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The clean energy claims of BP, Chevron, ExxonMobil and Shell: A mismatch between discourse, actions and investments [1]

['Mei Li', 'Graduate School Of Environmental Studies', 'Tohoku University', 'Sendai', 'Miyagi Prefecture', 'Gregory Trencher', 'Graduate School Of Global Environmental Studies', 'Kyoto University', 'Kyoto', 'Jusen Asuka']

Date: 2024-06

Interpreting ExxonMobil’s results requires caution. This major increased its usage of keywords after 2014. But this is likely influenced by the style of annual reports. While the other three majors release full reports each year, ExxonMobil published only summaries (except 2020). Considering that total normalized keyword usage dips markedly in 2020 (when a full report was available), for other years, results appear to be inflated by the brevity of annual-report summaries. This aside, ExxonMobil’s results show an increase in discourse on “emissions” and “low carbon” energy. But the low frequency of keyword mentions in the “climate change” and “transition” categories reflects low attention to these issues. This differs from the European majors, where results in the “transition” category increase markedly. Furthermore, ExxonMobil’s use of several keywords is erratic. For example, in the “emissions” category, although “CO2” was mentioned 10 times in 2009 and 11 times in 2020, it was not found between 2011 and 2013.

Chevron is the only major not showing a noticeable increase. It trails the European majors in all categories, particularly “climate” and “transition”. The word “climate” was mentioned only 45 times for the entire study period and was missing from annual reports in 2009–2011. This compares to 171 mentions by BP in 2020 alone. Chevron’s lagging performance is also indicated by mention of “renewables”. This appears only in the glossary of terms of the 2009 annual report, and climbs to just 19 mentions in 2019 [ 85 ], compared to 92 times by BP.

BP also shows a marked increase in keyword usage over the study period, especially in 2019. In contrast to Shell’s steadily rising trend, BP’s follows a “U” curve, with low points between 2012 and 2017. BP has increased usage of words in the “climate change” category in particular, from 22 to 326 mentions over 2009–2020. The “transition” category also increased markedly in the study period, from 50 to 418, reflecting increased discussion of a low-carbon business model. In 2009 the CEO considered BP an “oil company”, whereas in 2021, BP advocated transforming into an “integrated energy company” and pledged a transition to net-zero emissions [ 84 ].

Shell is the only company showing a marked increase in all four categories over the study period, displaying a clean “J” curve. Notable keywords include “low-carbon energy” (increasing almost ten-fold, from 59 to 503 mentions), “renewable” (3 to 91), and “clean” (9 to 82). This shift in oral discourse is also visible in the evolving messages from Shell’s chairpersons. For example, in 2009, Jorma Ollila stated ambitions to produce more oil and natural gas to meet global energy demands [ 83 , 84 ]. This was flipped in 2020, as Chad Holliday pledged a reoriented mission, to “play an essential role in the move to a cleaner, lower-carbon world” [ 83 ].

Fig 1 shows the normalized results of the discourse analysis: the frequency of 39 keywords in annual reports. All majors show a clear increasing trend over the study period, most notably the European majors, particularly in the “transition” and “emissions” categories. Findings reflect an amplification of discourse about mitigating GHG emissions and increasing clean energy businesses.

3.2 Strategies: Pledges and actions

This section applies the framework explained in Section 2.2.3 and Table 2 to evaluate the state of pledges and concrete business actions that indicate a shift to clean energy. Results for each major appear in Fig 2A and 2B. The differing trajectories of pledges and actions appear in Fig 3. Detailed supporting evidence is provided in (S2–S5 Datasets). When discussing findings, we refer to indicators with codes explained in the Methods (Section 2.2.2).

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TIFF original image Download: Fig 2. Business strategy analysis for European majors (2009–2020). (a) Business strategy analysis for European majors. (b) Business strategy analysis for American majors. Note on scores: “+1” indicates pledges and actions that implement or reinforce a strategy or commitment in that year; “-1” indicates pledges and actions that contradict or hamper a strategy or commitment in that year; and “0” indicates that no evidence of pledges and actions in either direction was found. https://doi.org/10.1371/journal.pone.0263596.g002

