Hypocrisy and Decarbonization: Are State-Owned Oil and Gas Companies Doing What it Takes?

IAS Visiting Fellow Aldo Musacchio delivers a seminar on his research. 

Governments around the world are committing to very rapid reductions in greenhouse gas emissions as part of the Sustainable Development Goals, as well as COP25 and COP26. Yet many governments that sign these agreements have an inherent conflict of interest. This is because they are, oftentimes, the main beneficiaries of the business of fossil fuels, because they own the companies that produce them. The project documents the inconsistencies between the National Determined Commitments that are part of the Sustainable Development Goals, what state-owned oil and gas companies say they are doing to reduce CO2 and other emissions, and what these firms are actually doing in practice.

The study zooms in on a set of state-owned firms that operate in and around the Amazon biome, which covers 12 countries. We use a variety of natural language processing techniques to analyse what firms portray to be doing in their annual reports and compare some of their climate actions to the actual investments and production in oil and gas fields. Nations that have more aggressive commitments to reduce greenhouse gas emissions turn out to have oil and gas companies that spend more on exploration and who are less willing to let go of the business of fossil fuels, despite the fact that on paper they are owned by governments that have very stringent climate change commitments.

In fact, some of the countries with high commitments to reduce their reliance on fossil fuels are the ones investing more heavily on oil and gas assets in or around the Amazon biome. Textual analysis of company annual reports uncovers also a variety of symbolic strategies used by these firms, which are associated with the “greenwashing” of their operations.

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