Big Oil, full of money, fails on its climate commitments

By Allison Morrow, CNN Business

At the height of the 2020 shutdowns, the giant oil companies had a wake-up call. Demand had collapsed, undermining profits, and it was unclear when that would end. This gave environmentally conscious investors a chance. The pitch: Take the clean, green path or perish.

Fossil fuel companies, particularly in Europe, have responded to pressure from shareholders, customers, activists and governments with bold plans to invest in clean energy. Wall Street, for its part, said it would start holding these companies accountable for their climate commitments.

But halfway through 2022, as fossil fuel prices rise and restore the oil giants to pre-pandemic profitability, the push for green reform appears to have stalled.

Exxon shares are up 54% this year. Shell is up almost 44%. BP, which suffered a huge loss on its Russian business, is up more than 28%.

This is largely due to record profits and soaring energy prices. So it’s no surprise that their environmental report cards look abysmal.

Despite their promises, big oil companies are “still failing to meet the bare minimum to align with the Paris Agreement,” researchers from Oil Change International, a fossil fuel advocacy group, wrote in a statement. report released Wednesday. Eight of the major oil producers’ plans are “grossly insufficient”, they wrote.

Indignation overflows. But whether shareholders feel the same pressure when times are this good is another question.

See it here: Shell’s annual shareholders’ meeting in London on Tuesday was delayed by nearly three hours as protesters chanted “We’ll arrest you” (to the tune of Queen’s “We Will Rock You”.) Someday Earlier, one of the consultants’ Shell security officers quit, posting on LinkedIn that she “can no longer work for a company that ignores all alarms and discounts the risks of climate change and ecological collapse”.

A Shell representative did not immediately respond to a request for comment.

Another demonstration on Wednesday targeted the general meeting of shareholders of Total in Paris.

Despite the disruptions, the meetings continued. No less than 80% of shareholders approved Shell’s climate resolution. An independent resolution by a climate activist shareholder group garnered just 20% support, down from 30% last year, Reuters reported.

Total won 89% support for its climate plans, a spokesperson said.

Look to the future: the pressure is also coming from other quarters.

The UK is expected to announce a windfall tax that would redirect billions of profits from Shell and BP, among others, to help ease household energy bills. While talk of the single tax rocked British energy stocks on Tuesday, most were trading higher in London on Wednesday.

Meanwhile, several officials in Davos, including US climate envoy John Kerry, have warned the business community not to let the disruption of war in Ukraine become an excuse to rely on fossil fuels as are struggling to keep up with demand.

Davos Expedition

Here’s Julia Horowitz, senior editor of Before the Bell, with a dispatch from Davos, Switzerland, where she’s reporting on the World Economic Forum.

This morning I sat down with Neil Murray, the CEO of Work Dynamics at JLL, the commercial real estate giant.

Murray flew in from Chicago to attend the forum. This is his third time here. He conceded that this time the emotions are darker.

“The overall feeling is pretty muted,” Murray told me. “It’s the confluence of the challenges we face, whether it’s war thousands of miles away, inflation, climate, food and a falling stock market. I probably feel an air of less excitement, more concern.

Market turmoil has depressed JLL shares this year. Its stock is down nearly 31% after climbing 82% in 2021.

Real estate is often seen as a hedge against inflation. But rising borrowing costs have made companies and investors more hesitant to sign new deals.

A trend in favor of JLL is that people are returning to their offices, although the rate of return varies by city and industry. The number of people in offices in the United States was 43% in recent weeks, compared to 25% in January when Omicron was booming, according to company research. This figure is expected to reach 55% in July.

“People keep coming back,” Murray said, although he acknowledged something had to be done to overcome the “inertia” of recent years. Many JLL customers are spending more on renovations with that in mind, Murray added. Yoga studios and wellness spaces have become perks du jour.

“We need to make space travel-worthy,” he said. Vacancies persist in major cities. Yet, increasingly, the industry is seeing a “flight to quality”. The best tenants favor certain buildings that are more durable and better equipped.

Could this create a divide, as less money flows into neighborhoods and buildings that are considered less desirable? Murray said there was “always a demand for space”. He hopes that as money flows change, it could open up new opportunities for small businesses.

The hot summer of the trip looks a little lukewarm

This third summer of the Covid era was supposed to be a boom time for travelers and for the industries that serve them. It may be over before it even begins, writes my CNN Business colleague Paul R. La Monica.

At least that’s the story of travel stocks so far.

Shares of major hotel chains, including Hilton, Wyndham and Hyatt, have all fallen nearly 20% this year. Shares of Las Vegas Sands, MGM and Wynn Resorts casinos also plunged. Ditto cruise lines Carnival, Royal Caribbean Cruises and Norwegian Cruise Line.

Airlines, which have held up better than the broader market this year, have lost ground lately. Shares of American, United, Delta and Southwest all fell sharply on Tuesday and are now in the red for 2022.

Airbnb is trading near an all-time low, more than 50% below its late 2020 IPO price. Vrbo owner Expedia lost more than a third of its value in 2022.

It’s still early, of course. Last year, second- and third-quarter profits for leisure companies were strong as consumers threw Covid caution to the wind.

Travel agencies may face difficult comparisons with last year’s results. And inflation certainly does them a disservice. The “revenge spending” that drove consumer demand last year is being tempered this year by a relentless sticker shock, analysts say. Labor shortages compound these headaches.

Despite all of this, CEOs are still cautiously optimistic pent-up demand will make this summer a lucrative one.

Heck, maybe inflation isn’t so bad after all. As Norwegian Cruise Line’s CEO said on an earnings call this month: “Inflation is a bad word, but… there’s a nice side to it, which is the power of price fixing. price.”

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