A Bloomberg analysis of quarterly earnings calls and other conference calls related to the 23 members of the S&P 500 Energy Index showed that mention of ESG and other sustainability-related terms soared in the first quarter of 2021 (compared to the same quarter last year). Use of ESG-related terms among oil and gas companies jumped from 36 in the first quarter of 2020 to almost 300 in the first quarter of this year.
Some of this may be due to the fact that public discussion on the topic has risen following a year of upheaval caused by events like severe weather, wildfires and Covid-19. “I do think to some degree that companies are trying to seize on the moment, and kind of greenwash themselves a bit,” Jefferies analyst Giacomo Romeo is quoted as saying. Other factors include the election of President Joe Biden, who is pushing an environmental agenda, and the fact that investors have been increasingly demanding answers on how companies plan to deal with climate risk.
But it’s not “all talk and no action” among oil and gas companies — at least not entirely. In February, ExxonMobil said it is investing $3 billion on a new business focusing initially on carbon capture and storage, a critical technology required to achieve net zero emissions, for example. ExxonMobil Low Carbon Solutions is working on more than 20 new carbon capture and storage opportunities around the world to enable large-scale emission reductions. Marathon Oil, an independent petroleum and natural gas exploration and production company, said in January that in 2020 it achieved an estimated 20% reduction to its GHG emissions intensity over 2019. And last year, Occidental Petroleum Corp. was the first large US oil company to announce a net-zero emissions goal, Bloomberg pointed out.
The Trump Administration weakened regulations put into place under President Obama in relation to oil and gas operations — policies that President Biden is working to restore. Under Obama, for example, regulations required that operators inspect equipment built or modified after 2015 twice a year for methane leaks and repair any leaks that were discovered. Biden is expected to restore those methane regulations and may even extend those requirements to older wells.
Biden’s goal for the environment is the put the country on an “irreversible path to achieve economy-wide net-zero emissions no later than 2050. The legislation must require polluters to bear the full cost of the carbon pollution they are emitting,” the new Administration wrote in a Clean Energy Revolution fact sheet.