Business News

Oil Industry climate risks

Oil giants are failing to disclose to investors the risks posed by climate change, a new report finds Major oil and gas companies are failing to tell investors about the full risks related to both climate change and new forms of resource development, according to a damning report from Ceres, an influential Boston-based coalition of investment and public interest groups. The report looks at the first quarter 2011 Securities and Exchange Commission filings of 10 companies – Apache, BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Marathon, Shell, Suncor and Total – and grades the quality of disclosures across issues such as deepwater drilling safety, and preparedness for climate regulation. Of 60 climate-related disclosures, it classed only five as ‘good’, with 34 deemed ‘poor or no disclosure’. Of 50 deepwater drilling rates, it says only four were ‘good’, with 29 ‘poor or no disclosure’. None of the disclosures was rated ‘excellent’, meaning even the best companies could do better. Ceres says energy companies have taken on increasingly risky projects, without updating investors of the potential liabilities. The Deepwater Horizon disaster – which cost BP $86bn when including the effect on its share price – showed the potential impact of the new types of exploration, it says. “While companies are making extensive capital investments related to climate change and deepwater drilling that carry material financial risks, they are generally failing to adequately disclose them consistent with SEC rules and growing investor expectations,” the report says. In fact, BP comes out better than most on deepwater disclosure. It gets ‘good disclosure’ marks in four of five categories ÐÊthough Ceres says there is still room for improvement. “Since [Deepwater Horizon] they’ve had 86bn reasons to concentrate very intently on offshore safety, and that’s reflected in their improved disclosure,” says Andrew Logan, director of Ceres’s oil and […]

The power under the ocean

Japan is known to be a country with few natural energy resources. Her current energy self-sufficiency rate is only 4%, although it is normally closer to 20% if nuclear power stations, currently almost all off-line, are included. Japan depends on oil for more than 50% of the energy supply, importing about 90% of it from the Middle East with all the political and security risks to stability of supply involved. Under these circumstances, Japan has been expanding her horizons in the search for sources of energy. Through marine research, the seabed around Japan has started to show the first glimmers of being an unopened treasure chest of potential energy. Methane hydrate, otherwise known as ‘Burning Ice’, is the only energy resource mined in Japan apart from coal. Experimental drilling off the Atumi peninsula ran from February to March this year as part of a national research project. According to the published results, the volume of methane hydrate deposits is estimated to be the equivalent 90 to 100 years of Japan’s natural gas consumption. There are substantial reserves of methane hydrate between 100 to 300 meters from the seabed in the sea off Niigata and around the East Nankai Trough. Developing this field would be the world’s first trial of offshore production of methane hydrate. Japan Oil, Gas and Metals National Corporation (JOGMEC) research organisation under the Ministry of Economy, Trade and Industry has led this project, supported by the deep-sea scientific drilling vessel ‘Chikyu’, operated by Japan Agency for Marine-Earth Science and Technology (JAMSTEC) under Ministry of Education, Culture, Sports, Science and Technology. There are still a lot of issues to be resolved before industrial production can begin, such reduction of mining costs, but the Government has high expectations. The Chikyu research vessel has made a number of other significant […]

Rainy Brain, Sunny Brain

By Elaine Fox $34.99 Random House This is a fascinating, informative and uplifting popular science book exploring optimism and pessimism. The author looks at why some of us are innately optimistic or pessimistic (including notorious extremes such as Michael J Fox), how emotions such as fear, anxiety and pleasure play out in our brains, and – most excitingly – how each of us can ultimately develop a more positive outlook. This is pop science at its most accessible, and while Elaine’s overall message is positive, she’s careful to debunk many of the myths of ‘instant happiness’ or ‘positive psychology’. Daniel Goleman’s Emotional Intelligence or Jonah Lehrer’s How We Decide. So there’s an element of e.g. Barbara Ehrenreich’s Smile or Die: How Positive Thinking Fooled the World, Oliver Burkeman’s Help! how to become slightly happier and get a bit more done

