Entergy 2006 Annual Report Download - page 34

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cp8
Policy
At Entergy, we adhere to the principles of sustainable
growth in all our operations. We aspire to deliver top-
quartile returns to our owners while simultaneously
making progress toward specific societal goals. We don’t
believe the pursuit of both goals is mutually exclusive.
With extensive market knowledge and sophisticated
analysis, we maintain clear points of view on external
variables – like environmental policy – that impact our
operations and we are guided by those points of view in
our strategies and actions. All investments, including
socially-oriented ones, are expected to
meet our financial aspirations for long-
term value creation.
The Science
We have long believed the scientific evidence
on global climate change was more than
sufficient to act to curb greenhouse gases.
In fact, we voluntarily committed to cap our
own emissions at the level in 2000 and have exceeded our
goal since then. We respect the fact that scientists tend to be
skeptics and conservative in their assessments. Truth as
defined by the scientific community is a concept none of us
in the business community ever has the luxury of
experiencing before we are forced to take action. There is
always the risk of being wrong, but the risk or lost
opportunity that comes from doing nothing is almost
never acceptable.
We believe the evolving direction of the scientific
assessments on climate change is correct. But achieving
“truth” as defined by science will always lag the necessary
actions to stay ahead of global climate change. Greenhouse
gases stay in the atmosphere for decades to centuries and the
climate is widely known to act more like a switch than a dial.
In particular, we believe current estimates of sea-level rise
could ultimately prove to be very conservative, potentially by
many multiples. Because of amplifying processes inherent to
the climate system, we believe continued global warming will
cause ice flow from Greenland and the West Antarctica Ice
Sheet to accelerate. This process is already happening, but
since scientists cannot agree on how to model it, they have
not accounted for it in the sea-level rise projections. As a
result, we believe the current forecasts will prove to be
substantially low.
The Risk
Regardless of whether the forecasts for
temperature or sea-level rise or climate
change are conservative, no business
schooled in risk management would ever
consciously accept a proposition with a
distribution curve of potential outcomes as
risky and one-sided as even the current
models of global climate change would suggest. The
potential outcomes are decidedly asymmetric to the
negative (any potential positives are reserved for high
latitude regions and are temporary at best) and display
what every company would see as a “deal killer,” a fat tail
(large probability of a catastrophic outcome) that it is
impossible to hedge against.
We don’t have an easy exit strategy (like another planet
we can escape to) nor do we have an offsetting “hedge” we
could execute like emitting huge quantities of particulate
aerosols into the atmosphere to block some solar energy
(which carries its own set of evils). In short, it is and always
will be, our lack of the ultimate truth that is the most
compelling reason to act sooner and more aggressively than
We’re Taking the Right Path Forward.
OUR POINT OF VIEW IS CLEAR.