{"id":17674,"date":"2018-04-19T17:32:58","date_gmt":"2018-04-19T21:32:58","guid":{"rendered":"http:\/\/blogs.edf.org\/energyexchange\/?p=17674"},"modified":"2018-04-20T14:47:11","modified_gmt":"2018-04-20T18:47:11","slug":"investors-methane-targets-wanted","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/energyexchange\/2018\/04\/19\/investors-methane-targets-wanted\/","title":{"rendered":"Investors: Methane targets wanted"},"content":{"rendered":"

\"\"<\/a>With upcoming annual meetings full of shareholder resolutions calling on companies to set greenhouse gas (GHG) reduction targets, EDF released “Taking Aim”, a new paper<\/a> explaining why methane targets are the next frontier for the oil and gas industry and establishing five keys for strong targets. The paper explains how companies that set targets are more likely to be successful when it comes to securing methane emission reductions. Setting targets also demonstrates to investors that corporate decision makers understand methane risk management is critical to competing in an ever-cleaner energy market.<\/p>\n

With the Task Force for Climate-Related Financial Disclosure (TCFD) framework also highlighting the importance of targets<\/a>, \u201cTaking Aim\u201d provides some initial guidelines that can help frame what an ambitious, leading target looks like for oil and gas industry methane.<\/p>\n

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Investors are clear about the benefits of targets<\/strong><\/p>\n

Investors have filed 47 resolutions in 2018 asking companies to set GHG emissions reduction targets with companies such as Apple, Ford and Verizon. On the important issue of methane, investors have filed 10 resolutions with companies including Chevron<\/a>, Range and Kinder Morgan (seven have been withdrawn as of writing), and over 38 have been filed in the last three years alone.<\/p>\n

With mainstream investors highlighting the need for targets, companies would do well to get ahead of this trend especially as investors tilt portfolios towards companies preparing for a lower-carbon future. Financial industry heavy-weight State Street said they, \u201cview establishing company-specific GHG emissions targets as one of the most important steps in managing climate risk<\/a>.\u201d Companies should note that State Street has supported over 90 percent of methane-related shareholder proposals in the past two years.<\/p>\n

Oil and gas industry needs to respond<\/strong><\/p>\n

Imagine the investor reaction if a company simply said, \u201cWe plan on increasing our profit at some point in the future, but can\u2019t tell you how by much or when that may happen.\u201d Unfortunately, that is basically the current state of play when it comes to methane targets.<\/p>\n

Our recent report The Disclosure Divide<\/a> found only four companies of the top 65 companies operating in the U.S. have time-bound, quantitative methane targets (though that’s up from zero two years ago). Internationally, the situation isn\u2019t much better. Italian operator Eni has an ambitious target to reduce upstream fugitive emissions by 80 percent by 2025, but until recently few other global operators have followed their lead.<\/p>\n

[Tweet “Investors: Methane targets wanted”]<\/p>\n

But change is underway, and methane target setting may become the new normal. Earlier this week, BP announced a quantitative methane reduction target<\/a> aiming to reduce methane emissions to 0.2 percent of its operated global production. While BP\u2019s initial target unfortunately leaves out emissions from stranded gas assets, the target\u2019s immediacy and stringency is a good example for others to follow. In a recent interview with EDF<\/a>, BP recognized the operational and management benefits of having a goal, saying \u201cWe wanted to set a clear benchmark to focus BP\u2019s efforts and help us build a shared understanding of why it is important to minimize methane and how to do it, from management to operations to the research and development of new solutions.\u201d<\/p>\n

BP\u2019s target is timely, as CDP, an organization focused on sustainable investments, just announced a new scoring system for the oil and gas industry<\/a>. Moving forward, companies that do not set and disclosure methane targets will be penalized, demonstrating that target setting is now the standard expectation among investors.<\/p>\n

What investors should look for in a methane target<\/strong><\/p>\n

Investors should keep in mind a few key points as they work with companies to set targets and assess existing ones:<\/p>\n