Businesses not adapting to climate change

Companies are failing to develop the resilience they will need to cope with climate change, say two business experts from The University of Queensland. Dr Martina Linnenluecke and Professor Andrew Griffiths of UQ Business School have spent 10 years working with businesses to develop climate change strategies. “Companies should be planning now to safeguard their long-term future,” Dr Linnenluecke said. “Climate change is upon us but the business community has not yet fully considered the implications. “Some firms are reducing greenhouse gas emissions, but there has been little discussion of how to cope with the physical impact of climate change. “Temperatures are gradually rising, but even more concerning is the increase in extreme weather.” Storms, floods and other climate events were likely to be more damaging for businesses than higher temperatures, and few areas would escape the effects. “Even where businesses sustain no direct damage, they are likely to be affected by power cuts or damage to infrastructure,” Dr Linnenluecke said. “With companies increasingly reliant on high-tech systems, any outages can result in large-scale disruption.” Dr Linnenluecke and Professor Griffiths’ book, The Climate Resilient Organization, argues that businesses have two courses of action: reducing greenhouse gas emissions to try to prevent further climate change, and adapting to change. “We say companies need to do both,” she said. “Unless we make attempts to avert climate change, it could become so severe that we will be unable to adapt at all. However, even with the most stringent efforts, we cannot fully avoid the impact. “We will have to learn to adapt to gradual changes, such as the rise in temperatures, and also build the resilience required to be able to recover quickly from extreme weather incidents.” Dr Linnenluecke said companies also should look at how they could take advantage of any opportunities associated […]

Great by Choice Uncertainty, Chaos and Luck

Morten T. Collins Jim/Hansen Random House $60 Following on from the worldwide bestseller Good to Great, Jim Collins returns with another groundbreaking work, this time to ask: Why do some companies thrive in uncertainty, even chaos, and others do not? In Great by Choice – based on nine years of research, buttressed by rigorous analysis and infused with engaging stories – Collins and his colleague, Morten Hansen, enumerate the principles for building a truly great enterprise in unpredictable, tumultuous, and fast-moving times. No mere sequel, Great by Choice distinguishes itself from Collins’s prior work by its focus not just on performance, but also on the type of unstable environments faced by leaders today. With a team of more than twenty researchers, Collins and Hansen studied companies that rose to greatness – beating their industry indexes by a minimum of ten times over fifteen years – in environments characterised by big forces and rapid shifts that leaders could not predict or control. The research team then contrasted these “10X companies” to a carefully selected set of comparison companies that failed to achieve greatness in similarly extreme environments. The study results were full of provocative surprises, such as: * The best leaders were not more risk taking, more visionary, and more creative than the comparisons; they were more disciplined, more empirical, and more paranoid. * Innovation by itself turns out not to be the trump card in a chaotic and uncertain world; more important is the ability to scale innovation, to blend creativity with discipline. * Following the belief that leading in a “fast world” always requires “fast decisions” and “fast action” is a good way to get killed. * The great companies changed less in reaction to a radically changing world than the comparison companies. The authors challenge conventional wisdom […]

Environmentalism Lost and Found

Mainstream environmentalism is preoccupied with giant technofixes – from windfarms to ‘sustainable consumption’ – and pays almost no attention to the underlying cultural reasons why our civilisation is destroying the planet. Somewhere along the way of observing and experiencing the degradation of the planet, environmentalism morphed from being a project designed to protect the wider natural world from destruction by human industry, into a project that exists to protect the lifestyles of middle-class consumers in as ‘sustainable’ way as possible. We are kidding ourselves that we will not have to radically change our ways; if oil, food and commodity prices keep on rising, then localisation will happen, if not for economic rather than simply sentimental reasons. The effects of the 2008 collapse are still playing themselves out, but globalisation is already in retreat. In ten years time, the world will look very different. By acting now, rather than waiting for systems to fail catastrophically and force our hands, the long-term future for renewal can be extremely bright. Ridiculously high land property prices and entrenched land ownership patters are major obstacles preventing an intelligent use of our countryside today, but as a greater majority of the world’s population migrates towards urban living, cities must regenerate and reinvent themselves. But the exciting thing about cities is their dynamism and agility in adapting and renewing themselves, absorbing new ideas and becoming more enjoyable places to live and work. The new element in the mix is climate change, and so all development must now embrace social, economic and environmental sustainability. Consumers have traditionally expected governments to take the lead in protecting the environment, but now they are looking more to the corporate world to take action, rather than individuals with political influence. Increasingly, Asians want economic growth but believe it should be achieved through […]

