Metrics
CDP's ratings in question

Do these oil and mining companies belong on CDP's Climate A List?

Burgess COMMENTARY
I am glad this article has been produced. Cassandra Sweet is asking some important questions, and the answers are not easy. My understanding of the modern world is not by any means complete, but one thing is certain and that is that the global socio-enviro-economic system is complex and interconnected ... and nothing is simple. In my view some things are clearly wrong, and the idea that profit always correlates to good is one of them. I am working on the idea that every economic transaction connects to a history of transactions in the supply chain, and a history of future impacts as the chain continues to the end of the life cycle. Conventional accounting only considers the money dimension at the single point transaction rather than the complete stream. Thinking in terms of streams and not just simple points and applying this to history as well as the present and the future results in an appreciation of the huge role that carbon emission producing energy has had in the progress of human quality of life over the past 200 years ... and continues to play. There is a huge need for improving the efficiency of the energy part of the socio-enviro-economic system and companies that are doing this deserve an A. Eliminating the energy sector from the modern economy would be catastrophic for (modern) quality of life and the same goes for many of the other sectors in the real economy like food, shelter, mobility, etc. as apposed to digital and financial economies! In contrast, I cannot get excited about high profit digital tech companies doing well in the grading. These companies have had a serious role in doing damage to society and the economy, for which they are getting a pass which they really don't deserve ... but that is a subject for another time. Peter Burgess ... http://truevaluemetrics.org
Peter Burgess

Do these oil and mining companies belong on CDP's Climate A List?


ShutterstockSusan Santa Maria

Oil refiners, such as Galp Energia of Portugal, can obtain top climate change leadership marks from CDP if they are transparent and show they are serious about setting and meeting emission reduction goals.

You don’t have to be low carbon to make it onto CDP’s Climate A List.

The annual list, compiled by London-based CDP, purports to showcase the world’s most climate-aware large businesses that are taking the most aggressive action to fight global warming.

So it might come as a surprise to discover that a petrochemical giant, an oil exploration and production company, and a gold miner share space on the 'A List' with the likes of Google, Apple and Microsoft.

Companies that invest a lot of time, money and logistics into buying renewable energy and cutting their carbon emissions in other ways, might be miffed to discover that big polluters can obtain climate leadership status, even as they continue to spew carbon dioxide into the air.

Braskem is a Brazilian petrochemical company. Galp Energia, of Portugal, produces oil and natural gas, makes gasoline and other fuels, and operates pipelines and service stations in Portugal, Spain and Africa. Harmony Gold Mining is a South African gold-mining and exploration company that produces gold in South Africa and Papua New Guinea.

CDP gave all three companies an A grade for their CO2 emissions-reduction efforts and environmental leadership. Other companies got Bs, Cs, Ds or no grade at all, if they did not respond to CDP's request for information. CDP requests environmental information from the world’s largest companies, on behalf of 827 institutional investors who manage a combined $100 trillion in assets. This year, 2,418 companies provided information about the climate initiatives, but only 114 of those received As.

Solar-panel maker and solar-farm developer First Solar got a B, oil major Chevron Corp. also got a B and General Electric got a C.

How did fossil-fuel heavy companies get an A, while GE, one of the world's biggest wind-turbine makers, only got a C?

Companies’ scores are based on their transparency, awareness of climate change and the degree to which they integrate concern for the climate into their management and leadership, according to CDP, formerly called the Carbon Disclosure Project.

All the companies that got an A set climate policies at the board level, they all use an internal price on carbon to make investment decisions, and they provide management and employees with financial incentives to help the companies meet their climate goals, according to CDP and reports the companies filed with CDP.

'Any company from any sector can achieve a high score if it can capture the relevant data, demonstrate its awareness of the environmental issues and show how it is managing these issues,' CDP spokeswoman Camilla Lyngsby wrote in an email. 'Fossil fuel companies can often cover many of these points, however they are also often faced with difficulties in putting into practice what are considered leadership practices. They often score well for disclosure, usually having robust data collection capabilities, but rarely achieve the highest levels of leadership due to the nature of their business. As there are multiple avenues to achieve the highest possible level, it is not straightforward to say why a company has an A (or for that matter why it does not have A).'

