It must be hard being the CEO of an oil company. You run an immensely complex organisation, where at any moment a tanker could run aground, a war break out near one of your fields, or activists tie themselves to various parts of your building. These PR nightmares have recently been joined by another, thanks to research from the Grantham Research Institute on Climate Change and the Environment.
The Institute published a study on 24th May, which found that climate-based lawsuits measurably affect a company’s stock price. In the worst cases, where energy, natural resources, and utilities companies (the so-called Carbon Majors) see a legal judgement go against them, their share price can drop by as much as 1.55%. CEOs (and their PRs) shouldn’t pin too much hope on winning their case in court, since the filing alone can knock 0.35% off the share price in 3 days.
Nonetheless, for the most major of Carbon Majors, such as Shell (valued at over $380 billion), there’s a great deal of difference between a fall of 1.55 and 0.35%. Every company which might need to worry about climate – from airlines to supermarkets to banks – will need to plan their response. When (or if) they find themselves facing a climate-based lawsuit, they must reassure their shareholders that their money will be safe as fossil fuels are phased out, and persuade ever more environmentally-conscious customers that the company is doing its part to reach Net Zero.
Because climate litigation is so new, and the tactics being used constantly evolving, Carbon Majors and other litigation targets can often struggle to maintain their reputations and reassure shareholders and the wider public. While an oil company will have ready-responses to criticism of their environmental performance, more consumer-facing companies will struggle.
One PR response is to state that many of the necessary technologies for decarbonisation simply aren’t available yet, or are available, but at so high a cost that the company would no longer be able to offer affordable services. This strategy would suit airlines; sustainable aviation (whether electric, hydrogen, or another alternative fuel) is at an early stage, and immediately switching to it would not only be impractical, it would make flying an unaffordable luxury again – something which western consumers would not accept. This strategy has the added benefit of reassuring shareholders that the company’s leadership is not about to embark on an unresearched strategy reliant on nascent technology, or one that would eliminate scores of customers.
A PR strategy defending oneself from climate litigation has two main risks in my view; first, depicting the company as unconcerned with the environment and driven only by its bottom line; second, appearing to blame consumers for climate change by relentlessly scrutinising their purchasing habits.
The first can be countered by clearly laying out, without the greenwashing buzzwords most companies reach for, what the company is doing to improve its environmental performance, focusing on concrete actions (even if relatively small) rather than vague commitments to ‘work towards’ something ambitious. A standout example of this is the search engine Ecosia, which uses a portion of its profits to plant trees in areas like the Sahel. Granted, Ecosia’s brand is built on their environmental credentials, but this kind of clear evidence of practical change, even if it is relatively small, does more for a company’s reputation than the standard set of generic commitments alongside stock photos of trees on their website.
The second danger, blaming customers, can go seriously wrong. BP coined the idea of a personal carbon footprint, and launched a calculator aimed at ordinary consumers in 2004 (the PR firm that came up with this won’t be named, none of us are perfect). This went down fairly well at the time, but now looks grossly unfair, implicitly demanding that ordinary consumers ceaselessly interrogate their most mundane purchases, all while allowing big polluters, like BP, to wash their hands of responsibility.
To avoid appearing to demonise consumers or deflect blame, companies should stress just how great a change the transition to renewable energy is. Any change on this scale will take time. The steam engine was invented in the 18th Century, but navies were still equipped with sailing ships in the 1850s. Companies like airlines need to explain, without attempting to disguise the need to transition to renewable energy, that switching the entire world from one form of energy to another is not easy and is not helped by targeting companies which are doing all that they reasonably can.
