“Those are my principles and if you don’t like them… well, I have others.”
The famous words of much-loved comic Groucho Marx, but they could have come out of the mouth of BP’s chief executive if this week is anything to go by.
After reporting record profits of £23bn last year, the company’s CEO, Bernard Looney quickly rolled back on commitments to cut the energy company’s Scope 1 and Scope 2 emissions by 2030 by between 35% and 40%. This has now been lowered to between 20% and 30%, with more investment going into hydrocarbons than previously planned. It has not shelved it’s net zero by 2050 commitment, however.
The justification? People just love oil and gas. BP is merely “helping provide the energy the world needs,” he wrote in its annual report. Others may suggest it’s simply benefiting from a war in Europe that has impacted energy supply, but if that’s BP’s outlook then so be it.
The PR fallout – if you can call it that – of BP’s bumper year centred on tax. Given the cost of living has dramatically increased, in large part due to the cost of heating one’s home, there’s a public sense of injustice about how little will find it’s way back into government coffers. A windfall tax is in place in the UK, but many argue it’s not high enough. Capital Monitor would counter that’s more a failure of government, not of BP.
In that sense, BP’s climb down on curbing carbon emissions has played second fiddle in public consciousness. If shareholders are anything to go by, they could hardly care less. With the share price reaching a three-and-half-year high on February 8, and the promise of healthy dividends for the foreseeable, don’t expect pension funds to make too much noise about short-term carbon emissions reductions.
And maybe they shouldn’t. It’s hard work for asset owners to find decent returns; if the Shell’s, Exxon’s and BP’s of the world are raking it in then you’re a bold CIO if you choose to divest now. No doubt many will be justifying their holdings by rolling out the old, “it’s better to be pissing out of the tent…” engagement analogy.
Timing is everything
BP’s decision to roll back its commitment come safter the damp squib that was Cop27, and the conclusion that world leaders are given up hope on finding consensus for climate mitigation (opting to go big on climate adaption instead) there is a palpable sense now that the Paris Agreement – a commitment to keep temperatures from rising beyond 2oC – is nothing more than a collection of well-intentioned signatures on a piece of recycled paper.
With cracks forming in the investor and banking net-zero alliances – think Vanguard – and oil execs changing their tune on renewables one could also be mistaken for thinking the money men and big corporates are shifting positions under the cloud cover formed by our political leaders.
This year could prove fateful if multiple carbon emissions commitments continue to be watered down. Sticking to net zero by 2050 requires positive action now – not in 2049. The International Energy Agency says that to reach net zero emissions by 2050, annual clean energy investment worldwide will need to more than triple by 2030 to around $4trn. It also makes very clear that no new investment in oil and gas fields should commence as of 2022.
And BP appears to tread a thin line here. While admitting it would miss its targets to reduce oil and gas production by 2030, it said it would match investment in lower carbon projects with any new investment in fossil fuels while extending the life of existing oil and gas projects. So, it will shave less carbon emissions off now, benefit from the immediate energy bonanza, and hope to catch up later on.
If they can do it….
So where is the leadership required to stop others big emitters from thinking, “Maybe we can let things slide for now?”
Well, it may come down to the actions of individuals within these influential institutions. Albeit fraught with risk, both personal and professional, whistleblowing may prove one avenue that could keep institutions on their toes and holding them to account to their existing public commitments.
While it’s hard to get a complete picture of the development of whistleblowing culture, various reports indicate it is on the rise. Baker and McKensie surveyed 523 business leaders in Asia Pacific with the results showing a strong uptick in whistleblowing reports year on year.
Published in October 2022, the law firm revealed a 41% increase on average, notably higher (74%) in China and in Hong Kong (61%). One third of complaints were linked to at least one aspect of ESG. The report concludes: “This trend is likely to continue, driven by new whistleblowing regulations, increased public and media attention, and offering of financial incentives.”
In the UK, the picture is far less clear, especially on the subject of the environment. If the Environment Agency, a government department, is anything to go by, very few individuals whistle blow environmental concerns. Between April 2021 and March 2022, the agency received only eight qualifying whistleblowing disclosures. At Ofwat, the UK’s water regulator, only nine.
According to Sybille Raphael, the legal director at Protect, which provides advice on whistleblowing, very few callers raise an environmental concern. “It’s around 10 per year,” she says. “We normally advise between 2,500 and 3,000 callers per year.”
Why the lack of engagement on the environment is unclear, especially considering how important it is to the new generation of workers (Gen Z). It may be down to simply not knowing what rights a whistleblower has or who to approach to seek advice before acting.
According to Lewis Silkin, a law firm, UK law protects “a whistleblower who makes a “protected disclosure” about specific types of wrongdoing, where they reasonably believe this to be in the public interest.”
Given the increased regulatory scrutiny concerning greenwashing, it seems reasonable to assume that any credible evidence that a company is failing in its commitment to the environment would be in the public interest.
Whistleblowing is not for the faint of heart and clearly not suitable for all situations, but it could prove an important tool in holding institutions to account, especially as companies start realising the clamour to keep temperatures from rising has abated. As Standard Chartered’s CEO Bill Winters said at Davos: “We’re all terrified of being accused of greenwashing”.
Being terrified of something sharpens the mind to which principles really matter. And without principles, what exactly do we have?