Energy companies have often found themselves embroiled in controversial practices during recent decades which continue to have damaging effects on people and planet. While there is increasing awareness of the role energy companies have played in hindering progress on climate change, their broader impacts on communities are still under-appreciated, as is their role in producing packaging waste - just 20 companies produce 55% of the world’s plastic waste.

While renewable energy is our best hope for the future those companies too must urgently improve their human rights practices if they are to retain their moral legitimacy and social licence.

Climate Change

To get the obvious out of the way: yes, energy companies are among the biggest contributors to climate change, and no, it’s not all their fault. Most of the world’s economies are still dependent on fossil fuels to meet their energy needs, and until that is no longer the case companies will exist to meet that demand.

However. Companies can choose to support or obstruct the transition to a low-carbon economy, and all too often they have chosen the latter. Suppressing research on the realities of climate change, running disinformation campaigns, fighting policy measures to curb emissions; these are the ways in which energy companies have helped bring us to the brink of dangerous global warming.

There are two futures for today’s fossil fuel companies - they can shift their focus and invest in being exclusively renewable energy companies, or they can start to scale down their activities, redirecting money that would have been spent on resource exploration to retraining workers for the jobs of our low-carbon future and supporting their other stakeholders.

Some general information on climate change is elsewhere on this website. Policy change to mitigate the effects of climate change is to some extent inevitable; as physical disasters such as the 2019 Australia fires become more commonplace, inaction will become impossible. But the speed and strength of action is critical, and many energy companies are acting as obstacles. Not only does this mean worse climate change effects down the line, it also means that workers and communities dependent on fossil fuel extraction are more likely to suffer sudden losses of income under policy changes, rather than companies engaging in a managed decline of their extractive operations starting now.

One necessary part of a credible climate plan is a minimum price for carbon emitted - see here for a good explanation. Companies should publicly support a carbon price of at least $100 per tonne of CO2 in developed countries by 2030 at the latest, and likely much sooner. While many fossil fuel companies have backed a carbon dividend plan, the proposed price ($40 per tonne) is too low to justify the roll-back of environmental standards they’ve demanded alongside it.

A number of companies have declared ambitions to achieve net zero emissions by 2050. Such commitments are in theory laudable, but the devil is in the details of how net zero is defined and their plan to get there. This report sets out how none of the current 2050 goals are aligned with the Paris Agreement, and what would need to change.

If the world was to only burn all known fossil fuel reserves, that would already take the planet beyond 2 degrees of global warming, well beyond the 1.5 degrees limit needed to avoid some catastrophic consequences. Despite this, fossil fuel expansion continues - pages 4-5 of this report show how several companies are planning increases in oil and gas production. Fossil fuel companies need to keep it in the ground.

Over half of global industrial emissions since human-induced climate change was officially recognized can be traced to just 25 corporate and state producing entities.

The Transition Pathway Initiative evaluates the alignment of energy companies (and others) with a 1.5 degree scenario over the short-, medium- and long-term.

  • Does your company have a plan to achieve net zero emissions by 2050 at the very latest? Is the plan detailed and credible?
  • Does your company, either directly or via trade associations, lobby against necessary climate regulations or fund climate change deniers?
  • Is your company continuing to explore for new fossil fuels?

Pollution and environmental degradation

The negative environmental impacts of energy companies have not been limited to climate change. The burning of fossil fuels causes significant air pollution, a leading cause of death in many parts of the world. Chemicals from coal have leaked into groundwater and polluted drinking supplies. Renewable energy sources have also caused their own set of negative impacts, with hydropower dams having led to biodiversity loss, flooding and damaging fish populations.

Research on the various environmental damages caused by coal (beyond climate change) can be found here. A collection of resources on damages caused by dams can be found here; SANDRP provides resources specifically on South Asia.

  • Is your company involved with any litigation regarding its environmental practices?
  • Is your company supportive of stronger laws regulating pollution and Environmental Impact Assessments (EIAs)?

Impact on communities

Energy projects are inherently disruptive and carry risks of a range of negative impacts on local communities - forced relocation, restricted access to culturally significant territory, negative impacts on their livelihoods, failure to pay just and fair compensation. These impacts have fallen disproportionately on indigenous people.

Energy companies must engage in robust human rights due diligence before initiating any project, obtain the informed consent of communities for the project, ensure dialogue with communities throughout and allow some degree of local ownership of the project.

BSR sets out the top 10 human rights priorities for power companies as well as opportunities for positive impact. A central issue is “free prior and informed consent”, an internationally recognised principle that a community or group of individual smallholders has the right to give or withhold its consent to proposed projects that may affect the lands its members traditionally own or use. These are not only issues for traditional energy companies but also for renewable energy companies. For example, solar companies have been found to obtain source materials for their products using forced labour from the Uyghur region in China.

Some of the largest extractive companies in the world were assessed on their human rights performance. A similar ranking is available for the 15 largest wind and solar companies.

  • Does your company have a policy setting out how it respects human rights? Does it include a commitment to the principle of free, prior and informed consent?
  • Does your company provide access to remedy/adequate compensation where a human rights breach has taken place?