Shareholders Press ExxonMobil and DowDuPont on Climate Resiliency Risks; Petrochemical Giants Double Down on Operations in Flood Zones
FOR IMMEDIATE RELEASE
MEDIA CONTACT: Stefanie Spear, [email protected], 216-387-1609
Oakland, California—May 28, 2019—Shareholder proposals brought by As You Sow will challenge two of the world’s largest oil and chemical producers, ExxonMobil and DowDuPont at annual meetings on May 29 and June 25, respectively, to issue a report assessing the public health risks of expanding their petrochemical operations and investments in areas increasingly prone to climate change-induced storms, flooding, and sea level rise, and the risks such operations pose to public health. Major hazardous chemical leaks from existing petrochemical operations have already occurred during extreme weather events like Hurricane Harvey, which are becoming more frequent and intense as a result of climate change.
Petrochemical operations include ethane cracking plants (“crackers”) and other facilities that produce dangerous pollutants, including benzene, volatile organic compounds (VOCs), and sulfur dioxide. Such plants can become inundated during extreme weather events and release toxic chemicals as they experience upsets and malfunctions.
During Hurricane Harvey, roughly two million pounds of hazardous air pollutants were emitted from local oil refineries and chemical plants. Following the storm, local community members reported health impacts such as respiratory illness, nausea, and headaches, among others. Some health impacts may be long-term and worse than captured by initial incident reports.
A recent report found that Exxon and DowDuPont experienced some of the largest chemical releases during the event, indicating that their existing risk management systems are proving inadequate. Such practices must evolve to meet the new challenges and risks climate change brings including litigation, financial penalties, clean-up costs, loss of social license to operate, and reputational damage, all of which negatively impacts shareholder value. Financial institutions like BlackRock are increasingly warning that financial assets are underpricing the impacts of weather events like hurricanes.
“Petrochemical industry giants like ExxonMobil and DowDuPont are demonstrating that they are alarmingly underprepared to deal with the increasing severity of extreme weather events exacerbated by climate change,” said Lila Holzman, energy program manager of As You Sow. “More must be done to assure stakeholders that community health will not be sacrificed as a result of poor planning and insufficient risk management.”
Available disclosures from both companies lack sufficient information on if and how the companies are considering evolving climate change-related threats in their decision-making regarding where and how to invest in the buildout of sensitive infrastructure. Exxon and DowDuPont currently have significant operations on the Gulf Coast in Texas and Louisiana and are intending to spend tens of billions of dollars over the next decade on expanding petrochemical operations in this region. Climate change is already impacting the area, and impacts will continue to intensify. Houston has experienced an increase of 167 percent in heavy downpours since the 1950s and three 500-year floods in three years from 2015 to 2018. Reports show that land loss from sea level rise in Louisiana is occurring at an alarming rate, threatening up to $136 billion in infrastructure. Moreover, proposed petrochemical operations will further contribute to the problem of climate change, as they involve highly energy- and carbon-intensive processes.
“As industry puts its foot on the gas to accelerate buildout of expensive petrochemical infrastructure, investors are asking: what are the risks?” said Holzman. “Shareholders are concerned that companies are allocating significant resources to risky petrochemical investments at a time when trends show that plastic use must be limited and high-carbon operations must reduce their footprint. This concern is heightened when companies do not clearly account for increased storms, flooding, and sea level rise in their planning processes, thereby exposing themselves, their shareholders, and their communities to preventable and unacceptable risks.”
The reporting requested by shareholders will help investors assess to what extent the companies are evaluating and mitigating critical risks posed by climate change to their operations and the communities where they are located.
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As You Sow is a nonprofit organization that promotes environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies. See our resolutions here.