This month, the CEO of BP announced that the world’s fifth-largest oil company would invest more than $1 billion in offshore wind power. BP, like a growing number of oil majors, aims to reach net-zero carbon emissions by 2050. Is BP really planning to diversify away from the oil business? And why are other major oil companies sticking to business as usual?

Between climate change and the pandemic, oil companies face an existential challenge. Our research explains how oil companies are responding in different ways, and how their responses will shape the politics of global warming.

Oil companies face huge challenges

The pandemic lockdowns and recession have hit oil companies hard. Last month, Exxon dropped off the Dow Jones industrial average, after reporting a $3 billion write-down earlier in the year — its first loss in 30 years. The company also reported that it may write down an additional 20 percent of its reserves in the near future. Shell took $22 billion in assets off its books in June, and BP devalued its assets by $17.5 billion. The novel coronavirus has depressed the demand for oil, and the Energy Information Administration forecasts that this trend will persist for months.

But they are responding in different ways

While all oil companies are hurting, there are important differences among them. Our ongoing research examines differences in the business and political behavior of major oil companies. Like BP, almost all now claim they are “going green” and targeting net-zero carbon emissions. But their actual behavior shows that none is really transitioning from fossil fuels, though some are doing better than others. Our analysis of both business practices and political behavior — what companies communicate to shareholders — suggests that Exxon has resisted the green transition more than other oil companies.

Looking at pre-pandemic changes, rather than announced targets, we find that the most ambitious firms, whom we call leaders, are not actually decarbonizing. Only one firm, ENI, has committed to an absolute CO2 reduction target. Instead, the leaders — which include Equinor, Shell, Total and, to a lesser extent, BP — are hedging their bets. We call these firms “hedgers.”

Hedgers lower risk by diversifying into pro-climate activities. These efforts include reducing emissions intensity, usually by switching to natural gas and curbing natural gas flaring (which emits methane, a powerful greenhouse gas). Some firms are also cutting back on upstream oil investments, which lock in production for at least a decade. BP’s recent announcement that it would diversify into renewables, if implemented, would be further evidence of hedging.

We found that no firm, even among the leading hedgers, is aggressively investing in renewables. Equinor, among the greenest of the oil firms, invested only 0.08 percent of its total revenue in renewable energy in 2018, the most recent year with available data. Things haven’t dramatically changed since then: Equinor’s 2020-2021 pledged investments in renewables would account for only around 2 percent of gross revenue.

Hedgers do tend to be more pro-climate in their political behavior. We know this by examining what firms report to shareholders via quarterly earnings calls, a company’s primary means of communication with capital markets. Our analysis shows that all firms have moderated what they say about climate issues over time. Before 2014, nearly all firms rejected the basic science of climate change. Most took a more moderate view between 2014-2019 — but no major oil company has actively supported a full transition to a fossil-free energy system.

Other firms, which we call “resisters,” continue on a business-as-usual trajectory. They have mostly declined to make even the modest changes to their business practices that hedgers have implemented. And their political behavior continues to downplay the threat of climate change.

Our analysis concludes that Exxon has been the most resolute resister of the nine oil firms in the study. In addition to being a long-standing denier of climate change, the company has maintained the most anti-climate change business strategy according to our measures. Among private firms, it is the largest emitter of greenhouse gases, emitting nearly twice as much as the runner-up, Shell. It is at the bottom of the pack in terms of energy-efficiency measures and is the only company in our study without any major investments in renewables. And Exxon has the longest average reserve life for its fossil fuel assets; in plain language, it has gone all in on fossil fuels over the long haul.

Why do some firms hedge against climate change regulations while others resist?

While we can’t answer this question in any truly rigorous way, we find that hedgers share certain characteristics. First, hedgers tend to be headquartered in jurisdictions with more stringent climate regulations — generally speaking, in Europe. Second, they often sell to markets that have stringent regulations, although our findings suggest that this isn’t as important a factor as where they are headquartered.

Also, hedgers are more likely to be members of voluntary corporate climate initiatives. Companies that are members of these initiatives tend to have more pro-climate political behavior, but they don’t seem to have systematically different business practices. This suggests that these voluntary initiatives are more about political talk than business action. This finding is reinforced by a recent report showing that fossil fuel industry groups were uninterested in reducing methane flaring.

Resisters, by contrast, are more likely to have bigger investments in refining facilities, making it harder for them to move away from fossil fuels. If climate policy gets tougher, they will either have to make costly retrofits or write off many of their refining assets, as Exxon hinted it may have to do.

Our research suggests two important things. The first is obvious: Big oil companies aren’t decarbonizing. At most, they are hedging. The second is an important qualification: Though critics tend to lump oil companies together as “climate bad guys,” some companies are more opposed to climate policy than others.

These different strategies may well shape the political economy of climate change — and oil companies’ long-term viability — for decades to come. Rising climate concerns and a pandemic-induced oil crash are pushing such firms as BP, Equinor and Shell into renewables and decarbonized fuels. Firms like Exxon and Chevron, instead, seem to be doubling down on oil.

Jessica F. Green is an associate professor of political science at the University of Toronto. Find her on Twitter @greenprofgreen.

Jennifer Hadden is an associate professor of political science at the University of Maryland. Find her on Twitter (@jenniferhadden).

Thomas N. Hale is an associate professor at the Blavatnik School at Oxford University. Find him on Twitter (@thomasnhale).

Paasha Mahdavi is an assistant professor of political science at the University of California at Santa Barbara. Find him on Twitter (@paashamahdavi).