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January 30, 2004
ExxonMobil Contributed Five Percent of Global Greenhouse Gas Emissions in Last 120 Years
    by William Baue

Friends of the Earth releases two studies that attribute one twentieth of global climate change to ExxonMobil. The company questions these findings, as it questions climate change.


Yesterday, ExxonMobil (ticker: XOM) announced 2003 profits of $21.51 billion, almost doubling 2002 profits of $11.46 billion. The day before, it announced a court decision increasing punitive damages over the 1989 Exxon Valdez oil spill in the Alaska's Prince William Sound to $4.5 billion plus interest, which independent sources report will add another $2.25 billion.

Is there a link between profits and environmental liabilities? Two related reports released yesterday by Friends of the Earth (FoE), an international environmentalist group, suggest so. The reports provide scientific calculations that ExxonMobil contributed five percent of the world's manmade carbon dioxide emissions over its 120-year history. Carbon dioxide is the greenhouse gas (GHG) primarily responsible for climate change.

The reports set a precedent by pinning responsibility for a percentage of climate change to a single company. According to FoE, ExxonMobil repudiates the global scientific consensus voiced by the Intergovernmental Panel on Climate Change (IPCC) linking human fossil fuel combustion to global warming.

"ExxonMobil is sticking its head in the sand just like tobacco companies that knew the harmful impacts of their product and ultimately paid the price," said Jon Sohn, FoE's senior policy analyst. "We believe that ExxonMobil is at risk of litigation."

Mr. Sohn refers to the 1998 Master Settlement Agreement, which requires tobacco companies to pay 46 states $206 billion, and the related settlement that requires tobacco companies to pay the remaining four states $40 billion.

"Given the many uncertainties surrounding the important subject of climate change and the large number of global sources and sinks of carbon dioxide, it beggars belief that FoE can suggest ExxonMobil is vulnerable to legal action," ExxonMobil spokesperson Lauren Kerr told SocialFunds.com.

However, Ms. Kerr did not address the implications of the February 2003 Columbia Journal of Environmental Law article by Yale Law School's David Grossman that maps several legally viable ways to litigate against companies linked to climate change.

"We are not concerned about legal action since FoE's allegations are without merit," Ms. Kerr reiterated. "In our experience FoE's accusations regarding our company have always been high on sensation and low on substance, and this case is no exception."

Asked to identify specific inaccuracies in FoE's report, Ms. Kerr responded: "We feel that the reports do not merit a detailed rebuttal."

FoE commissioned independent researchers in Spring 2003 to conduct the studies. The first study, written by Richard Heede of Colorado-based Climate Mitigation Services, estimates ExxonMobil's emissions of carbon dioxide and methane (another GHG) from the founding of ExxonMobil precursor Standard Oil Trust in 1882 to 2002. During this period, the combustion of ExxonMobil-produced fossil fuels resulted in the emission of approximately 20.3 billion tons of carbon, the equivalent of between 4.7 percent and 5.3 percent of global carbon dioxide emissions.

The second study, written by Jim Salinger and Greg Bodeker of New Zealand-based National Institute of Water & Atmospheric Research (NIWA), runs the results of the first study through the well-respected and widely-used "Bern CC" climate model. This process extrapolates the environmental implications of GHG emissions. This study finds that ExxonMobil’s emissions have contributed between 3.4 percent and 3.7 percent of total attributable temperature change since 1882, and 2 percent of the sea level rise.

"ExxonMobil's greenhouse gas contribution is staggering and shareholders can vote for resolutions that force the corporation to take action now," said Mr. Sohn.

One shareowner resolution, which received 21.3 percent of the vote at ExxonMobil's annual meeting last year, asks the company to report on how it will respond to rising regulatory, competitive, and public pressure to develop renewable energy resources. A second resolution, which received 22.2 percent shareowner support last proxy season, asks the company to report on the risks of climate change and what it is doing to mitigate these risks. This resolution cites a projection by the World Resources Institute (WRI) that the impact of governmental climate policies on ExxonMobil could create nearly a 4 percent loss in shareholder value.

"It is ridiculous to suggest, as FoE's news release has, that ExxonMobil's approach to climate change is diminishing shareholder value," said Ms. Kerr.

ExxonMobil's 2003 profits amounted to $3.23 a share, a significant increase over 2002 profits of $1.68 per share. It remains to be seen how ExxonMobil's approach to climate change will affect shareowner value over the longer term.

 

 
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