Mounting pressures and scrutiny make ties to fossil fuels a growing liability. Here is why companies need to change and how.
The divesting fossil fuel movement is rapidly gathering pace. Beginning first as a somewhat fringe idea, its power and influence has accelerated since the 2015 Paris Climate Summit. Following the unprecedented announcements of divestment by Norway’s Sovereign Wealth Fund from certain oil holdings, BlackRock’s from thermal coal, and BP’s plans to go net-zero by 2050, the movement can no longer be ignored by the corporate world. Environmental movements now not only command immense public support but also have a strong effect on markets and consumer behaviour. Companies need to recognise this and factor it into their PR services. Increasingly having strategies and communications plans that address this issue will be vital and we have implemented such programmes for companies across sectors and markets.
Oil is no longer a safe bet
Since 2014, the number of institutional investors committed to divesting fossil fuel stocks from their portfolios has climbed from 180 to over 1,100 in 2019. In the years since the Paris Climate Summit, perspectives have shifted on the oil and gas industry. In their 2018 annual report, Royal Dutch Shell listed divestment campaigns as a substantial risk, one validated by declining figures across the sector. Energy has been by far the worst performing sector on the S&P 500 in recent years, with oil and gas companies now accounting for just 4.4% versus 28% in 1980.
Most notably in recent news, the announcement in 2019 that Norway’s Sovereign Wealth Fund would pull £7.5 billion in investments from its oil and gas assets sent shock waves through the industry. Share prices plunged across the sector, with companies like UK-based Tullow Oil losing roughly 3%. In all, it is estimated by 350.org that the amount of divested assets under management now represents more than $11tn.
Going into 2020, shifting attitudes towards divestment seems only to be intensifying, with the world’s biggest fund manager, BlackRock, announcing their commitment to divesting from thermal coal and BP’s new CEO, Bernard Looney vowing to cut the company’s net greenhouse gas emissions to zero by 2050. While concrete action and follow-through on many of these commitments remains to be seen, the sentiment is undeniable—the world is moving away from fossil fuels.
What this means if you have fossil fuel connections
Companies with even tenuous connections to the fossil fuel industry are becoming increasingly at risk of pressure to divest, both externally from advocacy groups and internally from staff.
“The divestment campaign started to question the moral legitimacy of the fossil fuel companies and we’ve definitely achieved that,” said Ahmed Mokgopo, a campaigner for 350.org. With some of the biggest players in the industry seemingly beginning to recognise the need to move towards more responsible, eco-friendly practices and growing pressure from public figures like Greta Thunberg, connections to oil and gas are becoming more of a financial and PR liability than ever before.
Divestment, at least for now, might not necessarily be the answer, but neither is outright denial of the role carbon emissions play in global warming. Japan’s $1.3tn national pension fund has opted to retain their investments and try to enact changes from within, rather than outright abandoning them.
BlackRock is another excellent example of this. Their thermal carbon divestment announcement doesn’t change the fact that they still have a $87.3bn fossil fuel portfolio, but it is still a positive step forwards which, coupled with their ongoing push to operate with a lower carbon footprint, has mitigated much of the negative coverage they often receive, with articles published internationally on their new eco-conscious direction.
Full fossil fuel divestment still comes with certain financial risks which a lot of companies are unwilling or unable to take. But that does not mean that efforts cannot be made to avoid the risk of appearing outdated or even harmful to environmental causes.
Developing a nuanced PR approach which adapts to the rapidly-changing circumstances surrounding the oil and gas industry and makes carefully considered moves to demonstrate a willingness to adopt a more eco-conscious business practices will become crucial to any corporate strategy going forward.
What this means if you don’t have fossil fuel connections
Even if your company has no direct fossil fuel connections, there are still lessons to be learned from the divest fossil fuels movement. It is that it’s no longer possible to suppress or ignore the environmental movements spreading across the globe. PR stunts which might have worked a few years ago, like planting trees or donating to environmental movements are failing to satisfy much of the public, who decry these gestures as hollow and disingenuous. Both BP and BlackRock’s announcements while lauded by some, failed to impress activists, who found them too rhetorical, rather than concrete efforts for change, showing how difficult it is for companies with a history of involvement in the fossil fuel industry to win over public opinion.
As every aspect of how we live our lives is being reassessed to improve sustainability and reduce waste, every company needs to be crafting a PR strategy which incorporates environmentalism cannot be omitted, especially when silence these days is often interpreted as indifference. These are three core points to consider when crafting a environmentally-conscious PR strategy:
- Don’t be shy: If you have implemented activity that shows your commitment to a net-zero world, maximise the brand benefit to the company by articulating it convincingly and powerfully.
- Be prepared to back up your message with concrete action: True of any PR strategy, if the message isn’t backed up by concrete action, public sentiments can quickly sour and even harm a company.
- Acknowledge the past, look to the future: People are not quick to forget the perceived sins of companies. If your company hasn’t always been the best when it comes to the environment, the first step will be to acknowledge this.
- Maintain the initiative: If you start trying to turn things around, make sure you follow through. Many companies have made big promises on going green and failed to properly follow through. Not only does it look insincere, it also undermines credibility overall and can weaken a brand.
Sapience Communications has extensive experience working with companies in the financial, architectural, property and development industries, crafting PR strategies which help them to navigate the often delicate issues surrounding climate change and the environment.
Contact us at firstname.lastname@example.org to learn more about how your brand can hone a credible environmental PR strategy.