The Church of England Synod voted on Sunday to ‘dis-invest’ from fossil fuel companies if, by 2023, they had not shown enough progress in aligning their business plans with the Paris Agreement to limit global warming to 2 degrees.

Although this looks like a divestment announcement, in fact the Church are really emphasising an ‘engagement first’ approach, having extended the deadline from an initial proposal of 2020 to give time for ‘robust engagement’ to take effect.

In practice, many fossil fuel companies have already made steps towards alignment with the Paris Agreement, and the latest actions from the Synod will no doubt add to the pressure on the laggards to adopt a more sustainable approach.

Shareholder pressure has been followed by a number of major oil and gas companies committing to reduce their CO₂ emissions. Shell has pledged to reduce its net carbon emissions by 20% by 2035 and 50% by 2050¹ and BP² is targeting zero net growth in their operational emissions and have set a sustainable emissions reduction target of 3.5 million tonnes by 2025. In addition, there has been significant investment into renewable energy sources, such as BP’s 200 million investment into Lightsource, one of Europe’s largest solar companies.

Exxon, Shell and BP have also backed natural gas as an effective solution to meet consumers energy demands while still reducing emissions. That’s because natural gas produces between around half the emissions of coal when used to generate electricity, according to the International Energy Agency.

Fossil fuel companies will need to reconcile the growing global demand for energy whilst reducing the carbon intensity of that energy. Diversifying into alternative energy sources and taking steps to reduce emissions will help these businesses successfully manage the transition to a lower carbon economy.

Source: ¹Shell Energy Transition Report, ²BP.com/Limitingemissions

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