Oil and gas companies are not only major contributors to climate change, they are also uniquely at risk from the impacts of global warming. But despite the dual legislative and operational risks they face, many are burying their heads in the sand and failing to properly assess climate change risks.
That is the stark conclusion of a major report from environmental consultancy Acclimatise, which assessed oil and gas companies' responses to the Carbon Disclosure Project (CDP) and found that while more than three quarters accepted that already inevitable levels of climate change would affect their business through increased downtime, system failures and rising safety risks, only 19 per cent were taking action to address those risks.
Speaking to BusinessGreen.com, Acclimatise chief executive John Firth said that while oil and gas firms were relatively adept at assessing extreme weather risks, they were guilty of largely ignoring the extent to which these risks will rise as a result of climate change.
He added that they were also failing to prepare for the likely impact of other climate change effects, such as rising sea levels and water shortages, on their operations.
The report found that while 19 per cent of respondents believed a changing climate may have additional health and safety implications for company employees, only 1.5 per cent gave evidence of actions being taken to manage these risks.
Similarly, just three per cent of respondents said they were investing in more water-efficient assets to help cope with predicted droughts, despite the fact many exploration projects and refineries are hugely reliant on reliable water supplies.
"If you put aside the fact that they are large emitters and are likely to be affected by climate change legislation, oil and gas companies are also exposed to physical climate change effects because they tend to invest heavily in long-term fixed assets," explained Allan Roberts, industrial strategy and change leader at IBM, which commissioned the report. "For example, the oil industry requires a lot of water and will face difficulties if water resources become scarce."
Failure to manage climate change risks could even affect oil and gas firms' valuations, according to Firth, who argued that rising sea levels and the increased frequency of extreme weather events could make it harder to access oil reserves and decommission existing assets.
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