BP Chief Claims Oil Company Should Qualify For Ethical Funds and Investment Portfolios
BP chief economist Spencer Dale, also a former Bank of England director, yesterday made the controversial claim that investing in the energy company widely regarded as ‘big oil’ should be considered ethical. Speaking at the launch of BP’s annual energy outlook study, Dale went so far as to say that BP shares should qualify for funds and investment portfolios based on environmental, social and governance criteria.
Despite BP’s significant investments into renewable energies, the vast majority of the company’s $10 billion profit for 2018 came from the sale of oil and gas. BP has also been directly responsible for a number of environmentally catastrophic oil spills over the years. The most recent major spill was the Deepwater Horizon catastrophe in the Gulf of Mexico when an explosion destroyed the oil rig platform and blew open the deep water well below. An estimated 4.9 million barrels of oil leaked into the Gulf. Despite the launch of a monumental damage-limitation and clean-up effort, the disaster was hugely harmful to marine ecosystems and surrounding coast lines.
Dale’s argument that investment in BP shares should qualify as ethical is based on what he sees as the energy giant’s overall contribution towards meeting global energy needs through oil and gas while transitioning towards a future where renewables will finally be able to take over from fossil fuels. In the meanwhile, BP’s oil and gas is, he claims, lifting billions out of poverty globally.
BP’s energy outlook report forecasts that renewable energy sources will account for a majority of global energy needs by 2040. However, improving living standards in regions such as India, south Asia and Africa also mean that total energy needs will have risen by 30% from today’s consumption levels. That would mean global demand for oil of 102.5 million barrels a day by 2040, compared to 95.1 million barrels a day in 2017, despite oil and gas’s overall share of the energy mix dropping.
The company also modelled an alternative scenario that it doesn’t believe is particularly realistic based on ‘off the charts’ growth in renewables meeting the targets for a 45% reduction in emissions set out by the 2015 Paris Accord. If this were to be achieved, global oil demand would drop to a still significant 81.8 million barrels a day. Even meeting this reduced demand means continued investment in the discovery and development of new oil and gas fields to replace those currently in operation as their reserves dwindle or are exhausted.
Without companies such as BP making these investments, backed by their own shareholders investing in them, a continuation of the positive trend in improving global living standards will not, says Dale, be practically possible. Meaning BP and other oil and gas companies are champions of the less fortunate sections of society fighting their way out of poverty.
Greenpeace UK’s Charlie Kronick didn’t support Dale’s argument for why BP should be considered an ethical investment. He responded to the statements with:
“BP is shamelessly exploiting the economic needs of developing countries . . . while conveniently choosing to ignore that those countries are already experiencing the catastrophic impacts of fossil fuel driven climate change.”
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