Industry Trend Analysis - Exxon Edging Towards A Greener Future - FEB 2018

BMI View: As a relative laggard , ExxonMobil ' s recognition of climate-related risk is a significant step for the company . However, this alone is unlikely to translate in to significant changes in the company ' s corporate strategy, over the near term.

Following extensive shareholder pressure, ExxonMobil will introduce internal reporting and analysis of the impact of technological change and climate policy on the company's operations. Investors controlling about 62 per cent of the company's shares voted back in May, calling for an annual assessment of climate risk on Exxon's business activity. The decision is consistent with more recent action from the US supermajor, addressing the issue of fugitive methane emissions alongside several other major international oil and gas companies (see ' Emissions Policy To Support Gas Focus ' , November 28).

As a relative laggard in the climate risk and '2@C energy transition' space (see ' Transitional Risks Loom Large ' , September 15), the recognition of climate-related risk to Exxon's business model is a significant step for the major. Many of the European oil and gas majors have been increasingly factoring the effects of climate policy and carbon price risk into scenario planning and risk management over recent years, a trend that has accelerated in 2017 as the focus on the electrification of the transport sector and the threat to the oil and gas business model has intensified (see ' O&G Companies Must Adapt Or Decline ' , September 15). However Exxon, alongside other US majors, has been slower than its European counterparts to venture into clean technology, alternative energies and carbon pricing more generally.

Exxon Trailing Its Peers
Category & Composite 2CT Scores
Scores Out Of 100. Source: Bloomberg, BMI. BMI's proprietary Transition Tracker uses publ icly available company metrics to proxy both the depth of a company's exposure to the 2 degree transition , as well as its ability and willingness to adapt to it, relative to other companies.

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