BP scaling back climate pledges shows why corporations can’t be trusted to lead green transition

British Petroleum’s (BP) decision to cut $5 billion from its low-carbon investment plan while increasing fossil fuel spending to $10 billion annually marks a stark reversal from its 2020 commitment to becoming a Net Zero company by 2050. Under Chief Executive Officer Murray Auchincloss, BP will now produce 2.4 million barrels of oil and gas daily by 2030 — 60 per cent higher than the target set five years ago. 

This shift comes as BP faces pressure from activist investors such as Elliott Management, who demand immediate returns as the company’s market value lags behind competitors like Shell and ExxonMobil. Auchincloss justified the move by claiming BP’s previous optimism about a rapid green transition was “misplaced.” This explanation echoes a familiar corporate refrain: When the economics of sustainability clash with short-term profitability, sustainability loses.  

BP’s pivot is not an isolated case but part of a broader pattern in which corporate sustainability promises often unravel under financial pressures. In 2023, Shell, after pledging to cut oil production, backtracked by slowing its renewable investments while doubling down on fossil fuel expansion. Like BP, it faced shareholder demands for higher returns, particularly from the hedge fund Third Point LLC.

For the past two decades, ExxonMobil, despite its public messaging on climate action, has consistently invested heavily in oil and gas. It has also faced lawsuits for allegedly misleading the public about climate risks while protecting its fossil fuel business.

Similarly, the 2015 Volkswagen emissions scandal exposed how corporate self-regulation can lead to deception. Volkswagen manipulated emissions tests while marketing itself as an environmental leader, highlighting the limits of voluntary corporate responsibility. These cases reveal a systemic problem: Corporate environmental pledges often serve as public relations strategies rather than binding commitments. When sustainability and shareholder profits are in conflict, the latter consistently prevails.  

BP’s shift highlights the core flaw in relying on corporations to drive the green transition, as modern economic systems prioritise financial returns over ecological sustainability. Adam Smith’s The Wealth of Nations (1776) — the basis of today’s economic models — emphasised managing capital and labour to increase wealth but ignored the limits of natural resources. However, in a resource-constrained world, this omission is unsustainable and a recipe for collapse.

In a world driven by profit, fostering genuine climate action requires a transformation in how we define and pursue profit. The traditional view of profit prioritises shareholder returns and quarterly growth. 

A sustainable profit model must incorporate environmental and social externalities — what economist Kate Raworth advocates in Doughnut Economics. This model visualises a “safe and just space” for humanity, operating within planetary boundaries (ecological limits) and a social foundation (basic human needs).

While the current economic system is deeply entrenched in extractive practices, emerging circular economy models demonstrate the potential for aligning profit with climate action.  Shifting from a linear take-make-dispose model to a circular one reduces resource depletion while creating new profit opportunities in recycling and remanufacturing.

Broadly, solutions to mitigate climate change fall under two ideological approaches. The first is a libertarian-capitalist position, which argues that market forces and technological innovation alone can drive deep decarbonisation. The second is a regulatory-interventionist position, which advocates for global governance and regulatory agencies to enforce climate commitments.

Many behavioural economists, however, have debunked the notion that technological innovation alone can solve the climate crisis. Instead, greater collaboration between governments, corporations and regulatory bodies is required.  

The backtracking of corporations on their climate commitments is not just a corporate failure; it reflects a paralysed system of climate governance. Without stringent international regulations, voluntary corporate commitments remain vulnerable to reversal. International agreements such as the Paris Accord rely heavily on voluntary pledges, which lack enforcement mechanisms. This allows corporations to scale back commitments with impunity.

Stronger global governance could prevent corporate backsliding through mandatory carbon reduction targets for major corporations and financial penalties for failing to meet sustainability goals. Additionally, implementing standardised and transparent carbon accounting frameworks is crucial. Corporations must be required to disclose their entire supply chain emissions and face penalties for exceeding carbon budgets.  

BP’s return to fossil fuels is not just a corporate strategy shift — it is a warning. Without strong global governance, corporate promises to combat climate change will continue to unravel. History has shown that voluntary commitments are insufficient. Only through enforceable international regulations and systemic change can we hope to achieve a sustainable future where corporate actions align with the urgent realities of a warming planet.

Without structural reforms and enforced limits on fossil fuel consumption, corporate-led solutions will only exacerbate environmental degradation. 

Akanksha Jain is a Doctoral Researcher at the Industrial Biotechnology Laboratory in the Faculty of Life Sciences & Biotechnology, South Asian University.

Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth