News Release: WRI report warns environmental risks could reduce
shareholder value of leading oil and gas companies
IN THE NEXT FEW WEEKS, WE WILL POST FURTHER DETAILS ON THE
METHODOLOGY AND RESULTS
The oil and gas industry will confront two major environmental issues
in the coming decade-the prospect of policies to combat climate change and
constrained access to oil and gas reserves. These issues have the
potential to affect companies' sales, operating costs, asset values, and
In a case study of 16 leading oil and gas companies, we find that
companies are very differently positioned to deal with these 2 issues,
virtue of different asset bases and distribution of reserves. Using a
methodology previously developed by WRI in a case study of the pulp and
paper industry, we estimate the impacts of these issues for shareholder
value within the industry.
Across the industry, we find that companies' shareholder value could
fall by between 1 and 6 percent if investors were to account for these
In some scenarios, companies could gain if natural gas prices rise and
if permits to emit greenhouse gases are grandfathered to companies.
Although these issues prove to be financially significant and a source
of competitive advantage within the industry, it is not clear that
investors currently take account of them.
We hope you will find this information helpful. We
welcome your reactions and comments.