JP Casey (JPC): What were some of the main takeaways from the oil and gas AGMs?

Kathy Mulvey (KM): Climate is high on the agenda for shareholders in these major oil and gas companies, and I would say there’s growing investor impatience about the lack of ambition of oil and gas companies. Investors want these companies to look at how they can actually comply with the commitments the world has made to tackle climate change and align their own business models with the target of keeping global temperate increase well below two degrees and striving for 1.5 degrees.

JPC: What has been the role of the UCS in relation to oil and gas majors and climate change?

KM: We’ve been working directly on holding fossil fuel companies accountable for their role in climate change for several years. This industry has a long, well-documented history of seeking to confuse the public about climate science and block action on climate energy policy, so we’re calling on these companies to stop spreading climate disinformation, and that’s both in terms of their own direct communications, but also in terms of their participation in trade associations and other industry groups that are really active in this space.

[We can draw on] our own scientific expertise and rigour and also networks of external experts; the Union of Concerned Scientists has a network of 25,000 scientific experts who are connected to and part of our organisation, and we also have relationships with researchers and academic institutions to bring to the table. We are working to catalyse research and analysis that can really be brought into policy discussions.

We supported a US public opinion survey by the Yale Program on Climate Change Communications that found that the majority of the US public does think that fossil fuel companies should pay their share of climate-related damages. This is the context these companies are operating in, and refusal to address questions about that topic should be a red flag for investors.

JPC: Has the UCS been successful in these objectives?

KM: There is some positive movement on that question by a few of the companies [and] as a science advocacy organisation that’s obviously a paramount concern for us. Similarly, we have seen some of these companies actually start to sever their ties with trade and industry groups that have been found to spread misinformation and block climate action.

One lobbying group in particular, that’s been the focus of a lot of attention in the US, is the American Legislative Exchange Council, which is very active on energy policy, mainly at the state level. We’ve now seen many of the companies that we have examined closely, BP and Shell in 2015, and Exxon Mobil in 2018, actually leave that lobbying group because its positions were not consistent with their own stated position on climate change.

This year, Shell published a review of the climate positions taken by the industry associations it supports—and based on that review the company decided to quit the American Fuel and Petrochemical Manufacturers. While UCS recognised these important steps, we believe Shell and other major fossil fuel companies ought to pressure all their industry and lobby groups to represent what they say on climate policy, or not allow those groups to have their financial and corporate backing. At its AGM this year, BP was called upon to do a similar review, and this issue of lobbying alignment is one that’s been elevated through shareholder dialogue led by the Climate Action 100+, which is a group of leading institutional investors that have secured [support from] over ten European companies [which have] either pledged to or done one of these reviews.

JPC: Do you think technological innovation will have a role to play in this transition?

KM: Certainly, there’s enormous capacity but without dramatic emissions reductions coupled with planning and investment in low-carbon technologies, we’re not going to get to net zero emissions by 2050, which is what is needed to avoid devastating climate impacts. BP, for example, is taking a venture approach for the most part to low-carbon technology: feeding a little bit of investment here and a little bit of investment there, and I guess the idea is that something will take off and provide a driving force towards decarbonising the economy, but the company hasn’t yet committed to do its part to keep global temperature increase within the Paris agreement limits.

[Scenarios put forth by companies such as Shell] depend on negative emissions technologies without saying how those technological innovations are going to be paid for. Shell seems to be planning on a 200-fold increase in carbon capture and storage from where we are now, but again doesn’t explain what the steps are to get from here to there. These companies are expecting somebody else to pay for those innovations, and how is that a viable business model?

JPC: What is still to be done by companies to improve their environmental performance?

KM: In BP’s case we saw a glaring misalignment; BP has long said that is supports a price on carbon, but it actually funnelled more than $13m into a campaign opposing a carbon fee in Washington state in the US. If a company is going to say it supports a certain policy and concepts, but then we find fault with any actual policy proposals, that’s a hollow commitment.

Another major area that we look at with these companies concerns how are they actually bringing their own business models into alignment with the need to reduce global warming emissions to net zero by mid-century, in order to avoid the worst effects of climate change. These companies lack ambition and urgency in terms of their targets for reducing emissions, and in terms of actually taking responsibility for emissions from the use of their products.

There aren’t any [companies] that are ambitious enough yet. BP’s targets do not encompass the use of its products, which are about 88% of the emissions associated with it, so there is some low-hanging fruit out there in terms of emissions across the supply chain and the company should definitely look at that. But if you have a target to reduce emissions, but only operational emissions, you would be tinkering around the edges of the scope of the problem.

For most oil and gas companies, global warming emissions from the use of their products are 80% to 90% of the total. While there are some incremental differences among the companies, all of them fall short.