Net-zero target for 2050 remains the same as other oil producers, as environmentalists push for fossil-fuel cuts
About 61% of its shareholders voted earlier this year in support of a proposal that the company substantially reduce emissions from its products — a stance that Chevron urged investors to reject.
Other big oil companies have announced similar net-zero targets over the past two years, as they face calls from investors and activists to respond to ESG, or environmental, social and governance concerns.
“We regularly engage with stakeholders and investors to understand their views and be responsive to their growing expectations on all issues, including ESG,” said Ronald Sugar, Chevron’s principal director on the board. “Our updated report demonstrates our goal to partner with multiple stakeholders to work towards a low-carbon future.”
Some analysts say the pressure to curb future emissions is now hindering companies’ ability to invest more in fossil fuel production. US oil prices climbed above $80 on Monday as traders assess a lack of growing energy supplies around the world; But big Western oil producers are sticking to tighter budgets during the pandemic, when many dramatically cut spending after a slump in demand.
Chevron’s net-zero announcement on Monday was quickly criticized by environmental groups, with the shareholder activist group calling it “disappointing tokenism” in a statement. Among other reasons, the groups said the target was insufficient because it did not cover Chevron’s products, only emissions from its operations.
“Chevron is like a tobacco firm that promises to quit smoking while continuing to produce cigarettes,” said Follow This, which filed a successful resolution at Chevron’s annual meeting. “Product emissions account for up to 90% of all emissions of an oil major.”
BP plc and Royal Dutch Shell plc made commitments last year to zero emissions produced from their assets, but US oil companies have been slow to make such promises. Exxon Mobil Corporation
Chief executive Darren Woods called the goals a “beauty contest” in 2020. Businesshala reported in August that the oil giant is now considering making a net-zero pledge.
Chevron chief executive Mike Wirth has previously said the company will not set goals it does not plan to achieve. Monday’s announcement was brief on details of how the company would achieve net-zero and stopped pledging to do so, as have other companies. Chevron said Aspiration expects advances in technology, policy, regulations and offset markets.
“Solutions start with problem solving, which is exactly what the people at Chevron do – and have been excelling at for more than 140 years,” Mr Wirth said in a statement.
Chevron on Monday committed to cutting the intensity of emissions from its oil and gas production and products by more than 5% by 2028. Such a reduction typically means cutting emissions by the amount of energy produced, but a company can still increase emissions overall if it is producing more oil and gas overall. For this reason, the measure has been criticized by many environmentalists.
Chevron said Monday that its new targets give it the flexibility to increase its oil and gas production, provided it becomes increasingly carbon-efficient. The company also said it would invest in low-carbon businesses, which include biofuels, hydrogen and carbon capture.
Earlier this year, Chevron executives met with representatives of Engine No. 1, the investment firm that led a successful fight to win three seats on Exxon.‘s
board, Businesshala previously reported. The Journal reported that the hedge fund is considering targeting a major oil company once again, and other investors are in contact with it about organizing a group to buy Chevron shares.
The Journal reported that Chevron had studied Engine No. 1’s campaign against Axon, and that the defeat of its rival made clear the urgency of communicating its energy-transition plans.
Christopher M. Matthews at [email protected]