Nobody can predict 2021’s Word of the Year with certainty, but, after it lost narrowly to subprime in 2007, my money this year is on greenwashing. Albeit for very different reasons, most of the major players in the energy industry have similarly thrown their billions behind it; as sea levels, global temperatures and levels of panic all continue to rise, the fossil fuel industry’s popularity is rapidly headed in the opposite direction, along with its future profitability. CEOs are understandably trying to give their companies something of a makeover.
Advertising is one way in. While nobody expects the whole truth — using a specific shaving foam won’t turn you into the shredded hunk on the TV — greenwashing, or more accurately gaslighting, is of a different ilk to standard advertising. A fossil fuel company waxing lyrical about its pocket-change investment in renewables isn’t mere consumerism, but a sinister and self-serving distraction from the gravest challenge of our times. The question is why it’s happening and if it’s likely to change.
Let’s grant them this: most fossil fuel companies do invest in renewables, undoubtedly so. What matters, though, is the amount. Greenpeace researchers found a very large discrepancy between the number of adverts focused on renewables by six fossil fuel giants and the amount of their portfolios invested in them. One extreme example was Preem, 81% of whose ads promoted green technology; impressive given that it only accounts for 1% of the company’s portfolio.
For almost half a century, fossil fuel giants have been using smoke screens to prevent real action against climate change. Big Oil is currently under scrutiny by the US Committee of Oversight and Reform for decades of well-documented attempts to cast doubt on the existence of global warming. What has changed, however, is the narrative: no longer is climate change said to be based on dubious science, nor statistically unproven. The industry’s newest line, ceding the premise that climate change is occurring, is to present itself as a key part of the solution. The two pillars of this strategy are exaggerated investments in renewable technology, along with claims that their fuel is ‘cleaner’ and therefore a worthy part of a ‘lower carbon’ future. This advertising is aimed far more at investors than at ordinary people.
It’s not a particularly new phenomenon either. Take Equinor, a gas and oil giant mostly owned by the Norwegian government. In 2018, the then Statoil changed its name. The rebrand, it said in a press release, was “to provide the energy the world needs and effectively fight climate change”. It made headlines this year with plans to build a huge new hydrogen plant in the UK, crucial as an alternative to fossil fuels in factories, and it owns wind farms in the North Sea. This is a company, by the way, that has a stated ambition of reaching net zero. It’s as green as they come, right? Except it publishes no short, medium or long-term reduction targets to actually achieve that goal. And its opening in January 2020 of the largest oil field in Western Europe is, shall we say, perplexing for a business “evolving from an oil and gas company into a broad energy company”. Their commitment that at least 15% of their investments per year will be in new energy solutions is promising, but that still leaves a staggering amount of investment opening up oil fields.
The finance industry has, in only the last few months, seen a significant increase in the number of major investors who will only back ‘renewable’ or ‘sustainable’ companies. There is no global standard for what counts as such and it is, to some degree, up to the specific investors to decide if they are satisfied that their own criteria are met. Both highlighting investment in renewables in financial statements, regardless of its extent, and arguing that the rest of their business, usually gas, is a cleaner fuel crucial to the energy transition, are intended to satisfy investors that the company is no longer the villain in this story.
Greenwashing of this sort helps to lock the fossil fuel industry into a vicious cycle to its benefit. The more investment that does stay in fossil fuels, either because of its microscopic investments in renewables or because it offers a supposedly cleaner and reliable transition fuel the economy cannot do without, the less money is invested in renewables. Crucially, without the huge upfront financing of the renewable infrastructure needed to support the transition away from fossil fuels, we do need them as a reliable fuel source because any sudden shortage would cause immense short-term hardship.
In other words, if their gaslighting is sufficiently effective, it becomes true. On the flip side, more investment in alternative and diversified renewable energy sources would provide the basis for a stable energy supply, undermining claims that fossil fuels are “needed”.
Climate change is now a topic all companies have to be seen to care about. References to net zero in corporate reports have gone up 370% in two years, according to ESG analytics company, Datamaran. But if actions speak louder than words then the corporate world is at present barely audible.
Only 412 companies in the US Russell 1000 index have pledged to emit less, of which only 65 have set specific goals in line with the crucial 1.5°C target. Crucially, most are commitments made for 2050; if you do try to listen for what corporations are doing rather than saying, you’ll hear the clang of cans being kicked down the road.
Even in the best cases, where actual, practicable plans exist to reach net zero, they rely on continuing to emit greenhouse gases and compensating via investment in carbon offsetting. These calculations are dubious at best: the exact effect on carbon concentration of schemes such as forestry, whilst laudable and beneficial for ecosystems more broadly, is thought by critics to be overstated.
That is, with clever carbon accounting, firms won’t actually be at net zero, but will have still fulfilled their commitments. Remember that for when the fossil fuel giants present their supposed plans for net zero.
Illustration: Victoria Cheng