Global environmental challenges
The Green Gauge: Chevron slides on oil spill news
The oil spill in the Gulf of Mexico strikes close to home for Chevron as it faces a $27 billion lawsuit brought on by the indigenous people in the Amazon region of Ecuador for water pollution, and a fresh Chevron oil spill in Utah, a bi-weekly analysis of companies in the news by ASSET4 data providers shows.
Company selections were made by Christopher Greenwald, director of data content at ASSET4, a Thomson Reuters business that provides investment research on the environmental, social and governance performance of major global corporations. These ratings are not recommendations to buy or sell.
Here is a breakdown of the companies that made headlines June 5 to June 18 for winning or losing credibility based on environment-related activity.
The recent news surrounding the creation of a $20 billion escrow fund to pay for claims in the Gulf of Mexico has led to renewed attention in the past weeks to the $27 billion case against Chevron brought by indigenous people in the Amazon region of Ecuador.
The lawsuit which has stretched on for nearly 17 years seeks reparations for environmental- and health-related damages caused by the dumping of over 18 billion gallons of polluted water in Ecuador by Texaco between 1964 and 1990. Last week two protesters were arrested during a House Energy Committee meeting after attempting to give a bottle of contaminated water from the Amazon region to Chevron’s Chairman John Watson.
Chevron last week also faced an embarrassing oil spill of 500 barrels of oil from a leaking pipe, which devastated a lake at a local park in Salt Lake City, Utah.
The loss of $90 billion in market capitalization of BP’s stock since the sinking of the Deepwater Horizon has caused not only significant financial pain, but also considerable reputational damage to the many Responsible Investment funds and indexes that held the stock. Earlier this month, both the Dow Jones Sustainability Index and the NASDAQ OMX CRD Global Sustainability 50 Index dropped BP from the list of its constituents. Several environmental groups in the UK, including Greenpeace and Friends of the Earth are now putting pressure on FTSE to remove BP from the FTSE4Good Index. The BP incidents underscore the need for close monitoring of environmental and social controversies in evaluating company performance, and it has pointed to the need to re-examine the basis for evaluating sustainability performance, as outlined in a recent article by Simon Propper.
RWE and E.On were the two largest CO2 emitters in 2009, emitting 141 million and 94 tons of CO2 respectively according to a recent report by Carbon Market Data. Emissions levels for RWE and E.On were 52 million and 18 million tons above free EU allocation levels, meaning that the companies needed to purchase CO2 permits worth €695 million ($854 million) and €253 million ($311 million) respectively at the average 2009 CO2 price of €13.32 ($13.36). The emissions of the two companies alone exceeded the combined emissions of Sweden, Denmark, Norway and Finland. A copy of the press release of the report is available here.
The Environmental Protection Agency has requested Monsanto to clean water discharges from a phosphate mine from a creek flowing into the Blackfoot River in Idaho, in a region near Yellowstone National Park. While Monsanto built the dam to contain selenium and metal emissions after being warned by the EPA in 2007, the current dam has cut off sufficient clean water flow from the area.
Honda Motor received the highest number of clean energy patents (30) in the first quarter of 2010 and has led all companies with over 500 clean tech patents granted during the period 2002-2009 according to the Clean Energy Patent Index published by the Cleantech Group. While the auto industry leads the Index due to the high number of fuel cell patents, General Electric is the all time leader of patents for wind power with 119 patents and Canon is the all time leader of patents for solar power with 93 patents granted between 2002-2009. The results of the Index are available here.
Wartsila has become the first non-oil producing company to join the World Bank-led Global Gas Flaring Reduction partnership (GGFR). The Finnish company provides a dual-fuel technology that allows companies to convert gas to be used as an energy source for power generation rather than being flared in the oil drilling process. The GGFR has estimated that gas flaring is responsible for approximately 400 million tons of CO2 emissions annually.
Procter & Gamble has recently launched its “Supplier Environmental Sustainability Scorecard” in order to measure the environmental impacts and to encourage environmental improvements among its suppliers. The company has also made the scorecard publicly available on its website in order to encourage the development of industry-wide initiatives to benchmark the environmental performance of suppliers. The scorecard is available here.
Photo shows Ecuadorean workers cleaning up an oil waste pit owned by state petroleum company Petroecuador in Shushufindi, some 410 km (254 mi) east of Quito December 8, 2009. Residents in the country´s Amazon region are suing Chevron, accusing the U.S. company of doing environmental damage while it operated in a consortium with Petroecuadro in the 1970s and 1980s. REUTERS/Guillermo Granja