Pressure mounting on $318b energy giant that says it cares about climate

All around the world, the pressure on $318 billion oil and gas giant Shell is mounting. In the Netherlands, the company was forced to remove ads promoting “carbon-neutral” petrol after they were found to be misleading by the Netherlands’ Advertising Code Committee. In the US, a House of Representatives committee heard Shell had touted its climate goals and vision but internal emails painted a different picture.

Critics question Shell’s commitment to tackling climate change even as it continues to explore new fossil fuel projects.Credit:Bloomberg

Now it’s Australia’s turn.

The Environmental Defenders Office filed a complaint to Australia’s consumer watchdog and corporate regulator late last month alleging Shell Australia has misled the public about its plans to achieve net-zero by 2050 on its website and social media.

The complaint, filed on behalf of Comms Declare – a climate advocacy group for those in the media, marketing and advertising industry, outlines five claims against the coal and gas giant. These include that the company allegedly continues to explore new oil and gas projects that are inconsistent with the Paris Agreement, it is not significantly transitioning its business into renewable or low carbon energy and that the company’s current plans rely heavily on offsets which, contrary to industry guidance, should only be used as an alternative to absolute reductions.

Kirsty Ruddock principle lawyer with the Environmental Defenders Office.Credit: Domino Postiglione

“The Shell representations are misleading because they provide the general impression that Shell is taking steps to reduce its emissions despite this not being the case,” the 15-page complaint reads. “Comms Declare are concerned that the overall conduct of Shell’s Australian website reproducing these representations creates the impression to consumers and investors that Shell are concerned about climate change and are taking steps to reduce their emissions across their business, consistent with the Paris Agreement, when this is not the case.”

EDO managing lawyer Kirsty Ruddock says the allegations against Shell are an example of greenwashing, which is a serious matter because it delays efforts to reduce greenhouse gases and undermines consumer trust in legitimate products. The practice is defined as creating a false impression about how environmentally friendly an organisation’s products and goals are.

“Shell Australia’s statements about its emissions targets make the public think harmful products are good for the environment. It is clearly in the public interest to ensure big polluters don’t get away with this sort of conduct,” Ruddock says.

Comms Declare founder Belinda Noble says the group wants the regulators to hold companies to account and be more transparent about their environmental impacts. For its part, a Shell spokesperson said the company was investing in low and zero-carbon energy solutions, which included utility-scale solar and wind generation, battery energy storage systems and batteries for household use.

“At the same time, our investment in gas is critical to the energy transition, helping customers mainly in Asia transition away from coal and wood burning,” the spokesperson said. “Addressing a challenge as big as climate change requires a truly collaborative, society-wide approach. We believe smart policy from government, supported by action from business and society, is the appropriate way to reach solutions and drive progress.”

The company has indicated it is making strides in the area, including by increasing the amount it spends on its energy transition and investing in renewable energy projects.

Shell is only one of many firms that has found itself under the greenwashing microscope – among them are Nike, H&M, Coca-Cola, IKEA, BP, Starbucks, Ryanair, HSBC and McDonald’s. One notable case involved thousands of German consumers who sought compensation from Volkswagen over emissions test cheating in 2015. The company was found to have installed software in diesel engines that could detect when they were being tested, changing the performance accordingly to improve results. It was subsequently forced to pay $46.3 billion in fines, compensation and legal costs.

In September, the Environmental Protection Agency (EPA) found that many VW cars being sold in America had a “defeat device” – or software – in diesel engines that could detect when they were being tested, changing the performance accordingly to improve results.

The Australian Competition and Consumer Commission and the Australian Securities and Investments Commission flagged they would expand their remit to look at misleading environmental claims to cater to changing consumer demands earlier this year. ACCC and ASIC have confirmed there are numerous investigations into greenwashing allegations. And there’s already been action. Last month, ASIC issued an Australia-based energy company developing power projects in parts of Africa a fine for greenwashing.

While neither regulatory body can comment on the EDO complaint specifically, the general process is examining the hundreds of thousands of complaints they receive annually. Only a small handful deemed substantial enough will proceed to the investigation and legal stage.

While the broader regulatory crackdown on greenwashing is a welcome step, Professor of Political Philosophy at the University of NSW Jeremy Moss says the response from companies has been underwhelming. The push for greater transparency has come from consumers and shareholders, with the regulatory sector only just catching up.

But Moss says natural disasters have sparked greater interest in stronger climate action from these groups. That, in addition to the growing concern of climate-induced risk from the financial industry is behind increased regulatory oversight, he said.

Back-to-back natural disasters have pushed many consumers, investors and shareholders to demand greater transparency around corporate climate action.Credit:Flavio Brancaleone

However, experts say Australia is lagging behind its global counterparts. This is driven by the politicisation of climate change by previous governments, a recent report by the Australian Institute notes. Senior researcher with the institute Polly Hemming says the federal government’s own record with greenwashing is poor.

“In real terms emissions from fossil fuels in Australia really haven’t declined and we have a pipeline of over 100 new gas and coal projects in development,” she said. “And greenwash is enabled by the fact that we have no credible regulatory framework that requires the private sector to comprehensively report or reduce emissions in Australia. The private sector is technically not breaking any rules when it makes claims that you or I might find misleading because there are none.”

Hemming said while there was no suggestion that coal and gas projects be shut down tomorrow, the science showed the transition needed to happen rapidly if global warming was to be slowed.

“Most fossil fuel companies claiming they’re moving towards net zero or investing in renewables are also proposing to ramp up their production. There’s no evidence that there is a shift away from their current business model,” she says.

Hemming adds that terms like net zero, sustainable, carbon neutral, climate neutral or nature positive, were buzzwords that had limited legal binding. “They’re completely open to interpretation which makes it impossible to identify greenwash from legitimate action,” she says. “Net Zero in Australia is a mixed bag of claims and creative accounting where most businesses assume they can be the ‘net’, but no one is prepared to be the ‘zero’.”

Director of Climate Energy Finance Tim Buckley adds fossil fuel companies have the power and financial resources to play their part in the transition, but it comes down to balancing short-term financial gains and longer-term structural shifts.

But he remains hopeful that some leading fossil fuel companies will pivot to play their part in reducing climate change through climate science, ongoing scrutiny from consumers, shareholders, authorities, and ongoing investment in the financial and technology sectors.

For those at the EDO, and further afield, the mounting cases they are working on suggest their task won’t be an easy one. “There’s more [cases] than we can deal with,” says Ruddock. But they, like many others, are determined to keep pushing for accountability.

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