One day after being anointed, the new CEO of one of the world's biggest energy conglomerates announced an ambitious agenda: to remake the company's core business and "take its responsibility" on climate change by investing heavily in green tech like wind, solar, and carbon-capture.
Less than four years later, as the company's stock faltered, the board abruptly ousted its ambitious, photogenic CEO.
Isabelle Kocher, the head of the French electric utility giant Engie, was sacked last week after being picked to steer the company into a glistening clean-energy future.
Her surprise exit – which roiled energy markets and sparked furious trans-Atlantic gossip and speculation, not to mention an outcry in France – came less than a week before BP's own newly minted CEO, the square-jawed Irishman Bernard Looney, announced barely a week into his tenure a similarly ambitious effort to transform one of the world's largest polluters into an Earth-friendly, carbon-neutral conglomerate by 2050.
"Let me be very clear today: I get it. The world does have a carbon budget, it is finite, and it is running out fast, and we need a rapid transition to net-zero," Looney said in public remarks in London this week, leading off what became a roughly two-hour Q&A with the CEO. "Providing the world with clean, reliable, affordable energy will require nothing less than reimagining energy, and today that becomes BP's new purpose."
The upheaval at Engie, and market pressures bearing down on European energy colossus, Royal Dutch Shell, may offer warning signs, signaling – beyond the inspiring words and aspirational messaging – just how much, or how little, disruption shareholders will be willing to tolerate long after the chairs have been stacked, the floors swept, and excitement faded from Looney's big announcement on Wednesday.
"This is one of the big questions facing oil companies: They want to reposition for a changing world, but the margins in clean energy are not the same as the margins in oil and gas," said David Spence, a professor specializing in energy regulation at the University of Texas-Austin School of Law. "The idea of being a first-mover or acting unilaterally, if you move too fast, can be economically challenging for shareholders."
BP's outgoing CEO, Bob Dudley, sounded a similar warning in one of his last interviews as chief. Nine years at the top one of the world's seven "supermajors" – the oil and gas colossuses that make up Big Oil – had taught him that "if you go too fast and you don't get it right you can drive yourself out of business," he said in a podcast interview with former Obama White House energy and climate advisor Jason Bordoff, a remark widely seen as a cautionary note for the incoming CEO.
BP isn't the first oil and gas company to announce plans to go carbon-neutral: The Spanish company Repsol in December said that it would seek to become carbon neutral by 2050, and Italy's ENI is aiming to go net-zero even earlier, by 2030, although it's using a less stringent benchmark.
But BP's aspirations aim considerably higher: While Repsol and ENI are counting only the heat-trapping emissions generated by their own operations – what's often referred to as "Scope 1" and "Scope 2" emissions, BP says it will include so-called "Scope 3" emissions: the greenhouse gases generated by the retail products that the company produces and sells downstream: namely gasoline and diesel fuels.
"That went considerably further than most of these pledges that we have heard from other companies," said Stefan Reichelstein, professor emeritus at the Stanford Graduate School of Business specializing in energy and economic policy. "Then again, it's three decades out, and no milestones were provided."
The oil sector's market performance – and BP's stock price in particular – have helped clear the way: Oil and gas companies, hammered by sustained low prices and a global slowdown in demand, made up the most dismal segment in global markets in the past decade; BP's stock price has dropped by about a third from 10 years ago. Meanwhile, clean energy resources like solar, wind, and even battery storage have seen prices plummet, allowing them to start competing on economics alone regardless of government subsidies.
"The oil industry was the worst-performing sector in the stock market for the last 10 years – not just BP, the entire industry. So for most institutional investors, they're saying, 'Figure out how to pick it up,'" said Jigar Shah, president and co-founder of Generate Capital, a clean-energy financing firm. "If BP wants to refocus its assets on decarbonization, the technologies are ready for scale-up."
But that mandate is far from limitless: Isabelle Kocher, when she was named the only female CEO of a publicly traded blue-chip French company in 2016, was tasked with transforming Engie from a legacy multinational heavily dependent on fossil fuels to a new firm largely reliant on zero-emissions energy sources, as well as new digital tools to help manage what promised to become a far more complicated electric grid as smaller networks of solar panels and wind turbines replaced the company's centralized oil, gas, and coal plants.
Investors quickly lost patience. Even as shareholder returns – negative in the four years before Kocher's tenure – once again became positive, investors complained that their returns still lagged behind Engie's European competitors. And while the company slashed its debt by $6.6 billion Euros, chiefly by selling off underperforming fossil fuel assets, and saw its growing clean-energy portfolio outperform many of its European competitors, investors groused that there remained "a lack of visibility" about the company's future.
"Kocher has delivered the plan, but not the payoff," Bloomberg put it last May. She was fired nine months later.
"It's a confidence game: Do the shareholders believe management's story? And with Engie, it looks like shareholders lost confidence in management's story," said Vit Henisz, professor of management, political and social risk at the Wharton School of the University of Pennsylvania.
There are crucial differences: BP, unlike Engie, doesn't plan to divest its oil and gas assets. The French government owns a 24-percent stake in Engie, adding taxpayer pressure on the company to perform. And as some investors and commentators highlighted discontent around a leadership style that "sometimes rubbed people the wrong way," Kocher's ouster also carried strong implications of bias and sexism.
As one woman who's steeped in the energy industry put it, asking not to be named because of sensitive business relationships, "It's infuriating. But also maybe she was driving the company into the ground. But we just don't know. The only woman CEO in that whole space is no longer there."
Even so, if BP's stock is seen as underperforming in the coming months and years, accusations that it's become distracted by its decarbonization push may be unavoidable. Royal Dutch Shell, for example, which last year announced plans to transform itself from one of the world's largest oil and gas producers to a comparatively cleaner company centered on selling electricity, is seeing its investments in cleaner energy being challenged by a sharp drop in profits.
Then there's BP itself: The company in the 1990s launched an aggressive campaign to reduce political risk by implementing anti-corruption measures that went far beyond those of its competitors. After the explosion of the Deepwater Horizon drilling rig in the Gulf of Mexico in April 2010, unleashing the worst environmental disaster in U.S. history, those anti-corruption efforts drew immediate scrutiny.
"They were a leader there but took their eye off of the engineering ball and a started having more leaks and more explosions – leading to the Deepwater Horizon," Henisz said. "If you put too much focus on one, you can end up destroying shareholder value."
