Energy Finance to Climate Change — Money Talks

Studies show Texas oil and gas companies and their employees do not believe in climate change, but “green” industry changes are underway. Greenbacks lead to green investments.

The Dallas-Fort Worth metroplex runs on oil and gas, the products themselves and the money they make. While oil and gas giants release official statements affirming a belief and concern about climate change, beneficiaries of the industry are a hub for climate change denial. Dallas is a central knot in the intertwining of these ideas.

A UT energy poll shows a person in the oil and gas industry is more likely to deny climate change. The likelihood a person will believe in climate change is not affected by their income or education level. The study concludes that equal knowledge and access to information on the topic leads to split opinion.

“Climate change is just political football at this point,” Dallas oil executive Matt Wenk said. “I’m not anti-science. Science has just been taken completely out of it.”

Demographically, a person most likely to deny climate change is a religious conservative of any educational or economic background. While the highest-ranking executives of oil and gas proprietors such as Exxon Mobil have clear, public statements acknowledging the existence of global warming, some argue that few tangible changes can be seen in the companies’ practice.

“The risk of climate change is clear and the risk warrants action,” reads Exxon Mobil’s official statement on the matter, one of many direct company affirmations. The statement does, however, wrap up with a vague caveat. “There is a broad scientific and policy consensus that action must be taken to further quantify and assess the risks.”

While the highest-ranking executives of the field’s biggest companies tend to publicly agree with the corresponding official public relations statement, employees statistically disagree. The social or office dynamics of climate change denial rely less on public appearance and prove to be more human and nuanced than a press release.

“[Alexandria] Ocasio-Cortez is making a big deal about how we all need to stop eating meat and how New York will be underwater, but she’s still eating hamburgers and nobody’s moving out of Manhattan,” said Wenk. “It’s hard to take that too seriously.”

Barry Greenberg serves as Chief Compliance Officer to Cushing Asset Management, a hedge fund that works almost exclusively with energy assets. He believes in climate change and that it is caused by human impact, acknowledging he feels he is of the minority opinion in his field.

“I definitely want [our industry] to be part of the solution,” Greenberg said. “Change really needs to come from the shareholders.”

Namely, money talks. This can be seen in the rising importance of ESG scores as companies make financial and investment decisions. Consideration of a corporation’s ESG score is proving to be a growing factor in predicting profitable investments.

Environmental, social, and governance performance scores are awarded to companies by various third parties with differing methodology. These third parties include Bloomberg ESG Data Service, DowJones Sustainability Index, and Institutional Shareholder Services — all subsidiaries of larger financial institutions.

Investment management corporations such as BlackRock refer to this practice as sustainable investing. They released an internal memo in 2018 on the topic.

“Much of the focus in ESG investing has been in equities,” the memo said. “The inevitable question: do investors need to choose between returns and ESG? Our answer: no.”

In other words, sustainability can be profitable. Many of those in the oil and gas industry are seeking to highlight that the need to weigh financial outcome is not one of demonized greed, but a consideration necessary to keep society afloat.

Chris Carlson moved from Montana to Texas to work in the oil and gas industry. He disagrees with the vilification of the business and advocates for changes in energy sources as a global context deems it necessary.

“Sure, we have to work to make [energy] cleaner, but it provides way too many necessities for a lot of people,” Carlson said. “Only some people don’t want to try new things.”

Todd Sunderland works in energy, particularly oil and gas, finance risk management. He echoed the sentiment that climate change discourse is driven by emotion more than facts, and only under a guise of science.

“Our society is literally built on this [kind of energy],” Sunderland said. “People don’t realize what that means. We would be running around naked without electricity or iPhones. We’d have nothing.”

He said that sources of energy that are cheap and effective are difficult to replace due to their efficient energy density. To switch to less efficient means of energy with more wholesome images, such as wind or solar, would be a much larger sacrifice than many realize. Pricing, efficiency, and consumption must all be considered.

Climate change has been addressed as an issue with only two sides, while many in the oil and gas industry see energy consumption and its environmental impacts as something more complex. There is a resentment towards the notion that they are the less educated or informed side of the coin. The UT poll disputes this myth.

“Honestly, the most open discourse on this stuff happens in this industry,” Sunderland said. “Debate is good. I just don’t like the political give-up on a science topic.”

Energy Finance in Texas Law

Texas State Representative Richard Raymond authored bill HCR 15 through the Environmental Regulation House Committee. The bill proposes required cost-benefit analysis be done concerning the potential risks of climate change and appropriate measures to combat the problem.

This bill differs from other climate change bills in that it focuses on the fiscal and practical measures of renewable energy sources as well as their implementation.

“Climate solutions based on sound economic analysis would build prosperity, benefit working Americans, reduce regulations, and protect our national heritage,” the bill reads.

Raymond proposes that the financial benefits of preventative measures would outweigh the costs of fixing damage done after the fact. The bill asks that United States Congress conduct an extensive analysis to investigate this.

The bill was referred to the Environmental Committee in February 2019. It is currently under review in committee. This is one of 21 bills concerning the environment currently circulating through the Government of Texas.