The Rainbow Mirage: How Big Oil Paints Over Hollow ESG Promises

In the world of ESG (Environmental, Social, Governance), multinational oil companies are master illusionists. They craft sustainability narratives so compelling that investors, regulators, and consumers alike find themselves captivated by the spectacle. Yet beneath these colorful promises lies a murkier truth: hollow commitments, selective reporting, and strategic lobbying to maintain the status quo.

From impressive ESG ratings by S&P to voluntary disclosures through the Carbon Disclosure Project (CDP), oil giants expertly manage their image while continuing practices that undermine global climate goals. This is ROYGBIV (red, orange, yellow, green, blue, indigo and violet) washing at its peak—a technicolor deception where every hue conceals a deeper truth.

Red: The Fiery Illusion of Climate Leadership

Oil majors like BP, ExxonMobil, and Shell champion climate initiatives with grand promises of achieving “net-zero by 2050.” However, these pledges rarely hold up under scrutiny. While they tout investments in carbon capture and renewable energy, they continue to expand fossil fuel operations at an alarming rate, often investing billions into new oil and gas exploration. We are still not yet at Peak Oil and Gas!

Consider S&P’s ESG ratings: they often reward incremental improvements, like a reduction in methane leaks or energy-efficient equipment, rather than transformative shifts. Similarly, the CDP relies on self-reported data, which allows companies to cherry-pick achievements while downplaying significant emissions. Scope 3 emissions—the largest contributor to an oil company’s carbon footprint—are routinely omitted or understated. Carbon offset programs, another common tactic, become a distraction, enabling companies to “burn now, plant later,” leaving the climate worse off in the interim.

The crux of the issue lies in how green finance—such as ESG-linked bonds and sustainable investment funds—is often used by these companies to attract capital, despite their ongoing fossil fuel dependence. Institutional investors are swayed by optimistic ratings that ignore the vast emissions from Big Oil’s core activities, inadvertently perpetuating a cycle of financial support for companies that continue to harm the environment.

Orange: Opportunistic Partnerships and Greenwashing Collaborations

Big Oil’s enthusiasm for social causes often rings hollow. For instance, TotalEnergies partners with NGOs to support renewable energy projects while simultaneously advancing controversial oil pipelines in East Africa. Chevron sponsors educational programs in underprivileged communities but remains silent about its role in perpetuating environmental injustice in those same regions.

At global climate events like COP conferences, oil executives speak passionately about sustainability while lobbying behind closed doors to weaken climate policies. Their opportunistic partnerships and public endorsements of environmental causes create a facade of engagement, masking their deep-rooted opposition to meaningful change. Their collaboration with NGOs and universities—alongside sponsorship of environmental summits—appears commendable at first glance, but it’s all part of a calculated effort to clean up their image.

Yellow: The Glow of Questionable Positivity

The glow of positivity shines brightly in Big Oil’s marketing, but its impact often falls short. Campaigns promoting biofuels, hydrogen energy, or renewable investments are carefully crafted to distract from ongoing high-emission activities. For example, BP’s investments in offshore wind farms are frequently celebrated, even though they represent a fraction of the company’s overall energy portfolio.

S&P’s ESG methodology often amplifies this illusion by assigning high scores for symbolic actions. Similarly, CDP’s optimism for future commitments allows companies to earn accolades for aspirational goals rather than penalizing them for current inaction. These metrics create a narrative of progress that crumbles under closer examination. The lack of regulatory pressure further exacerbates this, as many of these oil companies benefit from a regulatory capture system, where they influence governments to soften climate policies, ensuring they can continue profiting from fossil fuels without stringent oversight.

Green: The Grand Illusion of Sustainability

Greenwashing is where Big Oil truly excels. Shell’s annual sustainability report showcases investments in solar and wind energy, but closer analysis reveals that such projects account for only a small fraction of its capital expenditure. Meanwhile, Shell continues to explore and develop new oil reserves.

