BP’s reversal from renewables a sign of the times

BP’s stunning reversal on its renewable energy commitments is a direct result of President Doland Trump’s energy rhetoric—think “drill baby drill”. The oil giant will cut its planned funding for renewables by $5 billion and instead focus on oil and gas production.

While sources attribute BP’s u-turn to investor concern stemming from poor financial performance, the political context underpinning this decision is hard to miss. BP made its commitments with the swelling tide of the green transition. That seems to have stopped in its tracks following the US presidential election.

Trump is dismissive of climate change and a supporter of fossil fuels. His rhetoric has been matched by action that has shaped the regulatory environment—he has dismantled a series of environmental regulations, supports fossil fuels and brought partisanship to the climate issue. These developments have meant companies like BP can conveniently pull back from commitments made in the past without as much of a backlash as they would have otherwise faced.

For a long time now, companies have grown accustomed to operating within the parameters set out by the rule book of globalisation and a socio-cultural context that sets benchmarks for expected behaviour

BP is simply readjusting its corporate strategy to align with the political realities of the day. This is not the first time it has happened, and it certainly won’t be the last.

A sign of things to come

BP’s about-turn on renewables investment illustrates a bigger shift that may define corporate strategy over Trump’s second term and perhaps into the future: which is that there is no rule-book.

For a long time now, companies have grown accustomed to operating within the parameters set out by the rule book of globalisation and a socio-cultural context that sets benchmarks for expected behaviour, be it in terms of supporting the green transition or DEI initiatives. But we’re now entering a time where corporate strategy and business decisions will have to be designed (and reviewed frequently) based on a rapidly changing political and ideological landscape.

As I argued in this previous piece, globalisation is evolving, and companies are increasingly navigating a web of risks stemming from ideological shifts and politics-driven policy.