BP has announced a major shift in its strategy, cutting back on renewable energy investments and increasing its focus on oil and gas. The company plans to invest $10 billion annually in fossil fuels while slashing more than $5 billion per year from its energy transition spending.
This move marks a sharp reversal from its previous commitment to cut emissions and transition toward greener energy. So, what prompted the energy giant to go back on its climate goals?
Why Is BP Changing Its Strategy?
BP’s leadership cited slower-than-expected progress in the energy transition as a key reason for the shift. CEO Murray Auchincloss said the Ukraine war, the pandemic, and unstable energy markets have slowed the shift to renewables.
He acknowledged that BP was too optimistic in its early climate targets, saying,
“Our optimism for a fast transition was misplaced, and we went too far, too fast…We will be very selective in our investment in the transition, including through innovative capital-light platforms. This is a reset BP, with an unwavering focus on growing long-term shareholder value.”
The company also pointed to strong demand for oil and gas, which remains higher than expected.
As a result, BP now aims to increase oil and gas production to between 2.3 million and 2.5 million barrels of oil equivalent per day (boepd) by 2030—up from its current 2.36 million boepd.
BP’s New Investment Plans
BP plans to spend between $13 billion and $15 billion each year until 2027. Most of this money will now go toward traditional fossil fuels. The company has also announced that it will:
- Cut energy transition spending to $1.5 billion to $2 billion per year, down from previous forecasts of $8 billion in 2025 and $9 billion in 2030. BP’s big cut shows it expects slower returns on renewables. So, fossil fuel projects are now its main focus.
- Increase its dividend by 4% each year to draw in investors. This shows confidence in profits, even as green investments decline.
- Reduce operating costs and divest $20 billion worth of assets by 2027, including parts of its renewables business. BP says these divestments will simplify operations and bring in cash quickly.
- Sell a 50% stake in Lightsource BP, its solar business, and shift to a capital-light renewable energy model. BP will not fully develop its green energy projects. Instead, it will depend on outside capital and partnerships. This approach cuts its financial risk but keeps BP involved in renewables.
Dialing Down Climate Commitments
The energy major’s combined Scope 1 and 2 emissions were 32.1 MtCO2e in 2023. This is a decrease of 41% from its 2019 baseline. This means they’ve already surpassed their 2025 target of 20% emission reductions against the baseline.
BP has changed its strategy. It has lowered its climate goals and moved away from its earlier decarbonization plans. The company’s revised targets include:
- Cutting Scope 1 and 2 emissions (from its own operations) by 45%-50% by 2030, down from the original 50% goal. This slight reduction reflects BP’s decision to keep oil and gas production at higher levels than originally planned.
- Reducing the carbon intensity of its products by 8%-10% by 2030, compared to the previous 15%-20% target. This weaker target shows that BP is focusing on short-term profits instead of making bigger cuts in emissions from its fuel products.
- Eliminating its absolute Scope 3 emissions reduction target, which previously aimed for a 20%-30% cut by 2030. Scope 3 emissions make up most of an oil company’s total carbon footprint. They arise from how people use its products, not from the company’s direct operations. Critics say BP’s decision to remove this target signals a major retreat from its climate commitments and a lack of accountability for downstream emissions.
- BP’s aim 1 means to be net zero across its entire operations on an absolute basis by 2050 or sooner.
The energy giant’s new climate goals show a shift seen in many big oil companies. Many of them are slowing down their green efforts due to economic uncertainty. By abandoning absolute Scope 3 targets, BP avoids binding commitments to reduce emissions from its gasoline and diesel sales, which make up the bulk of its carbon footprint.
Investor Pressure: Chasing Profits Over Sustainability?
BP is reducing its focus on renewable energy. This change follows pressure from Elliott Investment Management. They want BP to boost its financial returns.
BP has also underperformed compared to competitors like Shell, Exxon, and Chevron, leading to dissatisfaction among investors.
Following the announcement, BP’s share price fell by 1.8%, reflecting mixed reactions from the market. Some investors like the new focus on profits. But others think BP is giving up on long-term sustainability.
BP’s move could also have regulatory implications as governments worldwide tighten emissions standards. With climate policies evolving, companies that fail to adapt may face higher compliance costs in the future.
Environmental Groups Call Out BP’s ‘Climate U-Turn
BP’s return to fossil fuels has angered environmental groups. It has also worried investors who care about sustainability. Greenpeace UK called the decision “proof that fossil fuel companies can’t or won’t be part of climate crisis solutions.”
Meanwhile, Global Witness criticized BP. They claimed the company cares more about quick profits for shareholders than protecting the environment in the long run. The group held a protest in London. They used mobile billboards to call out BP’s leaders for their “flip-flop” climate policy decisions.
BP’s move also raises concerns about its alignment with global climate goals. The International Energy Agency (IEA) states that new fossil fuel projects can’t help limit global warming to 1.5°C. By increasing oil and gas production, BP may stray from the global net-zero goal.
What This Means for BP’s Future
BP’s shift signals a clear return to traditional fossil fuel business models, with a reduced emphasis on clean and renewable energy. While this move may generate higher short-term profits, it raises concerns about BP’s ability to adapt to a decarbonizing world.
Many experts believe that, over time, stricter climate regulations and changing energy markets will force oil companies to prioritize renewables once again.
BP’s shift in priorities could also affect its reputation among environmentally conscious investors and consumers. Companies that continue investing in fossil fuels at the expense of renewables may struggle to attract younger, sustainability-focused investors who prioritize long-term climate goals over immediate financial returns.
For now, BP is betting on oil and gas—but whether this strategy pays off in the long run remains uncertain. As the world moves toward net-zero goals, its decision to step back from renewables could impact its standing in the energy sector in the years ahead.
The question remains: Will BP’s return to fossil fuels prove to be a wise financial move, or will it leave the company behind in an increasingly green-focused world?
- READ MORE: 2025: The Year Clean Energy Dominates with Record $670 Billion Investment, Trumping Oil & Gas
The post BP Rolls Back on Net Zero Goals, Bets $10B on Fossil Fuels: A Smart Move or a Climate Setback? appeared first on Carbon Credits.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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