The exclusion of Scope 3 emissions from ESG evaluations is particularly problematic. While CDP encourages Scope 3 disclosures, the lack of standardization means companies often report partial data, creating a distorted picture of their environmental impact. This selective transparency allows oil majors to claim leadership in sustainability while continuing to fuel global warming.

Further complicating matters, while many of these companies are lauded for their renewable energy investments, the real-world impact of such projects is negligible compared to the continued reliance on oil and gas. For instance, BP’s flagship wind and solar projects often pale in comparison to its massive investments in deepwater drilling, oil sands, and natural gas pipelines. These paradoxical commitments represent distractions from their core business of fossil fuel extraction.

Blue: Trust Wrapped in Complexity

Big Oil’s ESG reports are packed with jargon and metrics that obscure rather than clarify their impact. Investors are presented with terms like “carbon intensity per barrel” or “energy transition indices,” which appear meaningful but often fail to account for absolute emissions growth.

AI-driven ESG scoring systems compound the problem, amplifying these partial successes into positive evaluations. For instance, an oil company might reduce emissions per barrel while increasing overall production, leading to higher total emissions. ESG ratings from S&P frequently reward such nuanced improvements without penalizing the broader contradictions. Moreover, this creates a feedback loop where green finance and ESG-linked investments flow into projects that fail to make a real impact on carbon reduction, thus perpetuating the industry’s business-as-usual approach.

Indigo: Token Diversity in a Monolithic Industry

Oil companies frequently highlight diversity initiatives in their ESG reports, showcasing token hires or partnerships. Yet leadership remains predominantly homogeneous, with women and minorities grossly underrepresented in decision-making roles.

True diversity involves addressing systemic barriers, such as pay inequities, limited promotion opportunities, and exclusionary corporate cultures. Moreover, diversity intersects with sustainability: underrepresented voices often bring fresh perspectives on environmental and social challenges, making their inclusion critical for genuine ESG progress. Oil companies’ commitment to diversity is often undermined by their short-term focus on financial returns rather than systemic change, with leadership largely unchanged despite public commitments to diversify.

Violet: Lofty Goals with No Timeline

Big Oil’s long-term goals, like carbon neutrality by 2050, sound visionary but often lack concrete interim milestones. These aspirations conveniently delay accountability, leaving the heavy lifting to future leaders.

S&P and CDP’s scoring frameworks sometimes enable this procrastination, awarding high marks for commitments without requiring detailed roadmaps or near-term results. Investors are left with a feel-good narrative that masks the absence of immediate action. Regulatory inertia further allows oil companies to delay tangible actions, as many governments are reluctant to impose meaningful penalties or enforce strict climate goals on their oil-producing industries. This lack of urgency can be traced to lobbying influence, where Big Oil plays a pivotal role in shaping regulations to ensure the slow pace of change.

Beyond the Rainbow: Black and White Deceptions

Black represents the opacity of ESG audits. Many oil companies conduct these reviews internally or hire firms with vested interests, leading to reports that gloss over critical flaws. Transparency is often sacrificed to protect the company’s image.

White embodies virtue signaling. Consider ExxonMobil hosting sustainability forums while its lobbying efforts undermine climate action, or Shell sponsoring clean energy conferences while funding new drilling projects. These gestures offer no substance—just a polished veneer.

The True Colors of Responsibility

The rainbow of ESG promises may captivate, but true sustainability demands substance over spectacle. Regulators must mandate comprehensive Scope 3 reporting and penalize greenwashing, while ESG rating agencies like S&P and CDP should adopt stricter methodologies that prioritize real impact over self-reported data.

Investors must go beyond ratings, scrutinizing corporate lobbying activities and demanding alignment with science-based climate targets. Moreover, activist investors can play a pivotal role by pushing oil companies to embrace truly sustainable practices rather than relying on surface-level metrics.

Consumers, too, hold power by holding companies accountable for their actions, not their rhetoric. For Big Oil to truly fulfill its ESG promises, it must face the consequences of its actions, not hide behind optimistic ratings and greenwashing tactics.

Because when it comes to Big Oil’s ESG commitments, the pot of gold at the end of the rainbow often turns out to be a barrel of tar.