Big Oil CEOs can no longer express doubt that burning fossil fuels is a major contributor to climate change. Former BP CEO John Browne was way ahead of his time, however, as CEO of petroleum, making investments in renewables and reducing greenhouse gas emissions more than 25 years ago. . Now, as oil executives testify before Congress on climate change Thursday, Browne says the big picture has not really changed – at least not enough to meet carbon reduction targets.
“I wish the oil industry had done something about this 25 years ago,” Browne, now president of BeyondNetZero, said at the CNBC ESG Impact summit Thursday.
Browne said he was happy to see that oil companies are now speaking “at least the right language” and “pointing out virtues,” but at the end of the day, “very few are setting goals that really make sense and that have plans to reach them “.
A customer refuels a car at a gas station in San Francisco, California, United States, Thursday, October 21, 2021.
David Paul Morris | Bloomberg | Getty Images
The problem is not limited to the energy sector. Around 1,800 companies have committed to meeting the Paris 2050 climate targets, but only 50% of these companies have set carbon reduction targets, and only 10% of them have plans to achieve them.
“It’s about putting plans into action. It’s not just about setting goals. These plans are rare everywhere,” said Browne.
And even for companies that have plans, the plans will require increasing investment.
The amount invested annually will need to increase from $ 1.2 trillion to $ 3.5 trillion. âIt’s a big change, and that change needs to be made every year for the next decade,â Browne said.
âWe need to convert conviction into conduct and live up to the authorities that various agencies have,â said former Treasury Department deputy secretary Sarah Bloom Raskin, who spoke with Browne to ESG Impact.
The U.S. government’s Financial Stability Supervisory Board held a multi-agency meeting last week on climate risks.
“We have to start creating for the private sector the milestones, the measurable milestones in which to operate,” she said, adding that this was “the only way for there to be real momentum for the ESG movement is supposed to accomplish “.
For his former peers in the oil and gas industry, Browne said it was a difficult transition to make as shareholders in the energy sector demand that dividends and cash flow be returned to investors in this. which is a mature company.
BP is again at the forefront of transition efforts, cutting back its oil and gas production and deciding to cut back shareholder return programs to increase investment in renewable energy. But even among the European majors which have adopted the energy transition more quickly as an economic model, tensions with investors persist.
Browne’s comments came a day after activist investor Dan Loeb of Third Point Management said Royal Dutch Shell should be split into several companies because it cannot meet all shareholder needs or attract new shareholders trying to combine an old energy company with a new one.
âIt’s a push pull,â Browne said. Oil and petroleum companies need to balance investment in new clean energy projects, against investments by other renewable energy companies, and against investor expectations for shareholder returns. “It’s all a balancing act,” he said.