China’s dark power

The China Railway High-speed (CRH) train travels at over 300km an hour between Beijing and Taiyuan, capital of Shanxi province. This northern province, with roads congested by overloaded lorries en route for cities, was ChinaÕs principal coal-producing region for a long time, until it was overtaken by Inner Mongolia. Everything is stained with coal: the sad grey villages, the landscape and the people, whose faces and bodies are blackened from working down the mines. Even the water is black: washing the coal after extraction pollutes rivers and groundwater, making it unsuitable for irrigation or drinking. The look of the mines has hardly changed for centuries, even though they are being modernised. Huge heaps of coal at the entrances wait to be transported by lorry. Blackboards on the office walls carry the day’s slogans for the work team leaders and reminders of the decisions of the all-powerful State Administration of Coal Mine Safety, currently run by Zhao Tiechui. The number of mining accidents has risen again since 2010, when there were 1,403 accidents and 2,433 deaths, according to official figuresÊ Even though China plans to build more nuclear power stations and hydroelectric dams, coal remains its main source of electricity, preferred by business, particularly locally. According to the Beijing Development and Reform Commission, Beijing residents will consume 20m tons of coal a year by 2015, compared to 11m tons in 2010 (when there had already been a rise in use). China is one of the world’s biggest coal producers (reserves are estimated at 118bn tons), with depositsÊconcentrated in the north and northeast, where there are no major problems of extraction. It is cheap to extract, and seen as the best way to provide the energy needed to boost growth. The industry provides a lot of employment, particularly in rural areas where […]

Just how widespread is phone hacking?

The issues surrounding phone hacking and the Murdoch Empire wont be cleared up overnight and will undoubtedly feed the appetites of world media organisations for years to come. I wonder though if hacking in media hasn’t happened before? Can you believe that the Murdoch clan is the only organisation to have done this? And it’s more intricate than that – politicians are involved, the police are involved and the establishment is right in the limelight as the power and control of a massive media empire is now being realised; the impact of its control is frightening the living daylights out of many citizens around the world. The big question may well be “Just who is squeaky clean?”

Philip Morris launches legal battle over Australian cigarette packaging

Tobacco giant Philip Morris has notified the Australian government that it intends to request arbitration over Canberra’s draft law regarding plain packaging requirements for cigarettes. Hong Kong-based Philip Morris Asia Limited (PMA), owner of Australian affiliate Philip Morris Limited, claims that the law would violate Australia’s obligations under a bilateral investment treaty (BIT) with Hong Kong. “The forced removal of trademarks and other valuable intellectual property is a clear violation of the terms of the agreement,” Philip Morris said “Legal action is not a course we take lightly, but the government has unfortunately left us with no other option,” Anne Edwards, spokesperson for PMA, added. Australia’s Tobacco Plain Packaging Bill 2011, a draft law that aims to make tobacco products less attractive to consumers, would prohibit all logos, along with different colouring and layout on cigarette packs; it would also require that health warnings cover a substantial portion of each package. Though other countries, including New Zealand, the UK, and Uruguay, have previously attempted to adopt similarly strict requirements for cigarette packaging, Australia would be the first country to actually implement such measures. “We’re going to deliver cigarette packages in that drab green, with no logos, nothing attractive or enticing about the package,” Australian Prime Minister Julia Gillard explained in an interview with ABS Melbourne. “We are confident of our reforms – confident we can deliver them and confident that they will make a difference to the number of people smoke and that’s what this is all about,” she added. Tobacco giant’s action follows developing country-led WTO debate PMA’s announcement comes only a few weeks after the same legislation was the subject of heated discussions in the WTO’s Council on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The Dominican Republic led a group of developing countries in criticising Canberra’s draft […]

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