Josephine writes*
In 2001, British Petroleum rebranded to “Beyond Petroleum” promising to be a key player in the global low carbon energy transition. What does corporate environmental responsibility (CER) look like for an oil and gas company? Should these companies be held to different CER standards given the intrinsic paradox of being a “green extractor of crude oil”?
Taking a closer look at one company – now “Beyond Petroleum” – can help us understand how an oil company reports on its environmental, social, and governance (ESG) impacts and whether there are deeds behind their words, or if it is just “old wine in new bottles”?
Sir John Browne was President at the time of the $200 million rebranding and is also a vocal advocate for clean energy (Matejek & Gössling, 2014). Browne followed up on his words with deeds, such as investing in solar power and “pull[ing] BP out of its involvement with developing Canadian tar sands” which is “an energy-intensive process with a carbon footprint several times that of conventional oil” (Pearce, 2008). Only a few years later under new leadership (after Browne was ousted for being gay), BP bought its way back into the Canadian tar sands (Pearce, 2008).
But, isn’t BP one of the “better” oil companies?
While it’s true that BP was the “first oil company to publicly accept the scientific reality of man-made climate change”, it is still one of the largest individual carbon emitters, with a long emitting history (Matejek & Gössling, 2014). BP’s sustainability strategy has also helped them appear different and “better” than other traditional oil companies which increased their profits (even when their investments didn’t change). For example, corporate greening provides differentiation and “competitive advantage especially in sectors that are not directly associated with environmental responsibility” such as an oil company (Matejek & Gössling, 2014). To date, BP’s core business in petroleum still surpasses its tentative investments in renewable energy (Matejek & Gössling, 2014). So, at the end of the day, BP is not beyond oil.
Evolving under different leadership and since its rebranding in 2000, BP has gone through different waves of expanding and retracting its renewable energy transition commitments. For example, following the Deepwater Horizon oil spill in 2010, BP came under extreme scrutiny, especially being “legally responsible for operational safety on the oil rig” (Matejek & Gössling, 2014). Their sustainability strategy following this event was “widely accepted at first, only to find themselves dismissed as corporate greenwashing now” (Matejek & Gössling, 2014). Where will BP transition towards now?
BP’s new wave of sustainability strategies includes five aims that are boldly published on their website (with titles in blue curly letters so that everyone can understand them).
Let’s break down a few of these aims to see if they really are understandable.
- “Aim 1: Net Zero Operations”
- “Aim 2: Net Zero Production”
These two aims communicate BP’s goals in making their operations and production net zero which only relate to two out of three aspects of total GHG emissions (also known as Scope emissions). To a general audience, this incomplete picture would not be communicated (Scope 1, Scope 2, Scope who?). Thus, their definition of net zero has a massive flaw and excludes from the picture how its fuels are consumed and used (Scope 3).
In general, BP’s narrative remains conveniently vague. While they have profited from an enhanced green image, there is confusion on whether “Beyond Petroleum” is just a slogan or a statement of corporate goals that can be criticized accordingly.
Bottom line: Oil and gas companies know corporate sustainability reporting is confusing and use it to their advantage to sustain ignorance.
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* Please help my Economic Growth & Development students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).
Hey Josephine! I really enjoyed your blog post. I was left thinking about how the expanding and retracting of BP’s commitment to renewable energy is so dependent on the leadership. Longer-term solutions are necessary so that, even with changes in leadership, companies such as BP have to keep moving towards greener energy. Does the solution lie in ESG reporting? I’m not sure whether they induce sufficient long-term change. Furthermore, I can see the immense value of ESG reporting in industries such as retail or food, but I’m not sure whether, given the extractive nature of the oil and gas industry, it is enough to reduce the impact of fossil fuels. In fact, as you mention in your summary, oil and gas companies know that ESG is confusing and perhaps use it to their advantage. Maybe for these companies, clear regulation and legislation are more effective.
Congrats on a great post!
Hi Hannah! Thanks for your insightful comment 🙂 I definitely agree as you pointed out, the negative prospects for real change within extractive industries if so much is dependent upon the leadership at the moment. I am also however not entirely convinced that ESG reporting is the solution. We must ask ourselves, who is reading these reports? Is it just consumers, what is their voice in this? Or is are they being regulated by a third-party? And, if oil and gas companies can largely “construct” and report on what they want, how effective can they truly be? Thus, I believe that more State regulations and influence is needed to monitor and set standards for ESG indicators in order for it be more effective than now. Additionally, a variation between sectors as you pointed out (between clothes, food, oil and gas and everything else) would be beneficial with different ESG standards. Thanks again!