Stockholm (NordSIP) – Engagement. This is the magic word used to justify keeping massive greenhouse gas (GHG) emitters in institutional portfolios. In theory, shareholders can push these firms to invest in more climate-friendly business lines. Reducing what is an already massive carbon footprint can do more for the climate than investing in low-emitters or small cleantech companies. The question is: given the handful of years we have left to make the radical changes needed to meet the goals of the Paris Climate Agreement, should there be much stricter timelines and expectations for engagement to yield concrete results?
This engagement theory is presumably one of the reasons Norges Bank Investment Management (NBIM) felt comfortable to appoint Harvard Law School Professor Jody Freeman to its brand new climate advisory board in January this year. Freeman also sits on the Board of Texas-based oil and gas firm ConocoPhillips. But that’s OK, in June 2022 Ryan Lance, ConocoPhillips Chairman and CEO said: “Meeting the central aim of the Paris Agreement to respond to the climate challenge is a worldwide imperative for which governments and companies alike have adopted net-zero ambitions. We intend to play a meaningful role in this vital effort by fulfilling our Triple Mandate to responsibly meet energy transition pathway demand, deliver competitive returns on and of capital and achieve our net-zero operational emissions ambition.”
ConocoPhillips flunks the climate test
Let us take a closer look at ConocoPhillips. The word “operational” is doing some heavy lifting in CEO Lance’s statement. It means the company is only looking at reducing the Scope 1 and 2 emissions of its own extraction and production facilities. In other words, that appears to be the sum-total of its net-zero ambitions. Instead, it expects the vast GHG emissions from the use of its oil and gas to be addressed by government-imposed carbon pricing and perhaps a bit of carbon capture. The picture is even worse when looked at through the forensic lens of environmental non-profit InfluenceMap. ConocoPhillips scores an overall D- in its latest assessment, with InfluenceMap reporting that the firm: “Demonstrates negative engagement on climate policies, despite positive top-line communication on climate action. The company advocates for increased production of oil and gas and appears unsupportive of ambitious energy transition pathways. ConocoPhillips also retains a network of memberships to industry associations that actively oppose climate policy.”
Snail-pace progress at best, reverse gear at worst
But surely Professor Freeman has been able to steer them in the right direction. After all, she has been on the ConocoPhillips Board for more than 11 years. This goes back to the original question of how long one should allow for engagement to succeed. Should Professor Freeman continue, as she describes it, her: “Strategic role advising the company on climate change and the clean energy transition” with no sign of any tangible results? Only last month, the U.S. government broke a Biden campaign pledge by approving the so-called Willow project, which gives ConocoPhillips the green light to drill for oil on Alaskan public land. Burning the expected oil production from the Willow project would release around 277 million tonnes of CO2. This is not just mediocre-level ESG behaviour, this is tantamount to climate crime and completely negates any net-zero or Paris-alignment claims. So, what is Freeman actually doing? ConocoPhillips reportedly spent millions lobbying for this project, all during her watch. This does not seem like a vindication of engagement theory.
NBIM’s odd choice
Earlier this month Professor Freeman hit the headlines with allegations that she had lobbied the U.S. Securities and Exchange Commission (SEC) on ConocoPhillips’ behalf. The investigation by the UK’s Guardian newspaper and the Bureau of Investigative Journalism (TBIJ) points to Freeman’s $350,000 annual remuneration for her role at the oil company and questions the genuine independence of her Board position. NordSIP’s Laundromat endeavours to highlight the well-financed “smoke-and-mirrors” greenwashing skills of big corporations, and their seemingly purely symbolic participation in engagement initiatives. ConocoPhillips’ behaviour seems to be text-book greenwashing. Is Freeman therefore the right person to be advising NBIM on its new activist climate stance? She does not seem to have been able to significantly influence ConocoPhillips’ ways over more than a decade. There must surely be other energy and climate experts available with a less controversial CV.
