The recent evaluation of the low-carbon transition plans of major oil and gas companies in Europe and North America has revealed concerning results. According to the leading investor climate action group, Climate Action 100+, the current plans put forth by companies like Exxon Mobil, Shell, and Chevron are lacking in several key areas. The assessment was conducted using the Net Zero Standard for Oil & Gas framework, designed by the independent Transition Pathway Initiative (TPI) Centre.
The evaluation focused on three main themes – Disclosure, Alignment, and Climate Solutions. Under these themes, companies were expected to provide detailed information about their activities, demonstrate ambitious climate goals, and track their investments in environmentally friendly initiatives. Unfortunately, the overall performance of the companies fell short, with the evaluation revealing that they met just 19% of all the Net Zero Standard metrics.
European companies, such as TotalEnergies, BP, and Eni, outperformed their North American counterparts in the assessment. This disparity indicates that European companies are taking more significant steps towards addressing climate change and transitioning to a low-carbon economy. However, companies like Shell and ConocoPhillips chose not to comment on the findings, highlighting a lack of transparency in their approach to climate action.
While some companies have set targets to achieve net-zero emissions by 2050, the lack of detail on their planned use of carbon capture technology poses a significant challenge. Without a clear roadmap for reducing emissions and transitioning to renewable energy sources, it is difficult to assess how these companies will achieve their ambitious goals. Additionally, few companies are willing to acknowledge the need for substantial production reduction in the fossil fuel industry, a crucial step outlined in the Paris Agreement.
The assessment of the Net Zero Standard for Oil and Gas serves as a wake-up call for the industry. Companies must prioritize transparency, ambitious climate goals, and investments in green initiatives to meet the challenges posed by climate change. The findings of the evaluation are intended to inform engagement by asset managers with the boards of these companies. As the season for annual general meetings approaches, stakeholders must hold companies accountable for their commitments to sustainability and climate action.
The assessment of oil and gas companies’ low-carbon transition plans reveals a pressing need for more robust climate strategies and a greater sense of urgency in addressing the challenges of climate change. Companies must prioritize transparency, ambitious goals, and investments in green initiatives to transition to a sustainable future.