Study: Big Oil shareholders’ profits soar as world melts
As temperatures soar and food prices continue to rise because of climate change, BP and Shell shareholders are raking in their highest-ever levels of cash earnings, according to a new report by Corporate Watch and the Centre for Climate Crime and Climate Justice at Queen Mary University of London.
The report authors analysed financial data generated by the S&P Capital IQ database to calculate the earnings of shareholders in Britain’s two major oil companies since the Paris Agreement was signed in December 2015.
It said that:
- Shareholders in BP and Shell have earned a total of £131 billion in dividends and share buybacks combined.
- Annual earnings for BP shareholders have more than tripled (rising by 240 per cent).
- Annual earnings for Shell shareholders have almost tripled (rising by 194 per cent).
- The top eight shareholders have significantly expanded their holdings in BP and Shell and raked in a total of £28.7 billion in cash earnings from both companies.
‘As the world burns, shareholders are getting record cash pay-outs from their fossil fuel investments,’ David Whyte, one of the report’s co-authors and the director of the Centre for Climate Crime and Climate Justice at Queen Mary University of London said in a press release. ‘This report shows that we will not be able to stem the flow of oil unless we stem the flow of cash to rich investors.’
The report said the eight biggest investors of both Shell and BP include asset manager BlackRock, fund manager Vanguard, State Street and investment bank UBS.
Authors singled out Exchange Traded Funds (ETFs) as a major reason why these asset managers finance and stand to make a fortune from fossil fuel companies’ dividends.
ETFs are a type of investment that tracks indexes such as the S&P500, Nasdaq, or Dow Jones, stock markets. They are often touted as a form of minimal-effort investing for the average person with little time or knowledge of the market. This is because instead of picking individual companies, it leads investors to buy into groups of companies, which is considered less risky.
But the strategy can obfuscate which companies are included in these groupings – fossil fuel companies such as Shell and BP can be part of ETFs.
The sector has mushroomed to a $15 trillion industry.
The report authors said BlackRock was the only investor with a stake in Shell greater than 5 per cent, and a stake in BP that is greater than 10 per cent.
‘The biggest shareholders in BP and Shell have tripled their earning power since the Paris Agreement,’ a Corporate Watch spokesperson said in a press release. Corporate Watch is a UK-based research group that helps people stand up against corporations and capitalism. ‘If there was ever any belief that they were making positive change for the climate, this report thoroughly dispels that.’
The authors also examined what could have been done with that money had it been invested in the common good. For example, authors note that the Local Government Association (LGA) estimates that social care is underfunded by roughly £13bn per year – one-tenth of the BP and Shell shareholder payouts. Or the pay-outs could have funded a project to fit 13 million houses in the UK with solar panels.
‘The eye-watering £113bn in payouts since the Paris Agreement would be a game changer if it was spent on renewables,’ a Corporate Watch spokesperson said in the press release. ‘We would be able to revolutionise domestic power supplies and ensure real energy security.’
The report also analyzed the ESG (Environmental, social, and corporate governance) strategies of those top shareholders and raised major questions about the failure of fossil fuel divestment strategies and market solutions to climate change.
The full report is available on the Centre for Climate Crime and Climate Justice’s website.
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