Your investors are asking about methane risk: here’s why, and what you can do

This article was originally published in Petroleum Economist.

With the corporate annual shareholder season coming to a close and the World Gas Conference around the corner, one thing is abundantly clear – investors are strengthening their stance on climate, and they want the oil and gas industry to step up and reduce methane emissions.

In an open letter in the Financial Times earlier this spring, investors overseeing more than $10.4 trillion wrote they are expecting the oil and gas industry to change how it operates and transition its operations and corporate strategy to a low-carbon economy.

In the past three years, nearly 40 methane shareholder resolutions have been filed, and it doesn’t require a crystal ball to know that more are coming. This year’s shareholder season included 11 methane issue resolutions; eight were withdrawn (meaning the companies took action on their own without a vote). Chevron shareholders generated a 45 percent vote in favor of a methane resolution, and Range Resources’ resolution passed with a majority vote, while Kinder Morgan garnered a strong 38 percent shareholder vote.

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How virtual reality can help the oil and gas industry confront its invisible challenge: methane

I’m a certified oil and gas tech nerd, and I’ve never before been this excited about my job.  I love data and the insights that it surfaces, along with the immense possibility of applying those insights to catalyze continuous improvement. There are few decisions I make without an Excel spreadsheet – and, after spending several years working for an oilfield services company, I’m passionate about solving one of the biggest environmental problems of our time: methane emissions.

Methane is the main ingredient in natural gas and a common byproduct of oil production. Unburned, it’s also a powerful greenhouse gas. Worldwide, about 75 million metric tons of methane escape each year from oil and gas operations (through leaks, venting and flaring) – making the industry one of the largest sources of manmade methane emissions.

As methane risk is starting to draw increasing attention from public officials, major investors, and leaders within the industry, tech solutions are booming and “digitization of the oilfield” is becoming industry’s hottest new term.

The good news: many of these tech solutions are available today and easy to deploy on a wellsite. Unfortunately, many stakeholders involved in this global challenge have either never been to a wellsite or don’t spend much time on a wellsite. And even if they do, methane is invisible.

That’s why EDF worked with the creative agencies, Hunt, Gather and Fair Worlds, to build a new virtual reality (VR) experience, called the Methane CH4llenge, that brings the wellpad to you and showcases the power of tools like infrared cameras and portable analyzers to experience first-hand what methane leaks look like.

I recently spoke with Hunt, Gather / Fair Worlds Creative Director Erik Horn, my partner in crime for this project, about developing the VR, which you can experience at the World Gas Conference next week. Here are five takeaways from our discussion, which you can watch in full here. Read more

Investor concern on methane rises in 2018 proxy season

At Chevron’s annual general meeting last week, a shareholder resolution calling on the company to improve its methane management and disclosure received a 45% vote. This strong vote follows a majority vote at Range Resources, where 50.3% of voting shareholders supported a similar methane disclosure resolution (up from just 20% in 2013). Oil and gas industry shareholders are sending a powerful message– methane is a material risk that companies must manage to compete in a capital- and climate-constrained world.

Such resolutions are effective at driving change, even for non-majority votes like the 38% of shareholders at Kinder Morgan who supported a methane resolution. For example, last year ExxonMobil’s methane resolution received a 39% vote, and the company responded with a new methane emissions production program, which now includes a quantitative methane reduction target.

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Methane shareholder resolutions could yield big change, says investor

Oil and gas investor pressure is building, with 20 climate shareholder resolutions up for review at annual meetings held by publicly-traded energy companies this month. While the climate filings cover a range of issues, improved methane management is in the mix.

Last year was a breakout year for methane investor activism. ExxonMobil’s XTO Energy subsidiary business announced a reduction plan in response to a 2017 methane disclosure resolution, with onlookers expecting more change to follow this year from others. Meanwhile, a growing global network representing 36 investors and $4.2 trillion in managed assets continue to call on companies for methane reductions.

In the second-part of our interview series with Jamie Bonham, Manager of Corporate Engagement at NEI, we talk about how influential Environment, Social and Governance (ESG) shareholder resolutions, such as methane, have been in the past. We also discuss what prompts investors to file resolutions, and the potential impact on companies.

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3 ways sustainable finance can accelerate the Fourth Wave of environmentalism

Close your eyes and think about innovation. How many of you thought about a widget – a robot, a self-driving vehicle, a sensor? I’m guessing almost all of you. How many of you thought about regulations, contracts and financing? Maybe a few at most. This is the exercise that former Secretary of Energy, Ernest Moniz, and David Cash, former Massachusetts Department of Environmental Protection Commissioner, prompted at the launch of the WBUR Environmental Reporting Initiative.