3.2.1 Climate-change cognition. While the two European majors consistently acknowledge the anthropogenic causes of climate change (CC1-P&D) over the study period, the American majors have frequently ignored this topic. Only in 2018 did ExxonMobil recognize, indirectly and weakly, the link between fossil fuels and climate change in its annual report—and this position did not carry over into the 2020 version. Meanwhile, from 2011 to 2017, Chevron conceded in its corporate responsibility report that “use of fossil fuels to meet the world’s energy needs contributes to the rising concentration of greenhouse gases in Earth’s atmosphere” [86]. Yet this acknowledgment vanished from later versions. In contrast, the European majors have consistently acknowledged the link between fossil fuels and climate change. For Shell, this began in 2010 and evolved into stronger annual-report statements from 2015 on, such as: “We have long recognized that the use of fossil fuels contributes to climate change” [87]. BP follows a similar trend: its acknowledgment of climate change begins weakly in sustainability reports from 2010 [88], and evolves into stronger statements from 2012 on, such as: “action is needed to limit carbon dioxide (CO 2 ) and other greenhouse gases being emitted through fossil fuel use” [89]. For both the American and European majors, we find scant acknowledgment of the need to shift away from or reduce dependence on all types of non-sequestered fossil fuels (CC2-P&D). Overall, statements consistently argue the reverse. For example, from 2014, ExxonMobil began to reject the need to reduce emissions from hydrocarbon development [90], even strengthening this position in 2020: “With respect to energy supply, production reductions by individual companies would have no impact on demand or consumption of energy, and would simply result in production shifting from one producer to another” [91]. Chevron expresses similar views, stating as recently as 2019 that “a decrease in overall fossil fuel emissions is not inconsistent with continued or increased fossil fuel production by the most efficient producers” [92]. The European majors show a similar pattern of rejecting the need to transition away from non-sequestered fossil fuels. BP communicated in its annual report 2019 that producing more gas was consistent with a net-zero future [8]. This only changed in 2020, when BP announced the intention to reduce all fossil fuel production as part of its energy transition [84]. As the only indicator for action in this category, participation in the Oil and Gas Climate Initiative (CC3-A), established in 2014, indicates more rapid acknowledgment by the European majors of the need to begin the energy transition. Specifically, BP and Shell joined in 2015, three years before ExxonMobil and Chevron. Finally, BP, Shell, and Chevron have actively disclosed climate-related regulatory risk since 2009 (CC4-P&D). Shell was the first to consistently acknowledge both regulatory and market risks from climate change in its annual reports. For the other three, disclosure of market risk (CC5-P&D) has probably lagged due to views that renewables would not pose a significant threat to hydrocarbon businesses in the short term [90, 93].

3.2.2 Business model. For the business model category, support for government carbon-pricing policies (BM9-P&D) and adoption of an internal carbon price for decision-making purposes (BM10-A) are the only areas where consistent activity is observed over the study period. BP and Shell have introduced carbon pricing into decision-making, each setting $40 per ton [88, 94]. Though ExxonMobil’s support for carbon policies dates back to at least 2009 [95], continuous consideration of carbon pricing in internal business decisions (BM10-A) did not occur until 2017. For other indicators, evidence of a business-model transition toward clean energy is thin, appearing only after 2018. Only the European majors explicitly mention a commitment to shifting beyond fossil fuels to achieve a net-zero-emissions business model (BM1-P&D). In 2019, BP first pledged an ambition to become a net-zero company by 2050 [96]. Outlining a concrete strategy to achieve this through five aims [84], BP is the only major receiving a score for BM2 -A. This strategy includes increasing the proportion of investments in non-fossil fuel businesses and gradually reducing hydrocarbon production (BM3-P&D) and exploration (BM5-P&D). Shell also announced a goal to reach net-zero emissions by 2050 (BM1-P&D). Although it proposed a step-by-step plan to reduce carbon intensity while pledging to refrain from new exploration (BM5-P&D) after 2025, we found no evidence of an explicit plan to achieve such a transition [97]. Several actions are hampering the transition, most notably the refusal to make climate-related commitments or actions to reduce fossil fuel production (BM3-P&D and BM4-A) or fossil fuel exploration (BM5-P&D and BM6-A). While both BP and Shell engaged in new exploration in 2020 [84, 97], this tendency is particularly pronounced at Chevron and ExxonMobil. In 2019, Chevron rejected views that its assets might become stranded, outlining an objective “to be among the most efficient producers” while continuing to develop new fossil fuel reserves [92]. Meanwhile, ExxonMobil emphasized [91]: “The Paris Agreement does not contemplate or require individual companies to decrease production to align with the goal of maintaining global temperature rise to below 2°C. It thereby frames the required energy transition as being related to “society’s demand for energy–not its supply” (emphasis added). For labor force reallocation (BM7-P&D and BM8-A), virtually no activity was observed except BP’s pledge in 2020 of “enabling a just transition for the workforce” [84].

