What to Watch: Majors – Topic 3, Policy Commitments

It’s easy to get caught up in the political polarization around climate and carbon policy. Nevertheless, your company needs to keep tabs on the macro trends that create social risk. U.S. carbon policy has gone from “never gonna happen” to a daily topic of conversation. Here’s what you need to know.

Both of these things are true:

  • The longstanding stalemate in U.S. Congress makes the idea of passing climate policy seem silly.
  • International majors are engaging in the U.S. on climate and carbon policy as a way to participate with the public — and have a hand in their own destiny.

The problem path forward:

Three of the efforts underway that you and your company need to know about: 

  • Americans for Carbon Dividends. Remember the Baker-Shultz climate plan? Americans for Carbon Dividends is a conservative-led effort built to turn this idea into a reality. Exxon has committed $1 million over two years to this multi-million dollar political advocacy campaign that will lobby Congress to put a price on carbon emissions. The company’s spokesman, Scott Silvestri, said that Exxon has “been supportive of a revenue-neutral price on carbon for a decade. Applying a uniform cost across the economy is consistent with our principles on how to manage the risk of climate change.” If you’re at the table, you are less likely to be on the menu. 
  • Climate Leadership Council. The Climate Leadership Council is an international policy institute also promoting a carbon dividends framework as the most sensible climate solution. Founding members include BP, ConocoPhillips, ExxonMobil, Shell and Total. The council is founded on four pillars: an increasing bar on fee, carbon dividends for all Americans, border carbon adjustments and regulatory simplification. Other founding members include AT&T, Ford, Johnson & Johnson, and Microsoft. Joining other companies to drive conversation is a great idea.
  • CEO Climate Dialogue. More than a dozen of major corporations and environmental groups have begun a coalition called the CEO Climate Dialogue. The group’s goal is to “urge the President and Congress to enact a market-based approach to climate change in accordance with a set of six Guiding Principles for climate legislation.” Those six guiding principles include: significantly reduce U.S. greenhouse gas; deliver effective and timely emission reductions; use the power of the market; deliver predictable and durable results; support economic competitiveness; and, support equity. Energy company participants include BP, Dominion, Shell, and Total. Environmental organizations include the Environmental Defense Fund, The Nature Conservancy, and the World Resources Institute. Partnering with environmental NGOs demonstrates seriousness.

It matters because:

This party is just getting started. You don’t have to hit the dance floor just yet, but you should probably start contemplating the liquid courage.

The critical mistake companies are making

Counting on political polarization and policy stalemates to provide a roadblock to progress on climate conversations and policy advancement.

Seize the daySuccessful companies will: 

  • Pay Attention! At some point, you will be asked for your opinion on climate policy. Rather than dismiss such a question outright, you can opine on the different efforts underway. (Just click on the links above to familiarize yourself.) 
  • Build climate policy into your risk analysis. With such significant corporate, environmental organization, and political leadership, the carbon policy efforts described in this installment cannot be ignored. As you conduct a social risk analysis (which you are doing, right?) for your business, consider whether your company needs to take a position on the societal need to address climate and your company’s role in such work. It also may be time for your company to assess its vulnerability to a carbon price.

Following the international oil and gas majors’ proactive and responsive risk on climate and carbon will keep your company up to speed on developments. It’s happening fast, but you can get caught up by checking out What to Watch MajorsTopic 1 – Tech Investments, and Topic 2 – Decarbonization Commitments. We’ve got two more installments coming your way next.

Has your company taken a position on carbon policy? I’d like to know about it.

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