Have Oil Majors Changed Their Tune on Climate Change?

“This is the biggest challenge as we have at the moment as a company,” Ben van Beurden, chief executive of oil giant Shell, said recently. “The fact that societal acceptance of the energy system as we have it is just disappearing.”

Speaking at the annual CERAWeek energy conference in Houston on March 9, van Beurden described the growing tensions between his industry, which has created our fossil fuel dependent energy system, and the public, which is demanding a switch to clean energy: “I do think trust has been eroded to the point where it starts to become a serious issue for our long-term future.”

The world’s largest oil companies are increasingly faced with public pressure to do something about their impact on climate change. And increasingly we’re seeing their chief executives responding. The question is though, how much is for real and what's just greenwash?

It’s been just over a year since the Paris climate deal was agreed in December 2015 and slowly corporate annual reports are being filed. In these, companies take stock of the year’s changes and assess the future risks to their business. Meanwhile new strategies and corporate statements are being issued. Statoil recently released a climate roadmap and ConocoPhillips has come out in support of the US remaining part of the Paris Agreement.

But what are we to make of all of this? Do the actions of these oil giants match the big words put out by their chief executives when it comes to climate change? Has anything really changed since Paris?

Royal Dutch Shell

It feels like Shell is going through a bit of an identity crisis. On the one hand, it’s been pretty clear about the risk climate change poses to its business and the need to transition to renewable energy. But on the other hand, it sees this as a slow, decadal process and has a record of lobbying against climate action.

Last week headlines were made when Shell announced it was selling off most of its Canadian oil sands assets. Mixed in with this also was the news that it would now be tying 10 percent of its directors’ bonuses to how well they manage greenhouse gas emissions in their operations.

It also aims to invest $1 billion in renewable energy by the end of the decade.

But a look at the bigger picture shows that while these are steps in the right direction, they’re relatively small steps given Shell’s total annual spending comes to $25 billion.

And according to a recent article written by Shell’s climate advisor David Hone, the company has “no immediate plans to move to a net-zero emissions portfolio over our investment horizon of 10-20 years”.

That said, Shell appears to be somewhat ahead of the curve compared to other oil majors. Maybe it's making up for lost time, or perhaps it doesn't want to be left in the dust. Either way, it's not entirely burying its head in the sand. In its annual report last year for the year up to December 2015 it was the first company to recognize that policy action and legal risks due to rising climate change concerns are mounting. These same concerns are repeated in this year’s report.

However, this comes after the Guardian revealed that Shell knew of the impact fossil fuels would have on the climate as far back as 1991. In a film on temperature and sea level rise the oil giant accurately predicts what scientists now all agree on about climate change.

Yet, despite the company’s own data, it has spent decades investing in unconventional oil and gas projects. Projects which it has always known are incompatible with tackling climate change.


Meanwhile, BP is facing significant pressure to boost production. Part of this effort means it continues to expand into more and more challenging projects in search of bigger returns. But it’s having some trouble.

After strong public opposition to its plans to drill in the pristine waters of the Great Australian Bight it pulled out of the deepwater venture. And now it’s planning a similarly controversial project: drilling for oil near a recently discovered coral reef off the coast of Brazil.

The company also isn’t performing as well as it would have hoped, with share prices currently sitting 30 percent lower than before its Deepwater Horizon disaster.  All of this has led to rumours of takeovers, with reports last week that Exxon was eyeing up the British oil giant.

And as it continues to lay off workers from its drilling operations on the North Sea, a DeSmog UK investigation shows BP has been working hard to boost its social license by putting BP-branded tutors in primary and secondary schools all across Aberdeen.

In the US, however, BP chief executive Bob Dudley seems encouraged by the change in winds that came with a new White House administration. Dudley recently said that the political situation meant business is much more open now, saying that the White House is “very interested” in BP, “more so than at any times in the last eight years”.

As BP continues to push into riskier projects – and riskier in all senses of the word, from its operations to the climate and the marine environment – it will be interesting to see what its annual report (yet to be published) makes of all of this. Last year’s simply recognizes the impact that complying with climate change regulations and laws may have on its profit margin.


Compared to last year, Chevron’s come a long way. Whereas its chief executive John Watson boasted last year that the world will always need Big Oil this year it too has publicly recognized to its investors that climate change lawsuits can pose a risk to its profits.

In its annual report for the year up to December 2016 it states: “increasing attention to climate change risks has resulted in an increased possibility of governmental investigations and, potentially, private litigation against the company.”

But amidst growing demand from shareholders for corporate disclosure on climate risks, Chevron this month said in a quietly released report that a transition to lower-carbon energy sources would pose only a “minimal risk” to its operations because it’s investing in these options too. It then goes on to explain that oil and gas will remain the fundamental energy sources.


Like BP, Exxon fails to go beyond the impact of climate regulations on its profits. The company however continues to be in the spotlight, from investigations into its long history of funding climate denial to former chief executive Rex Tillerson becoming part of the new White House administration – the same Rex Tillerson who, as Exxon's chief, went by the alias 'Wayne Tracker' when emailing colleagues to discuss climate change.

Since Tillerson left the helm, Exxon has made some attempts to improve its climate credentials. The new chief executive Darren Woods publicly endorsed the Paris climate deal and just weeks after he took over from Tillerson, Susan Avery, a climate scientist, was appointed to the company’s board.

This comes after the company’s shareholders failed to do just that during Exxon’s annual general meeting last summer. During this meeting three other climate related initiatives were voted down including one to stress test the business to avoid 2C warming.

However, no major shift on strategy was announced during Woods' first speech on March 1 since being appointed to lead Exxon. Instead, investment priorities will continue to be in oil and gas.

The company also appears to be taking full advantage of the new US administration’s warm welcome to oil lobbyists as it pushes for weaker regulations on the oil and gas industry.

Photo: Drew Kolb via Flickr | CC 2.0


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