable company on the planet last year and posted its second highest profit ever.

Tillerson couched his statement as concern for lifting the downtrodden of the world out of poverty. He then then fell back on simple climate change denial-ism, asserting that the world’s temperature “hasn’t really changed” in the last decade. But what really pegged the absurdity meter is the Hobson’s Choice he created between “saving the planet” and preventing human suffering. Poaching humanity in a stew of carbon emissions seems like plenty of suffering. As  Ryan Koronowski and Joe Romm point out at Think Progress, heat waves, conflict, food insecurity, Dust Bowl-like drought, extreme flooding, sea level rise, increasingly destructive storms, and worsening refugee crises are the inevitable results of staying on the current emissions path.

More than anything, Tillerson’s risible dichotomy reminded me of that infamous declaration from the Vietnam war: “It became necessary to destroy the village in order to save it.”

Sinclair’s most famous work, The Jungle, was a stomach-churning look at the meat packing industry at the turn of the last century. I wonder what he would make of this century’s oil industry.

Behind the Brands Report Confirms That Corporations Will Never Be Cool

Photo by manwithface. Some rights reserved.

Photo by manwithface. Some rights reserved.

The human rights organization Oxfam International released a cool interactive report this month titled “Behind the Brands,” which gives a grim behind-the-logo peek at the shady ethics of such beloved international corporations as Coca-Cola, Mars, Nestle, Kellogg’s and Pepsi, among others. That these companies practice less-than-ideal business ethics should hardly come as a surprise to anyone, but Oxfam’s report lets you compare brands by assigning 0 – 10 scores in a number of green-related categories (land, women, farmers, workers, climate, transparency, water), and giving justification for each. You can compare company scorecards or look more closely at specific issues related to each of the categories for every company.

A quick survey of the site shows that Nestle (the snack moguls behind Crunch bars, Toll House cookies, and Hot Pockets) achieved the highest scores (a still-pretty-abysmal 38 out of 70), with Unilever and Coca-Cola following in the second and third spots. Associated British Foods, makers of Ovaltine and Twinings tea, received the lowest score (13 out of 70), and Oxfam accuses the corporation of not recognizing community land rights, not setting emissions targets for themselves or their suppliers, and having “zero commitment to reducing water use.” The site never goes too in-depth with specific figures, but the interface offers a nice, interactive and user-friendly experience that will hopefully encourage its readers to go deeper in their research.

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