Big Oil’s Greenwashing Playbook
Fossil Fuel Giants are positioning themselves as ‘green’ companies to sweep their sustainability shortcomings under the rug.
By Julianna Totoni
May 31, 2022
In recent years, fossil fuel companies have taken a fresh approach to their climate change strategy. Chevron, ExxonMobil, BP, and Shell, to name a few, have gone from blatantly denying the existence of climate change to claiming to be part of the solution.
Seems pretty optimistic right?
Unfortunately, time and time again, greenwashing practices employed by fossil fuel giants have surfaced. In an effort to appear environmentally friendly, these companies are deliberately, and often deceptively, framing their activities as “green.” Unfortunately, it has become commonplace in the industry to pledge to invest in sustainable energy while simultaneously expanding oil production.
Fossil fuel companies contribute significantly to climate change
While greenwashing runs rampant in the industry, the UN Emissions Gap Report maintains that the world is on track to warm more than 1.5°C (34.7°F). As the Earth continues to warm, irreversible environmental damage intensifies, from increased wildfires and drought to rising coastal flooding. In the US, fossil fuel combustion accounted for 92% of CO2 emissions in 2020 and 73% of total GHG emissions. One of the primary solutions to reversing climate change and achieving drawdown is reducing emissions.
If climate change is such a pressing issue – one in which fossil fuels play a crucial role – then why do fossil fuel companies greenwash?
Simply put, it is a means of survival. Fossil fuel companies are capitalizing on the lack of accountability in the industry to save their businesses and cover up broken promises or non-existent action plans. In order to actually see change, fossil fuel business models require a massive upheaval that is by no means easy.
How fossil fuel companies greenwash
A recent study focused on Chevron, ExxonMobil, BP and Shell found that corporate action fell far short of pledges to change for the better. We’ll take a closer look at three ways these companies maintain the status quo.
1. Lobbying Against Climate Change
Despite claims that it is “committed to providing affordable energy to support human progress while advancing effective solutions to address climate change,” ExxonMobil lobbied against issues that it publicly supported. According to their 2017 Charitable Giving report, $1.5 million was donated to 11 think tanks and lobby groups that reject established climate science. Moreover, ExxonMobil generated no clean energy during the decade and instead demonstrated an unwillingness to invest in solar and wind. ExxonMobil spends over $14.5 million hindering progress by the U.S. government in reducing climate change, earning the rank of third most powerful lobbying group against climate change.
2. Continued reliance on profit from fossil fuels
Chevron promotes a commitment to “lowering the carbon intensity of operations, building lower carbon businesses, supporting well-designed climate policy, responsible water management, and biodiversity.” However, this statement directly contradicts its growth in the production of petroleum. Along with other fossil fuel giants (other than BP), there has been no indication that Chevron was decreasing its reliance on upstream fossil fuel production. In fact, Chevron’s percentage of total earnings from oil and gas ranges slightly higher than its counterparts at 90%. Chevron has even promoted themselves as good stewards by publicizing their backing of environmental mandates that they originally fought against. Both Chevron and ExxonMobil have yet to announce net zero emission goals.
Shell announced a goal to reach net zero emissions by 2050, but with no evidence of an explicit plan to achieve this transition. On a positive note, Shell has made statements since 2009 such as “We have long recognized that the use of fossil fuels contributes to climate change,” acknowledging their role in climate change. It has also shared the intention of reducing fossil fuel exploration after 2025. However, in anticipation of their self-imposed deadline, they have in fact accelerated their fossil fuel exploration efforts.
3. Failure to invest in renewable energy sources
European counterpart BP claims to be transitioning to green energy. BP has pivoted from calling itself an “oil company” in 2009 to an “integrated energy company” in 2021. It is also the first of these fossil fuel giants to pledge a transition to net zero emissions by 2050. However, BP also decreased investments in alternative energy from $1.6 billion in 2011 to $750 million in 2020. Simultaneously, BP has crowned itself a leader in what it calls “low carbon” investment, or investment in energy sources of low greenhouse gas emissions. However, BP contradicted its efforts by expanding its dedicated area for fossil fuel exploration by 50,000 km2 in 2019.
Unfortunately, earnings data continue to point to fossil fuel as being the primary source of revenue for these key players, with little investment in renewables or decisive action to transition business models. Despite corporate statements of social responsibility, action does not match the marketing. Moreover, fossil fuel companies rely on individually-developed metrics for assessing their carbon offsets, which are both unreliable and unrelatable. Evidently, fossil fuel giants have long acknowledged their contributions to climate change but simply make underwhelming efforts to change.
An energy sector exemplar
The energy industry cannot move forward without transitioning its major activity to something other than fossil fuels, and it's not impossible. We can look to companies like Ørsted to see what the future of the industry could look like. The world’s leading offshore-wind power producer generated revenue solely from fossil fuels 14 years ago. In 2008, Ørsted put its 85% conventional, 15% renewable generation mix on its head to envision an 85% renewable, 15% conventional mix instead, with an expected completion time of 30 years. Not only did Ørsted make the change in 11 years, but it will also become carbon neutral in 2025 after it exits coal in 2023. This is the same goal set by other fossil fuel giants for 2050. Clearly, in the US in particular, we need to do more to encourage conversion to alternative energy sources, since it is possible after all.
A step in the right direction
In recognition of the need for better climate-related accountability, the Securities and Exchange Commission has proposed regulations on the disclosure of climate-related risk and greenhouse gas emissions by public companies. This standardization will be implemented over the next three years.
What’s Next? Putting your money to work
Many banks and funds are heavily invested in fossil fuels, but their investments are not always transparent. Make sure that your funds aren’t deposited at a top fossil fuel financing bank. If you aren’t sure where to start, check out our list of sustainable banking options.
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