Oil Companies Switch Their Approach To The Climate Change Debate - Eni (NYSE:E), BP (NYSE:BP)

Over the past few years, global efforts to address climate change issues and reduce carbon emissions have ramped up, leaving big oil companies to defend their highly criticized practices.

Now, those companies are taking a new position on the issue in an effort to ensure that their operations can survive through what appears to be a shifting tide in the industry.

Shareholder Pressure

At a conference in Paris, Philippe Desfosses, Chief Executive Officer of pension fund ERAFP, cautioned that the industry is likely to face several risks in the coming years as climate change risks take center stage.

In his view, carbon risks will eventually translate into legal risks, something that will decrease shareholder value. For that reason, many pension funds are expected to begin divesting holdings with companies that deal in fossil fuels like coal, which are associated with a high degree of pollution.

Energy Giants Unite

While energy companies have been defensive on the issue in the past, many CEOs are beginning to change their firms' views in order to better position their businesses for the shifting public perception.

Royal Dutch Shell plc (ADR) (NYSE: RDS-A), Total SA (ADR) TOT, BP plc (ADR) BP, Statoil ASA(ADR) STO and Eni SpA (ADR) E are all addressing the climate change issue by creating a joint think tank to come up with a common position on the issue.

An Active Role In Preventing Climate Change

Many expect that the new body will suggest increased reliance on natural gas as it is seen as one of the least environmentally damaging fossil fuels.

Last Thursday, Shell CEO Ben van Beurden said his firm was working to come up with a viable strategy to reduce emissions and address climate change, suggesting that the industry is repositioning itself to contribute to preventing climate change rather than denying it.

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