BP's Energy Outlook for 2017:Will it fully consider climate risk?
As BP's 2017 Energy Outlook is published, this note summarises BP's performance on climate risk disclosure and highlights climate lobbying activity.
BP publishes its latest Energy Outlook on January 25th, 2017 in which it "outlines the 'most likely' path for the global energy landscape". In the wake of Royal Dutch Shell's November 2016 announcement that oil demand could peak in five years, investors will scrutinise its views on oil in particular.
In a November 2016 report we assessed the climate risk disclosure and lobbying by the leading oil majors and found in general poor disclosure to investors on how the proliferation of renewable energy and electric vehicles (EV) would impact their two largest markets - fuel for vehicles and gas for power. The analysis found this vague disclosure to be accompanied by aggressive lobbying to prevent policy favouring renewables and EVs.
"Following the Paris Agreement, investors want to know how oil and gas companies can survive, and even thrive, in the transition to a low carbon economy. This requires more detailed disclosure of the impact on asset portfolio resilience of low carbon scenarios including disruptive technologies, such as zero emissions vehicles. Investors also expect oil and gas companies to play a supportive role in developing public policy to support the transition.” Leon Kamhi, Head of Responsibility, Hermes Investment Management
"The uptake of electric vehicles globally will be hugely important for oil majors like BP where fuel for vehicles accounts for up to 40% of revenue. California wants 100% electric vehicles by 2035 with the automakers articulating strong EV and hybrid roll out plans. In its latest annual report BP suggested oil will still fuel 90% of all transport by 2035, an estimate clearly misaligned with the plans of regulators and automakers like Toyota and Honda. Investors should look for updates on this in the 2017 BP Energy Outlook." Dylan Tanner, Executive Director, InfluenceMap