Carl WirdakOccidental Petroleum Corporation

GEMI Survey

Climate Change – Where Do We Stand?

March 2003

Climate Change Benchmarking – March 2003 2

Outline

• Survey Recap• Strategies• Goals• Inventories• Voluntary Initiatives• External Organizations

Climate Change Benchmarking – March 2003 3

Survey Overview

• Survey addresses the topic of climate change as it applies to a company’s business activities

• Survey response rate = 50% – Augmented with information from other GEMI

member websites (brings response to 75%)– Not all companies completed all questions

• Broad industry coverage

• Thank you to all participants!

Climate Change Benchmarking – March 2003 4

Strategy Overview

• Survey defined strategy broadly– requires conscious decision to link current or future plans

and action to the climate change issue, but…– no prescribed elements, format or scope

• 28 of 30 GEMI companies have or will have a climate change strategy within 2 years

no plans for

climate strategy

7%

strategy within 2 years

7%climate change strategy

86%

Climate Change Benchmarking – March 2003 5

Strategy Basis

• Why do companies have a climate change strategy?

Science doesn’t drive actions

Embe

dded

Prude

nt

Bus. C

ase

Mgm

t. Attn

.

Key Is

sue

Scienc

e

Other

0%

25%

50%

75%

100%

Climate Change Benchmarking – March 2003 6

Strategy Elements

• Top tier – “no regrets” actions

• Middle tier – tough stuff that takes real $$ to do

• Bottom tier – mostly Kyoto driven, but since it hasn’t been ratified…

0% 25% 50% 75% 100%

JI / CDM

External verification

Kyoto alignment

Sequestration

Credits / trading

R&D

Fuel switching

GHG reductions

Prod/Serv redesign

Public reporting

GHG inventory

Voluntary initiatives

Energy efficiency

`

Climate Change Benchmarking – March 2003 7

Strategy Adoption

• Climate strategies are a recent phenomena• In nearly every case, the strategy applies

across the company• Strategies sanctioned by Board = 23%

0 2 4 6 8 10 12 14

Pre 1990

90-93

94-96

97-99

2000+

Climate Change Benchmarking – March 2003 8

Public Communication of Position

• Companies with a climate change strategy communicate their position

• Absence of discussion does not mean that there is no climate change strategy

No Yes

Communicate Position Publicly

No

Clim

ate

Ch

ang

e S

tra

teg

yY

es 233

13

Number of Companies

No. of companies = 30

Climate Change Benchmarking – March 2003 9

Goals

• 73% of the GEMI companies with a climate change strategy have associated goals

• Preference is for numeric goals

• 90% of those companies that have goals disclose them publicly

0% 25% 50% 75%

Numeric - other

Qualitative

Absolute

Energy Eff.

Normalized

Vs. Baseline

No. of companies = 19

Type of goals

Climate Change Benchmarking – March 2003 10

Climate VISION

• Feb. 12, 2003 - Bush administration announces agreements in which companies will voluntarily meet targets to reduce, avoid, or sequester greenhouse gas emissions

• Climate VISION = Climate, Voluntary Innovative Sector Initiatives: Opportunities Now

• 16 GEMI companies indicated that they are part of an industry association that pledged support

Climate Change Benchmarking – March 2003 11

Inventories - Overview

No inventory

13%

Company-wide70%

Business unit17%

>85% of firms have inventories and most use recent baselines

Pre 19904%

1990-199313%

1994-199717%

1998-200144%

2002+22%

Inventory Baseline Year

Climate Change Benchmarking – March 2003 12

Inventory - Gases

0%

25%

50%

75%

100%

CO2 CH4 N2O HFCs PFCs SF6

• Carbon dioxide is most common GHG in company inventories

One38%

Two12%

Three19%

Six31%

# of GHGs in inventory

Climate Change Benchmarking – March 2003 13

Inventories - Scope

• Electricity / energy production (direct and indirect) and processing are top categories

• Just over half of the companies that assemble a GHG inventory use a published protocol

0% 20% 40% 60% 80% 100%

Third party transportation

Employee business travel

Employee commuting

Materials transport by company

Fugitive emissions

Physical or chemical processing

Indirect emissions

Production of heat, electricityand steam

Activities considered in inventory

Climate Change Benchmarking – March 2003 14

Voluntary Initiatives

• 24 of the 30 GEMI companies included in the survey participate in voluntary climate change initiatives

Climate VISION

EPA Climate Leaders

EPA Green Power Partnership

EPA WasteWise

EPA SmartWay Transport

DOE 1605b

BRT Climate RESOLVE

Pew Climate Change

API climate initiative

ACC climate initiative

Australian Greenhouse Challenge

Canada, UK, Netherlands programs

NJDEP GHG Action Plan

Climate Change Benchmarking – March 2003 15

Voluntary Programs - Incentives

• What’s in it for companies that participate in voluntary climate change programs?– Enhances

relationships with variety of external constituents

– Helps company learn how to deal with the specific issues

– Other benefits

0% 20% 40% 60% 80%

Other

Create credits

Marketing

Technical assistance

Investor relations

Org. learning

Company PR

Stakeholder relations

Climate Change Benchmarking – March 2003 16

External Organizations

U. S. Department of Energy 13 2 0

U. S. EPA 13 1 1

World Resources Institute 12 1 1

EPA Climate Leaders 10 3 0

WBCSD 8 2 1

Nature Conservancy 7 2 1

Pew Center 5 4 1

Helpful

Neutral

Not Helpful

• Results of poll ranking 29 NGOs and other organizations

• Screened to show only those receiving votes from at least ½ of survey respondents

• Not helpful– CERES

– Greenpeace

Climate Change Benchmarking – March 2003 17

Information Sources

• Dept. of Energy• EPA• GEMI• World Resources Institute

• Pew Center• WBCSD

• United Nations Environment Program

Common

Less common

What are the top web sites?

Climate Change Benchmarking – March 2003 18

External Inquiries

• Innovest Advisors - summary report– Most companies (80%) acknowledge risks– Most have not informed shareholders of financial risks– Companies that take steps to address climate change can

mitigate losses and even gain competitive advantage

Full response

46%

Partial response

46%

No response

8%• Carbon Disclosure Project– www.cdproject.net

• Target: FTSE 500• CEO was recipient• SRI fund backing• 24 of 30 GEMI companies

received questionnaire

Climate Change Benchmarking – March 2003 19

Climate Change Nuggets

• There’s a “rising tide” of company climate strategies

• Resistance to goals is “thawing”

• Public disclosure is more than a bunch of “hot air”

• Most GHG baselines are “frozen” in year 2000

• GHG emissions inventories are a “gas”

• Companies have “warmed-up” to voluntary climate-related initiatives

• The “heat is on” from external organizations

Climate Change Benchmarking – March 2003 20

Closing Comments

• Questions / comments / discussion

• June benchmarking will look at EHS information management systems