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Investors: Methane targets wanted

With upcoming annual meetings full of shareholder resolutions calling on companies to set greenhouse gas (GHG) reduction targets, EDF released "Taking Aim", a new paper explaining why methane targets are the next frontier for the oil and gas industry and establishing five keys for strong targets. The paper explains how companies that set targets are more likely to be successful when it comes to securing methane emission reductions. Setting targets also demonstrates to investors that corporate decision makers understand methane risk management is critical to competing in an ever-cleaner energy market.

With the Task Force for Climate-Related Financial Disclosure (TCFD) framework also highlighting the importance of targets, “Taking Aim” provides some initial guidelines that can help frame what an ambitious, leading target looks like for oil and gas industry methane.

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Can a team of finance experts and ocean scientists help save wild fisheries?

A new investment tool from Credit Suisse aims to bolster investment in the recovery of global fish populations.

Namrita Kapur, Managing Director of EDF+Business

Environmental Defense Fund Q&A with Namrita Kapur, Managing Director at EDF+Business and Ian Murdock, Risk and Finance Data Analyst at Credit Suisse

Overfishing endangers ocean ecosystems and the billions of people who rely on seafood for their food and livelihood. Without sustainable management, our fisheries face dramatic declines – and we face a food crisis. To reverse this global challenge, EDF has engaged in global partnerships to find solutions for thriving oceans that support more fish, food and prosperity. Most recently, EDF teamed up with Credit Suisse to find sustainable finance solutions to address the systemic challenge of reinvesting in sustainable fisheries. Namrita Kapur sat down with Ian Murdock to discuss this innovative new tool.

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I'm lovin' it: McDonald's exemplifies a sustainability leader

McDonald’s – the world’s largest restaurant company – recently announced new climate goals,  which were quickly followed by many comments like this one, from Axios:

"These are concrete targets, but they’re not as of yet backed up with specific plans of how to get there."

Axios is right. These are concrete targets (and they’ve been approved by the Science-Based Targets Initiative).  Here are the details: by 2030, McDonald’s is pledging to reduce greenhouse gas emissions from their restaurants and offices by 36 percent, and reduce their emissions intensity (per metric ton of food and packaging) across their supply chain by 31 percent. The company estimates these reductions will prevent 150 million metric tons of C02 equivalents (CO2e) from being released into the atmosphere. That’s huge – it’s the equivalent of removing 32 million cars from the road for one year.

But I want to challenge Axios in saying that the company has “no specific plans" to get there.

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Smoke alarms for methane benefit public health, the environment and business

The oil and gas industry has planted its sights on playing a competitive role in the energy mix of the future. However, oil and gas extraction, transport and use create serious environmental and safety risks when leaked, releasing 8-10 million metric tons of methane into the atmosphere each year in the US alone.

Fortunately, addressing this problem also offers a tremendous opportunity: a 45% reduction by 2025 would have the same benefit as shutting down one-third of world’s coal fired power plants. That’s why EDF set out on a groundbreaking global technology challenge to incentivize new solutions to fix this problem.

The super emitter problem

Methane is invisible and odorless, making leaks hard to detect. EDF-led studies have shown that methane pollution is widespread, pouring out from “super emitters” – the large, enigmatic sources responsible for a big portion of industry’s methane pollution. These super-emitting sources are nearly impossible to predict and can happen anywhere, anytime as a result of malfunctioning equipment that goes unattended or mistakes in the field.

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IKEA assembles a cleaner planet

Two years ago I had my first conversation with Stefan Karlsson, the Sustainability Compliance Manager for IKEA Purchasing Service (China) Co., Ltd. We talked about how IKEA was rethinking its business operations in order to green its global supply chain – and as the world’s largest go-to for affordable furniture – you can imagine how big a job that is. Right away, I could tell Stefan, and IKEA, was on to something big: encouraging hundreds of their suppliers to drive innovation and promote sustainability.

A goal, an opportunity and a partnership

IKEA isn’t unique in that it strives to provide affordable furniture. However, it is unique in that it strives to make products in ways that are good for people and the planet. That’s why in 2016, the company set a goal of encouraging its direct suppliers to become 20 percent more energy efficient by August 2017. As part of this target, IKEA initiated the Coal Removal Project – reducing coal use as a direct source from the energy portfolios of over 300 local supplier factories in China.

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