Any company from any sector can achieve a high score.

Companies on the A List also enjoy a spot on the Stoxx Global Climate Change Leaders Index, an investment vehicle for investors to back companies that are taking action on climate change. Stoxx is a unit of Germany-based Deutsche Bourse AG that operates benchmarks such as the Euro Stoxx 50 and Germany’s DAX Index.

About half of U.S. carbon-dioxide emissions come from burning petroleum fuels, according to the U.S. Energy Department. Another 29 percent comes from burning natural gas and 28 percent is produced from burning coal.

Globally, about 34 percent of CO2 emissions come from oil (PDF), while coal burning generates 45 percent and natural gas produces about 20 percent, according to the International Energy Agency.

Globally, about 34 percent of CO2 emissions come from oil.

Braskem produces 20 million tons a year of petrochemicals and thermoplastic resins, such as polyethylene, polypropylene and polyvinyl chloride. But the company also makes 200,000 tons annually of bio-products using sugar cane. The company, owned by Brazilian state oil company Petroleo Brasiliero, Brazilian petrochemical and engineering conglomerate Odebrecht and other investors, cut its greenhouse-gas emissions in 2016 by 8 percent, to 10.2 million metric tons, from 2008 levels, according to its CDP report.

The company said it is working to boost efficiency and cut energy usage at its operations, and plans to make more chemicals using biomass, such as sugar cane, and to be a top global supplier of green products made from renewable materials.

'Braskem recognizes that individually and also within its value chain, it is an important GHG emitter, however it has been acting systematically and consistently to minimize the negative impact its productive activities could have regarding climate change and encouraging its suppliers and clients to do the same,' the company wrote in the carbon disclosure report it filed earlier this year with CDP.

Braskem recognizes that individually and also within its value chain, it is an important GHG emitter.

The company said this month that it plans to use sugar to make monoethylene glycol — a key component of PET resin, used to make plastic bottles, at a demonstration plant in Denmark. Working with Haldor Topsoe of Denmark, Braskem plans to start making the bio-based PET resin in 2019.

GALP, the oil producer and refiner, said it is expanding into renewable power, such as wind and solar, and biofuels such as biomethane. The company also participates in carbon capture and storage research projects as part of the hunt for ways to cut emissions from existing smokestacks. Formulating a price on carbon and using that to make business and investment decisions is a key management principle, according to the company.

Galp aims to cut emissions at its Sines refinery in Portugal, which can process 220,000 barrels of oil a day, by 12 percent by 2019. The company plans to cut emissions at its Matosinhos refinery, which is about half the size of the Sines plant, by 1 percent by 2019, compared to 2007 levels. The company is boosting energy efficiency at the plants, adjusting its fuels portfolio and implementing 'best available' technologies.

'The inclusion of carbon price in the assessment of investment projects (medium and long-term) represents a tool to reflect the overall objective of limiting average temperature rises,' Galp wrote in its report to CDP. 'It is also a way of positively influencing the necessary technological transitions leading to maximizing energy efficiency and minimizing the carbon footprint of activities and products.'

Harmony Gold Mining of South Africa has cut its emissions by boosting energy efficiency and closing carbon-intensive mine shafts. The company aims to cut emissions by 3 percent to 5.3 million metric tons, compared to 2008 levels. That would come on top of emissions reductions the company set and achieved previously.

All three companies said their emissions reductions plans were not science-based, because no science-based targets methodologies exist for their sectors. Harmony said it is working to set a science-based target in the next two years.

Topics: ClimateEnergy & ClimateOil & GasChemicalsBiofuelsEmissions Reduction
Tags: climate changebiofuelspetroleum-based productscarbon