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Big Oil’s climate planning not good enough, investor group says
Global Banking & Finance Review®
Company
By Simon Jessop
LONDON (Reuters) -The current low-carbon transition plans of 10 of Europe’s and North America’s biggest listed oil and gas companies are not good enough to assess the risks involved, the world’s leading investor climate action group said on Wednesday.
Climate Action 100+ said the companies including Exxon Mobil, Shell and Chevron were assessed using its sector-specific Net Zero Standard for Oil & Gas framework by the independent Transition Pathway Initiative (TPI) Centre.
The other companies included in the analysis were TotalEnergies, ConocoPhillips, BP, Occidental Petroleum, Eni, Repsol and Suncor Energy.
Each was assessed using indicators and sub-indicators under three broad themes – Disclosure, where companies are rewarded for providing information about their activities; Alignment, which tests their climate ambition; and Climate Solutions, which tracks their investments in greener activities.
The aim of the Net Zero Standard for Oil & Gas (NZS) framework is to allow to assess to what degree the disclosures and strategies of companies in the sector are aligned with the Paris Agreement on climate.
Overall, the companies met just 19% of all the NZS metrics. European companies performed the best, led by TotalEnergies, BP and Eni, with North American companies weaker across all three themes.
Shell and ConocoPhillips declined to comment on the findings. The other companies did not immediately reply or were not immediately able to comment on the report.
While several companies are targeting net-zero emissions by 2050, a lack of detail on their planned use of carbon capture technology meant it was hard to tell how they would get there, CA100+ said.
On the issue of fossil fuel production, which the International Energy Agency says will need to be reined in to hit the world’s climate goals – a move acknowledged at the COP28 climate talks in Dubai in November – few firms appeared to concur.
Among disclosure sub-indicators, none of the companies acknowledged the “need for substantial production reduction across the industry”. Of the 10, only Repsol and TotalEnergies guided on long-term oil, gas or their combined production.
None of the companies provided the desired detail on their planned greenfield capital expenditure plans, the report added.
“The inaugural assessment of the Net Zero Standard for Oil and Gas delivers a clear message: while certain companies showcase commendable strides towards robust climate strategy, the overall industry landscape remains alarmingly underprepared for the transition,” said Jared Sharp, Project Lead for Net Zero Standards, TPI Centre.
The hope is that the analysis will be able to help inform engagement by asset managers with the boards of the companies, as the season for annual general meetings picks up pace in the weeks ahead, Sharp said.
(Reporting by Simon JessopEditing by Tomasz Janowski)
Climate change refers to significant changes in global temperatures and weather patterns over time. While climate change is a natural phenomenon, human activities, particularly the burning of fossil fuels, have accelerated its effects.
Carbon capture technology involves capturing carbon dioxide emissions produced from the use of fossil fuels in electricity generation and storing it underground to prevent it from entering the atmosphere.
Net-zero emissions occur when the amount of greenhouse gases emitted is equal to the amount removed from the atmosphere. Achieving net-zero is crucial for combating climate change.
The Paris Agreement is an international treaty that aims to limit global warming to well below 2 degrees Celsius above pre-industrial levels, with efforts to limit the temperature increase to 1.5 degrees Celsius.
Climate solutions refer to strategies and technologies aimed at reducing greenhouse gas emissions and enhancing resilience to climate change impacts, including renewable energy, energy efficiency, and sustainable practices.
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