HOUSTON (Reuters) - Chevron Corp plans to set greenhouse gas emissions targets and tie executive compensation and rank-and-file bonuses to the reductions, the oil major said in its latest climate report released on Thursday.
The move is a first for a U.S. oil major and focuses on the company’s oil fields. More investors have been pressuring San Ramon, Calif.-based Chevron and other big oil companies to reduce emissions that contribute to climate change.
Chevron said that by 2023, it will reduce its methane and flaring intensity by 25 percent to 30 percent from 2016 levels, and said the goal would be added to the scorecard that determines incentive pay for around 45,000 employees.
“It’s about the mindset and the culture of the company,” said Chevron Vice President Mark Nelson, noting that including most of its global workforce would “harness” ideas from all employees.
Chevron, though, does not address reducing the company’s full carbon footprint, said Danielle Fugere, president of investor group As You Sow, and so “will not achieve the reductions needed to stabilize the climate and reduce growing economy wide and thus portfolio wide risk to investors.”
Among other oil companies, London-based BP and France’s Total have set short-term targets on reducing carbon dioxide emissions from their own operations.
Royal Dutch Shell in December announced it would link executive compensation to reducing carbon dioxide emissions starting in 2020, including Scope 3 emissions from fuels sold to customers around the world.
Chevron said it does not support establishing Scope 3 targets.
Exxon’s climate report, published on Tuesday, includes a goal of reducing methane emissions from operations by 15 percent and flaring by 25 percent by 2020 compared with 2016 levels.
Chevron’s target aims to reduce emissions and flaring as a percentage of production, but does not set a total emissions goal - a measure activist investors prefer. The targets will apply to Chevron’s operations as well as assets it has a stake in but does not operate itself, the company said.
“This is the first public, industry-led, link between methane targets and joint ventures we’ve seen, and we are interested in how they will actualize and validate this,” said Isabel Mogstad of the Environmental Defense Fund.
Methane, the main component of natural gas, has more than 80 times the heat-trapping potential of carbon dioxide in the first 20 years after it escapes into the atmosphere, scientists say.
Reporting by Jennifer Hiller; Editing by David Gregorio and Phil Berlowitz