Today, Royal Dutch Shell published its Industry Associations Climate Review, delivering on a promise made late last year to leading institutional investors who are concerned about climate change. Shell’s review follows a similar report published by BHP in late 2017, and raises the transparency bar for fossil fuel industry competitors and their trade groups. Shell has won well-deserved headlines for its decision to quit the American Fuel and Petrochemical Manufacturers (AFPM), but the company’s decision to stick with other trade associations and industry groups that spread climate disinformation was a head-scratcher.
Here are a bunch of things to like about Shell’s report—and a few things not to like. To maintain a leadership role on climate policy in the fossil fuel industry, Shell will need to address these concerns.
What’s to like:
Transparency. Shell reviewed its relationships with 19 industry associations, disclosing its leadership roles and how it has engaged with the association over four climate-related policy positions. Lack of transparency is a major obstacle to holding companies accountable for their political activities—particularly those undertaken by third parties—so Shell is to be commended for these disclosures.
Principles for participation. Shell’s report spells out a new set of positions to govern the way the company manages its relationships with industry associations on climate-related policy issues. Particularly noteworthy are the prohibition on use of Shell funding for direct or indirect political contributions, and the actions that the company commits to take to address misalignment on climate-related policy positions—up to and including severing ties with groups whose positions are materially misaligned with Shell’s. UCS has long called for such an approach, for example in our Climate Accountability Scorecard.
Decision to quit AFPM! Shell’s review found a material misalignment of AFPM’s climate-related policy positions, and the company accordingly decided not to renew its membership in AFPM in 2020 (just as it left the American Legislative Exchange Council in 2015). Shell cited AFPM’s lack of support for carbon pricing and its push for a rollback of Environmental Protection Agency (EPA) fuel economy standards as examples of misalignment. AFPM has also drawn scrutiny for evading Facebook’s ad transparency rules.
Case studies. Shell’s report highlights the company’s independence from the Western States Petroleum Association (WSPA) on a ballot initiative for a carbon fee in Washington state last year, and its efforts to move the American Petroleum Institute (API) on EPA regulations to reduce methane emissions.
Acknowledgment of the role of investors and NGOs in drawing attention to trade associations’ climate advocacy and calling on Shell to disavow positions that are inconsistent with its own.
Unequivocal support for Paris climate agreement’s global temperature goal. Shell stands out from several of its competitors that continue to misrepresent climate science (as my colleague Brenda Ekwurzel has explained) and pay lip service to the Paris climate agreement’s goal of keeping global temperature increase well below two degrees Celsius (2°C) above pre-industrial levels and to pursue efforts to limit it to 1.5°C.
Pressure on industry peers to keep pace now that both Shell and BHP have completed, published, and acted on such a review. Shell’s move marks a break from corporate tactics UCS has documented in The Disinformation Playbook.
Pressure on industry associations themselves to be more transparent. Organizations such as Americans For Prosperity, the Competitive Enterprise Institute, the Energy and Environment Legal Institute, and the Heartland Institute have played a key role in spreading disinformation on climate science and policy, but a lack of transparency regarding these groups’ membership and funding makes it near impossible to verify corporate affiliations with them.
What’s NOT to like
Sticking with API, the National Association of Manufacturers (NAM), the US Chamber of Commerce (US Chamber), and WSPA? C’mon. UCS’s 2018 Climate Accountability Scorecard shows that each of these groups has a well-documented role in spreading climate science disinformation and has used disinformation in opposing recent climate policy proposals. Here’s how the claims in Shell’s report stack up against our research.
- Shell’s claim: API highlighted climate change as a serious issue in 2015.
- Reality: API blatantly omits the need to reduce global warming emissions, the risks of burning fossil fuels, and the science of climate change.
- Shell’s claim: NAM opposed a federal carbon tax in 2015, but didn’t back a congressional resolution to bar future carbon price proposals and made supportive statements on a carbon tax bill in 2018.
- Reality: In 2018 NAM launched its Manufacturers’ Accountability Project (MAP), which has been attacking climate scientists and communities seeking to hold fossil fuel companies legally accountable for climate damages attributable to their business. NAM is also behind the Main Street Investors Coalition, which has worked to slash shareholder rights in the wake of majority votes for climate-related shareholder proposals with major oil and gas companies.
- Shell’s claim: Acknowledges that the US Chamber was critical of the US commitment to the Paris climate agreement, but credits the association for a 2018 environment program, a workshop at the Global Climate Action Summit in California, and a statement that climate change is a serious challenge.
- Reality: The US Chamber refused, as recently as 2014, to acknowledge that climate change is caused by humans, and funded a 2017 report attacking the Paris Agreement and exaggerating the costs of achieving the agreement’s goals.
- Shell’s claim: Shell “derives benefit from its membership of WSPA, including WSPA’s delivery of accurate information on the oil industry to difference audiences” (emphasis mine).
- Reality: In addition to sponsoring the “No” campaign against the proposed carbon fee in Washington state, WSPA serves as a key organizer of opposition to California’s groundbreaking climate policies, including the state’s low-carbon fuel standard and its AB 32 plan requiring a sharp reduction in carbon emissions by 2020. In 2015, WSPA spread blatantly false statements about California’s proposed limits on carbon emissions from cars and trucks.
Failure to call out disinformation and misleading PR by trade associations (see above examples). By ignoring deceptive messaging in its assessment, Shell risks undermining its stated policy positions, its own reputation, and its social license to operate.
Shell’s own positions on some of these issues are weak. Shell places substantial conditions on its support for government-led carbon pricing mechanisms—and the Climate Leadership Council carbon tax proposal the company touts includes a rollback of the Clean Power Plan as well as relief for fossil fuel companies from liability for climate damages.
Squishy judgment calls. It’s unclear how Shell weighed the evidence and came to the conclusion that AFPM’s misalignment was material, while other groups such as API, NAM, the US Chamber, and WSPA had only “some misalignment”.
Ongoing and enhanced transparency? Shell has committed to publish further details of its policy positions and alignment with industry associations on its website, but it has not specified the timing or mechanism for future reviews. Will it publish a similar report on an annual basis? Will future reviews cover additional industry associations?
The Bottom Line
Shell’s audit of its trade associations’ climate positions shines a light on the fossil fuel industry’s extensive political lobbying and policy advocacy, and puts pressure on industry peers to join in pulling back the curtain. If BP, Chevron, ConocoPhillips, ExxonMobil, and other major fossil fuel companies followed Shell’s lead, we would be in a much stronger position to enact policies to prevent the worst effects of climate change and facilitate the transition to a low-carbon energy system and economy.
However, it’s unclear how Shell justified greenlighting API, NAM, the US Chamber of Commerce, and WSPA, given their well-documented roles in spreading disinformation on climate science and seeking to block climate action.