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COMPANY ... SHELL
SOME GENERAL INFORMATION
Bill McKibben ... 'Shell is among the most irresponsible companies on earth'
Peter Burgess COMMENTARY
Companies in the energy sector are some of the most important, and important in a number of ways, both good and bad.
The good that coal has done:
- Energy has been the single most important driver of human progress since the beginning of the industrial revolution in the early 19th century. Coal made steam that made power that enabled industry and transport which was the foundation for the betterment ot life in modern times.
- Coal is abundant and may be used within the economy in a profitable manner that is good for investors
While coal that employs people and produces power is a good thing, there are many by-products associated with coal that are not good:
- Employment in the coal industry has been bad for workers' health, and companies generally did very little to mitigate these issues;
- Working conditions in the coal industry have been dangerous for most of its history;
- Burning coal produces dangerous particulates that impact health unless they are removed before discharge into the atmosphere; and
- Burning coal produces carbon dioxide which is greenhouse gas (GHG) that is a major contributor to climate change.
Over time the relative importance of the various elements of good and bad has changed in large part because the scale of modern industry is very much larger than it was in the past. Global GDP was estimated to be around $ 481 billion in 1900 and 1,264% higher at $ 6,081 in 1990 nearly one hundred years later. Part of this is because of an increase in energy intensity as industry modernises and part is due to a muach larger global population. In 1900 the global population was around 1.7 billion people, and in 2000 this had increased to around 6.1 billion, an increase of about 360%.
A reminder ... (1) the size of planet earth has been the same in 2000 as it was in 1900; and (2) the natural capital of the planet has degraded and diminished significantly during this period, and is accelerating.
The management metrics that have been used by business operators and investors have enabled the profitable growth of the business sector and incremental wealth for investors, but without taking into account other aspects of society or the impact on the environment in an equivalent manner. This is dangerous and will result in an true existential crisis unless there are changes in behavior at scale and in a timely manner. Companies have to do this ... they are major actors in the modern world, and their behavior matters. Company managers have a role to play in this by their policy choices as well as investors by the support they give to companies that engage with all aspects of the good and bad in the socio-enviro-economic system.
Peter Burgess
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