3.2.3 Emissions reduction. The presence of pledges to reach net-zero emissions by 2050 (ER1-P&D) again shows the American majors trailing their European counterparts. While Chevron and ExxonMobil are yet to announce net-zero emission goals, BP and Shell did so in 2019 and 2020 respectively [8, 83, 96, 98]. Furthermore, in 2021 the European majors announced multiple rising targets to achieve net-zero emissions (ER2-A). Shell pledged to reduce the carbon intensity (compared to 2016 levels) of all energy products by 20% by 2030, 45% by 2035, and 100% by 2050 [99]. For scope 3 emissions (ER3-P&D), in 2017 Shell became the first major pledging to reduce the GHG emissions of energy products sold [100, 101]. BP followed from 2019 [8]. No evidence was found however of concrete actions to achieve these pledges (ER4-A). Activity from the two American majors is absent in this field. All majors have announced pledges to reduce methane emissions (ER5-P&D), but only since 2017 and 2018. All plan to improve energy efficiency and to mitigate flaring by investing in upstream and downstream technologies and by cooperating with industry frameworks such as OGCI. Pledges differ in the details. ExxonMobil pledged in 2017 to reduce absolute levels by 15% by 2020, and to lower flaring by 25% [102], a goal since achieved [103]. However, the other three majors’ intentions only concern intensity [92, 98, 104]. Again, no major has proposed an integrated and concrete roadmap to achieve these emissions reductions (ER6-A). Interestingly, despite growing expectations across the industry to completely eliminate all methane emissions from production [48], no such pledges were observed. All four majors have lagged in fully disclosing GHG emissions from fossil fuel products produced and sold (ER7-P&D). While each has released data for scope 1 and 2 emissions, disclosure of scope 3 did not begin until 2017 with Chevron. BP followed in 2019, and Shell in 2020. ExxonMobil, however, has refuted the need to disclose scope 3 emissions, stating: “Furthermore, Scope 3 emissions do not provide meaningful insight into the Company’s emission-reduction performance and could be misleading in some respects. For example, increased natural gas sales by ExxonMobil that reduce the amount of coal burned for power generation would result in an overall reduction of global emissions but would increase Scope 3 emissions reported by the Company” [103].

3.2.4 Clean energy investment. Again, the two European majors are more active in clean energy businesses than their American counterparts. But their actions are sporadic and inconsistent. Regarding the disclosure of annual CAPEX spending for clean energy (CE1-A), Shell and BP have released figures for some years, but not all. BP’s annual data covers only seven years in the study period, while Shell’s cover only three. BP claimed to have invested $1.6 billion in alternative energy in 2011 [105], the highest amount reported. Although later dropping to $750 million in 2020 [84], BP has since pledged to increase annual “low carbon” spending, aiming for $3–4 billion by 2025 and $5 billion by 2030 [84]. Neither ExxonMobil nor Chevron has disclosed information for any year about actual volumes spent, despite claims of increasing investments for low-carbon energy and technologies [85, 91]. Pledges to direct at least 1% of total CAPEX toward clean energy (CE2-P&D) were observed only for the European majors, and these appear only after 2017. Shell pledged to invest $1–2 billion annually into renewables from 2018 to 2020 [106], satisfying the 1% threshold. This increased in 2020 to $2–3 billion annually [97]. No major releases annual investment amounts for clean energy in a consistently transparent format that enables year-to-year tracking. It was, therefore, difficult to verify whether any met the highly conservative 1% threshold (CE3-A). Notwithstanding, BP leads in low-carbon investment, with reported spending on clean energy exceeding 1% of total CAPEX for eight years. Shell also appears to have spent more than 1% for the years it released figures. However historical pledges have been missed. For example, Shell pledged to spend $1–2 billion annually from 2018 to 2020. Yet investments were only disclosed for 2020, with actual spending less than half of pledges ($0.9 billion) [97]. ExxonMobil and Chevron have not disclosed any clean-energy spending volumes during the study period.

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[1] Url: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0263596

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