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Corporate governance and climate change: making the connection (2003)

Publication date:
D. G. Cogan
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This report examines how 20 of the world’s biggest corporate emitters of greenhouse gases are factoring climate change into their business strategies and governance practices.All of the companies profiled in this report are taking some governance actions to respond to climate change. But few have adopted comprehensive programs to treat the issue as an imminent financial and environmental threat. American companies, in particular, are pursuing business strategies that discount the threat, leaving them – and their shareholders – especially vulnerable to increased financial risks and missed market opportunities. American companies in particular are failing to incorporate strategies to deal with climate change:American-based petroleum companies are devoting virtually all of their development efforts to finding more oil and gasAmerican auto companies are depending on sales of big sport utility vehicles that get low gas mileage as their main profit centerAmerican electric utilities are investing heavily in refurbishing old, coal-fired power plants as their base source of generationThe divergence in corporate strategies to address climate change is reflected clearly in the findings of this report. It analyzes 20 major corporations and 14 specific governance actions that companies can take to address the issue. The report finds:the world’s major oil companies are poles apart. European-based BP and Royal Dutch/Shell have pursued all 14 actions identified in the report’s Climate Change Governance Checklist. By contrast, U.S.-based ChevronTexaco, ConocoPhillips and ExxonMobil have pursued only four or five of these actionsthe major auto companies are bunched in the middle. Japanese-based auto manufacturers Honda and Toyota have pursued nine or 10 of the actions on the
checklist. American-based Ford Motor and General Motors have pursued nine actions.DaimlerChrysler has pursued only fiveAmerican electric utilities are at the back of the pack. The analyzed utilities have pursued only seven governance responses to climate change, on average, which is the
lowest average among the four industry groups analyzed in the report. (American Electric Power is the notable exception; it has taken 10 governance actions.)