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Strategic Equivocation on Climate Science

“Some have learnt many Tricks of sly Evasion, Instead of Truth they use Equivocation.” – Benjamin Franklin (‘Firm Resolve’)

When oil and gas companies talk climate science they choose their words carefully.

Replete with qualifiers and boilerplate statements, the vacuous language S&P 500 oil and gas companies use to address climate risk, even as recently as 2015, fails to identify threats to their business or discuss strategies for addressing these.[1]

In fact, their words seem designed to sow doubt in the minds of readers (investors), which raises the question: do companies that equivocate about climate science really have a strategy for surviving into a carbon constrained future?

Words and phrases like ‘belief’, ‘suggest’, ‘may’, ‘some scientists’, ‘some studies’, ‘recent studies’ convey a qualified acknowledgement of the reality and threat of climate change at odds with the scientific consensus. [2]

There is a growing belief that emissions of GHGs may be linked to climate change” warns WPX Energy in its 2015 10-K.

According to the online site Oxford Dictionaries, ‘belief’ is “an acceptance that something exists or is true, especially one without proof… [such as] extraterrestrial life.”

Volumes of climate science spanning decades, supporting the overwhelming international scientific consensus that climate change is caused by rising concentrations of greenhouse gases (GHGs) in the earth’s atmosphere, that we humans are significant contributors to this build-up and that unchecked global warming will lead to (is already causing) destructive weather patterns and rising global sea levels posing significant threats to ecosystems that sustain human life can hardly be summed up as a leap of faith.

Yet Cabot Oil & Gas intones “…moreover, some experts believe climate change poses potential physical risks…” (2015 10-K).

References, to ‘some scientists’ or ‘some studies’ or ‘some experts’ serve to frame the science as early findings.  In a number of the 10-Ks reviewed, the word ‘some’ (as in a small, unspecified number) was used to refer to the scientific studies or the scientists who have linked increasing atmospheric GHG concentrations to climate change.

While climate change remains a complex issue, some scientific researchsuggests that an increase in GHGs may pose a risk to the environment.” –Noble Energy

Finally, it should be noted that some scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere may produceclimate changes that have significant physical effects…” – Range Resources  andWPX Energy (using identical language).

Finally, we note that some scientists have concluded that increasing concentrations of greenhouse gases in the Earth’s atmosphere may produceclimate changes that have significant physical effects…” – Chesapeake Energy

Finally, some scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects…” – Pioneer Natural Resources

Besides apparently copying each others’ reports, note the strategic dilution of the word ‘scientific’ with two further qualifiers: ‘suggests’ (as in alluded to or to consider the possibility of) and ‘may’ (as in a slim possibility of) – just in case the idea of scientific evidence starts to gain ground in the mind of the investor.

Studies have suggested that emission of certain gases, commonly referred to as greenhouse gases (GHGs) may be impacting the earth’s climate.”Cimarex, 2015 10-K

Most disclosures limit consideration of physical effects of climate change to potential impacts on operations of the company. However, QEP Resources almost lets the cat out the bag:

It is uncertain whether QEP’s operations and properties, …are exposed to possible physical risks, such as severe weather patterns, due to climate change that may or may not be the result of anthropogenic emissions of GHG.”QEP Resources (2015 10-K)

By contrast, the Intergovernmental Panel on Climate Change (IPCC) uses the term ‘extremely likely’ to describe the probability that anthropogenic sources are the principle drivers of global warming.[3]

Over 90% of anthropogenic GHG emissions come from burning fossil fuels – like oil and natural gas and coal.  This makes things a bit tricky for companies in the fossil fuel business.  Cabot Oil & Gas touches on the sensitive subject of GHG emission regulation.

“In response to studies suggesting that emissions of carbon dioxide and certain other gases may be contributing to global climate change, the United States Congress has considered legislation to reduce emissions of greenhouse gases from sources within the United States between 2012 and 2050.”Cabot Oil & Gas, 2015 10-K

Sounds like a knee-jerk policy reaction to dubious science.

In response to such studies [by ‘some’ scientists ‘suggesting’ blah blah blah], the issue of climate change and the effect of GHG emissions, in particular emissions from fossil fuels, is attracting increasing attention worldwide.” – Helmrich & Payne, 2015 10-K

Wait!  Could this lead to an international commitment among 195 nations to keep global warming to well under 2 degrees C, thereby requiring much of the world’s known fossil fuel reserves to stay in the ground?

Again, it’s important to stay level-headed about these things.

International accords and underlying regional and national regulations covering greenhouse gas emissions are evolving with uncertain timing and outcome, making it difficult to predict their business impact.” –ExxonMobil, in every 10-K report from 2010 to 2015.

After running weary eyes over line after line of hot air (or wasted pixels, as the case may be) any sign of commitment or future orientation stands in stark contrast.  And so, on a positive note, ponder an excerpt from  EOG Resources’ 2015 10-K which, it should also be noted, seems to be a rare piece of original text:

EOG supports efforts to understand and address the contribution of human activities to global climate change through the application of sound scientific research and analysis. Moreover, EOG believes that its strategy to reduce GHG emissions throughout its operations is in the best interest of the environment and is a generally good business practice.”

[1] This article is based on a review of S&P 500 oil and gas company climate disclosures made in their most recent (2015) annual 10-K reports to shareholders.

[2] According to the US Government NASA website, 97 percent of scientists and most leading scientific organizations agree that “Climate-warming trends over the past century are very likely due to human activities.”

[3] Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, R.K. Pachauri and L.A. Meyer (eds.)]. IPCC, Geneva, Switzerland, 151 pp. Climate Change 2014: Synthesis Report, Summary for Policy Makers, p. 4.