Chevron Corp. (NYSE: CVX) 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 Feb. 7.
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% to 30% 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.
Among other oil companies, London-based BP Plc (NYSE: BP) and France's Total SA (NYSE: TOT) have set short-term targets on reducing CO₂ emissions from to their own operations.
Royal Dutch Shell Plc (NYSE: RDS.A) in December announced it would link executive compensation to reducing CO₂ emissions starting in 2020, including so-called Scope 3 emissions from fuels sold to customers around the world.
Chevron's report said it does not support establishing Scope 3 targets.
Exxon Mobil Corp.'s (NYSE: XOM) latest climate report, published on Feb. 5, includes a goal of reducing methane emissions from operations by 15% and flaring by 25% by 2020 compared with 2016 levels, as well as reducing greenhouse gas intensity at its Canadian oil sands facilities by 10% by 2023.
Chevron's target aims to reduce emissions and flaring as a percentage of production but does not set a goal for total emissions—a measure that activist investors prefer. The targets will apply to Chevron's operations as well as joint ventures or assets it has a stake in but does not operate itself, the company said.
Methane, the main component of natural gas, is colorless and odorless, and has more than 80 times the heat-trapping potential of CO₂ in the first 20 years after it escapes into the atmosphere, scientists say.
Methane can leak from oilfield equipment and pipelines, or is flared or vented during maintenance work, and when new oil wells are added in areas that don't have natural gas pipelines.
Activist investor Carl Icahn may seek a special meeting to remove and replace board members, according to a lawsuit filed May 30 over Occidental Petroleum's pact to buy Anadarko.
Occidental last month beat out Chevron Corp. to grab the oil industry’s biggest prize: nearly a quarter million acres in the Permian Basin, the top U.S. shale field.
Occidental Petroleum’s takeover of Anadarko Petroleum remains subject to other customary closing conditions, including approval from Anadarko’s stockholders.