An Examination of the Financial Implications of Environmental Performance I Bp, Shell and Exxonmobil

Topics: Socially responsible investing, Environment, Corporate social responsibility Pages: 18 (6052 words) Published: August 24, 2013
An Examination of the Financial Implications of Environmental Performance in BP, Shell and ExxonMobil

LONDON SCHOOL OF BUSINESS AND FINANCE

Research Proposal
An Examination of the Financial Implications of Environmental Performance in British Petroleum, Royal Dutch Shell and ExxonMobil

Alison Leung Submission Date: May 10 , 2013 Assessor: Dr. Steve Priddy Student ID: A4052143 th

Master of Business Administration Integrative Research and Consultancy Project

Alison Leung A4052143

An Examination of the Financial Implications of Environmental Performance in BP, Shell and ExxonMobil

TABLE OF CONTENTS
1. Introduction ………………………………………………………………………………… Background of the Study Industry Background 2. Research Aim and Objectives Research Aim Research Question Hypotheses Objectives 3. Literature Review …………………………………………………………………………. Definition of Environmental Performance Definition of SRI Literature Review 4. Research Methodology ………………………………………………………………….. Introduction Research Design / Proposed Method Sampling Data Collection Data Analysis 5. Timescale …………………………………………………………………………………... 6. Resources …………………………………………………………………………………. 7. References …………………………………………………………………………………. Appendix I Appendix II 2

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Alison Leung A4052143

An Examination of the Financial Implications of Environmental Performance in BP, Shell and ExxonMobil

INTRODUCTION This dissertation is the empirical study of the relationship between environmental performance and Socially Responsible Investing (SRI) within British Petroleum (BP), Royal Dutch Shell and ExxonMobil. In particular, the researcher is looking to examine environmental performance and its effects on stakeholders’ investment allocation. The goal of this study is to determine the correlation between environmental performance and stakeholders’ SRI for these three companies and further CSR implications for the oil and gas industry and sustainable investment implications in the financial industry. Background of the Study In the past decade, environmental concerns regarding the exploration and extraction of oil have gained precedence in the oil and gas sector especially after BP’s 2010 oil spill in the Gulf of Mexico. Environmental events such as the one mentioned, as well as climate change, have had huge impacts on credit risk analysis, in turn affecting decisions made by lending banks (Acclimatise, 2009). Combined with the growing interest in SRI, oil companies are at risk of losing funding from ethical investors owing to their poor environmental performance. Since SRI follows a framework that looks at areas of Environmental, Social and Governance (ESG), it focuses on longterm sustainable growth (Dow Jones, 2013). Sustainable investments now are now focusing on the relationship between ethical, social and governance of shareholder value, which have a great correlation to a company’s share price (Stewart, 2012). In recent years, and in the wake of the negative publicity BP and Shell received over environmental events related to the extraction of oil (e.g. the Niger Delta disaster and the BP’s Deepwater Horizon oil spill in 2010), environmental groups such as 350 have begun a “fossil free” movement, urging institutions and individuals to divest from fossil fuel companies. However, crude oil is an inelastic commodity that mankind cannot survive without and currently there still is no alternative sustainable source of energy that can completely replace crude oil, ticking both economics and resource boxes (Van Vactor, 2010). The controversial question remains as to whether it is a viable solution to completely pull out of investing in oil and gas companies because of their poor environmental performance if we indeed need petroleum to survive. Heated debate around this topic has spiked interest in the environmental performances of oil and gas companies, whose activities can have great environmental and social impacts; this ultimately affects SRI...

References: An Examination of the Financial Implications of Environmental Performance in BP, Shell and ExxonMobil
maintaining a steady yearly growth (Fusaro, 2002)
An Examination of the Financial Implications of Environmental Performance in BP, Shell and ExxonMobil
analysed based on social and environmental values (Kugler, 2005 cited in Betz, 2009, p.112)
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