Corporate America is uniting on climate change.
Consumer brands and industrial giants have been supporting government action on climate change for years. In a shift that is changing the debate, the biggest and most important U.S. energy companies are now dropping their resistance to a global climate deal.
Why it matters: Broader corporate backing of global action on climate change is helping push President Trump away from his campaign promise to pull out of the climate deal, which was struck by nearly 200 nations in Paris two years ago to slow the growth of global greenhouse gas emissions.
The consensus in corporate America is the broadest it's been in a decade when in 2007 an official coalition called the U.S. Climate Action Partnership was formed to push for legislation cutting carbon emissions. Though it dissolved a few years later when Congress didn't act, it included members ranging from ConocoPhillips to Caterpillar to utility Duke Energy. There's no official coalition this time, but the collection of companies is even more diverse.
To varying degrees, most major companies producing coal, natural gas and oil either explicitly back sticking with the 2015 climate deal struck in Paris, or they're opting not to lobby against it, a dramatic shift from just a few years ago. They're not necessarily cheering global efforts to address the issue, but the decision not to oppose it has the same effect as tacit backing.
The reasons corporate America is uniting on global climate policy are many and often depend on the products made and how global a company's operations are:
- Consumer-facing companies like Starbucks and Pepsi, have long prioritized policies to cut carbon emissions because they don't sell products that directly contribute to the problem. They also have more direct interaction with consumers who like to buy from green-minded corporations.
- Companies that generate electricity have said, for much of the past decade, that they're moving away from coal toward cleaner burning sources of power, including natural gas and renewables. The Edison Electric Institute, the trade association representing investor-owned utilities, held a reception last year honoring the Paris climate deal after its conclusion, even though it officially doesn't have a position on the deal.
- Companies with huge global footprints, like General Electric and ExxonMobil, know that pulling out of one diplomatic deal can only weaken the U.S. standing on other geopolitical issues, which could hurt their operations around the world.
- Publicly traded fossil-fuel companies are facing growing calls from their investors to address climate change, or at least to not fight such policies. This is a newer trend that's gained influence over the past couple of years.
- Major oil companies, like ExxonMobil and Royal Dutch Shell, have increasingly invested in natural gas, which emits 50% less carbon than coal when burned. Companies with big natural gas portfolios will gain with climate policies that accelerate a shift already underway to replace coal with natural gas. ExxonMobil, which bought big natural-gas producer XTO Energy in 2010, sent a letter to the White House in March urging Trump to stay in the deal. That letter followed a tweet by the company's top lobbyist just hours after Trump won the election expressing support for the accord.
Big coal companies remain the most tepid about embracing global efforts on climate change. Nonetheless, U.S. executives know the continued use of coal around the world depends on two things, both which would benefit by staying in a global climate deal: government support for new technologies to burn coal more cleanly and continued U.S. exports of coal. Coal giants Peabody Energy, Arch Coal and Cloud Peak Energy have conveyed this to the White House, according to multiple people familiar with the conversations, and Cloud Peak's CEO, Colin Marshall, sent a letter to Trump about it. Reuters and Politico have had good reports on this development recently.
"It seems absolutely irrational to not at least develop an insurance policy against climate change," Marshall said in an interview with Axios last week. "What if the planet is warming up twice as much as we thought?"
- The other side: One of the most influential and outspoken outliers is coal producer Murray Energy, whose CEO, Bob Murray, is close to the president. One thing helps explains that company's resistance to the Paris deal: it's privately held, and so it doesn't have to answer to shareholders clamoring for more acknowledgement of climate policy.
To be sure: Trump's EPA is working to get rid of the Obama administration's main commitment to the Paris deal: carbon rules for power plants. Staying in the Paris deal but gutting the main U.S. pledge doesn't leave much meat on the bones, making it easier for more corporations to back it.
What's next: White House officials have said they will make a decision by an end of May meeting of the G-7 nations in Italy whether to stay in the Paris deal.
(Harder Line will be a weekly column by Amy Harder where she offers up informed and unbiased analysis of the energy industry and environmental regulation, along with scoops, trends and exclusive interviews. Look for the column weekly at www.axios.com, and highlighted in the Generate newsletter which you can sign up for here.)