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Exxon warns investors of climate risk

Exxon/Mobil admits that fossil fuels are risky

When Exxon/Mobil admits that fossil fuels are risky, that’s saying A LOT. Our nation’s largest oil company’s board evaluated climate change as a business risk on par with operational, strategic, and financial risks. It’s clear the recent board “shake-up” has resulted in a shot off the bow as a way to signal rough waters ahead.

Exxon wrote off 26 billion in 2020

The pandemic showed the company what a decline in oil and gas demand looks like. The picture wasn’t pretty with Exxon writing down the value of its property, plants, and equipment by nearly 26 billion in 2020. That is more than a 10% correction. For 2020, Exxon had the worst financial performance in 40 years.  Chevron lost money too.

What a telling about-face. However, risk is something corporate understands and the pandemic gave them enough taste of what’s coming to see the need to communicate climate change risk.

Energy giant admits to climate change risk. Exxon warns investors of climate risk to its oil and gas assets (ampproject.org)

Stop drilling now to meet 2050 net-zero targets

A respected energy authority warned that 2020 was THE year the world would need to stop drilling for new oil and gas wells in order to meet net-zero emissions targets set for 2050. 

The 3 D’s are impacting oil

Yale Environment 360 asked the question in a June 2021 article, “Amid Troubles for Fossil Fuels, Has the Era of ‘Peak Oil’ Arrived?” If that’s the case, then 2019 was THE year for peak oil.

What are the 3 D’s contributing to peak oil? Decarbonization; Deflation of demand; and a desire to Detoxify our air.

Oil consumption likely will decline over the next few decades. Losses and risk like this pose a large setback for big oil companies. Cars and trucks consume almost a half of the world’s oil. And add in pandemic changes to the usual commute, regulatory pressures, reputation risk, and the rapid transition to electric vehicles, the trends will only continue to crimp their financials.

Exxon board calls for unprecedented collaboration

With the addition of a new activist board member in June 2021, Exxon’s statement of risk included a need for unprecedented collaboration among governments, private companies, consumers and other stakeholders to create meaningful solutions that will meet the world’s increasing demand for affordable and reliable energy.

This Bloomberg article discusses the role of the Exxon board when shareholders went against Exxon and supported the disclosure of political- and climate-lobbying activities. When the new board member was vying for a seat, the old guard cast typical warnings about adopting an outsider which would “derail our progress and jeopardize your dividend.” Activist investing is a new and very influential quest for power and influence.

Hang on… this transition to a lower-carbon emissions future will be a wild ride. What matters most now is what we do about this inevitable transition to cleaner energy. Go COP26 – this is where that cooperation happens. And its possible that these energy companies will lead the way – if they get smart about the risk and help to fuel that transition.

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Exxon warns investors of climate risk

Exxon/Mobil admits that fossil fuels are risky When Exxon/Mobil admits that fossil fuels are risky, that’s saying A LOT. Our nation’s largest oil company’s board evaluated climate change as a business risk on par with operational, strategic, and financial risks. It’s clear the recent board “shake-up” has resulted in a shot off the bow as a…

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