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‘Almost no progress’ in oil and gas sector

Research reveals no oil and gas companies have plans in place to phase out fossil fuels
Katie Hill - Editor-in-Chief, My Green Pod
Pipeline valves on soil, with sunrise in the background

The World Benchmarking Alliance’s (WBA) second Oil and Gas Benchmark, published today (29 June), shows a dangerous lack of progress towards global climate goals from the sector.

There has been little advance – and alarmingly even some decline – in oil and gas companies’ progress on limiting global warming to 1.5 degrees.

Overall scores across the Benchmark have fallen, on average, by 0.2 points in the past two years.

Not using available tools

WBA’s Oil and Gas Benchmark, developed with CDP using the ACT methodology, assesses and ranks the world’s most influential oil and gas companies, including TotalEnergies, Chevron Corporation and China National Petroleum Corporation, on their low-carbon transition and social impact.

The research shows that even though the oil and gas sector has a wealth of resources and tools available to decarbonise, it is failing to use them.

‘This assessment of the oil and gas sector is critically timed before COP28, it must be used to reinforce current cries that it is not possible for us to limit warming to 1.5 degrees and avert the worst impacts of climate change if we do not start to hold this vital sector to account. 
‘We need to see the oil and gas sector gaze at its future through science-aligned lenses, confronting structural, not cosmetic changes.

‘Commitments and actions are limited across the board. Not enough companies have set targets, and of those that have, most don’t have targets that include scope 3 emissions reductions. Even the small number that have targets that include scope 3 are not supporting them with a credible transition plan. The advice could not be clearer from the IEA, we need to have stopped exploration by 2021, yet it is currently not set to peak until 2028.
‘A few companies in the benchmark show that there is room to transition for those that act now, the rest of the sector must follow suit, and quickly.’

CDP’s Global Director, Climate


No sign of slowing extraction

The oil and gas sector made record profits of over $200 billion in 2022, and paid out a record $110 billion in dividends and share repurchases to investors last year.

Despite this, investment to reach a low-carbon economy has fallen dangerously short.
To halve the sector’s scope 1 and 2 emissions, companies need to invest $600 billion by 2030 into low-carbon solutions. This is not happening.

Only 12% of companies’ assessed scope 1 and 2 emissions have decreased on track to limiting global warming to 1.5 C.

Scope 1 and 2 methane emissions must be reduced by 60% by 2030, yet only 29 companies have even disclosed targets to reduce methane emissions by 2030.
About 80% of the sector’s emissions come from the use of oil and gas products. The sector’s only route to transition is phasing out fossil fuels.

While this cannot happen overnight, companies are not even putting plans in place, and there is no sign that companies are slowing down extraction.

The run-up to COP28

Last year, the sector committed half a trillion dollars for new drilling and extraction. In fact, the 81 oil and gas companies with extraction activities are predicted to increase total oil production by 9% from 2021, peaking in 2028.

Over half the companies assessed still link executive remuneration or incentives to the growth of fossil fuels, and only 18% of assessed companies have scope 3 emission targets.
Only 25% of companies assessed report how much of their capital expenditure is invested in low-carbon technologies.

On average, these companies only dedicate around 18% of their investment in decarbonisation.

Just one company, Neste, invests enough for a credible transition, spending 88% of its investment on low-carbon options such as advanced biofuels

‘The oil and gas sector’s failure to address emissions from its products and operations hampers international efforts to limit global warming to 1.5C.

‘In the run up to COP28 in Dubai, all eyes are on the oil and gas industry. But these companies are not planning for a low-carbon future and are failing to take responsibility in the immediate and long term.

‘It is deeply concerning that no companies have made a commitment to halt the expansion of fossil fuel activities before 2030.’

World Benchmarking Alliance’s Decarbonisation and Energy Transformation Lead

Some progress on human rights

In addition to decarbonisation, WBA is calling for immediate and significant investment in protecting workers and communities who will be impacted by the transition to a net zero future.

A just transition must consider those who are at risk of negative impacts from necessary change, and account for them through investment in skills, training and human rights due diligence.
Despite the dismal picture on decarbonisation, the research shows that some progress has been made by some companies on human rights due diligence.

‘While there has been some progress on social aspects, the oil and gas sector is far behind where it needs to be. The oil and gas sector will not make the investment in rapid decarbonisation and just transition without external pressure from key stakeholders. Our findings are a warning for the need for all stakeholders — investors, policymakers and the public — to hold the oil and gas sector accountable.’

World Benchmarking Alliance’s Decarbonisation and Energy Transformation Lead

85% of companies are working to assess human rights risks, 56% of companies now have human rights policies and 12% demonstrate effective human rights due diligence, including identifying potential risks to human rights, integrating salient risks into planning and proactively responding to issues.

While only 35% of assessed companies are committed to social dialogue, an increasing number of companies are engaging with stakeholders on just transition planning (currently 15% up from 8% in 2021).

4% of companies demonstrate social dialogue and meaningful engagement on all aspects of a just transition, up from 2% in 2021.

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