Exposed: Regulators Crack Down on Sneaky Lobbying Tactics!

Greetings from New York, where a new consumer trend has emerged this week: checking the AQI (Air Quality Index) on your smartphone. Thankfully, my device tells me the AQI is improving, after giving terrifying readings earlier this week due to wildfires in Canada. On Wednesday, New York recorded the worst air quality of any major city in the world.

The big question now is whether the smoke shock will push Wall Street and Washington to take tougher action on climate change or whether it will be treated as a soft spot. The fit measures are already on display: There’s been a race for home air filters, and the company FindStorageFast says that in New York City last week, “searches for ‘sell my home fast’ increased by more than 26 times the average volume” on Google. This echoes the behavior seen among wealthy residents of smog-ridden emerging-market cities and on the American West Coast, parts of which have long grappled with smog. (Indeed, some of my California friends reacted to the New York news this week with hints of schadenfreude – and sardonic social media memes.)

But will adaptation among the rich undermine the political pressure for mitigation? Let us know what you think. Meanwhile, in today’s newsletter we look at the growing risk of regulatory action over green advertising claims. Have a good weekend. (Gillian Tett)

Shell’s ruling by regulators is a wake-up call for advertisers

Last summer, Bristol activists were surprised to come across a large poster in the southwestern English city touting the green credentials of oil group Shell.

“BRISTOL is READY for cleaner energy,” the poster proclaimed, informing residents that 78,000 homes in their region were now using “100% renewable electricity from Shell Energy.”

For Adfree Cities activists, this seemed like a prime example of the harmful advertising they fight against. It’s a “particularly well-tested tactic,” activist Veronica Wignall told me, in which companies “selectively promote a portion of their business and fail to mention that the vast majority of their business takes place in environmentally harmful areas.” .

The campaigners have lodged a formal complaint with the UK’s advertising regulator and this week made sure to overwhelming sentence with serious implications for companies in the energy sector and beyond.

The Advertising Standards Agency ruled that the poster – and a video featuring inspirational scenes of Shell’s investments in wind power and electric vehicle charging – “must no longer appear in the complained form”.

The adverts, he said, gave “the impression that low-carbon energy products made up a significant proportion of the energy products Shell invested and sold in the UK in 2022, or were likely to do so in the next future” – while most of Shell’s business remained in oil and gas.

The times of the sentence it was particularly embarrassing for Shell, which is about to say goodbye to those green electricity customers in southwest England. The day before, he had announced the decision to exit its domestic retail energy businesses in the UK, the Netherlands and Germany, citing poor returns.

Shell said it “strongly disagrees[d]with the ASA’s “myopic decision,” pointing to market research that showed most consumers were well aware of its core business in oil and gas. “But what many people don’t know is that we’re also investing heavily in low and zero carbon energy, including building one of the largest public networks of electric vehicle charging points in the UK.”

Shell invested $4.3 billion in “low-carbon energy solutions” last year, out of a total capital expenditure of $25 billion. But two-thirds of its capex was in oil and gas. And the ads’ omission of “significant information” about Shell’s overall environmental impact, the ASA ruled, made them misleading.

The ruling was issued together with two similar findings, against energy groups Petronas of Malaysia and repsol of Spain (the latter for the announcements that appeared on the FT website). Repsol said it “respectfully disagreed” with the ASA’s ruling and said a third of its capital expenditure would be dedicated to low-carbon businesses for the 2021-25 period. Petronas also said it did not agree with the ruling and “remains committed to its low-carbon ambitions”.

Lawyers told me these rulings should be scrutinized by companies considering green-colored advertising campaigns.

“Every time you get a ruling like this, you get a sense of what the regulator is thinking,” Ashurst partner Tom Cummins said, adding that the ASA was “further along the curve” in addressing green claims. outrageous compared to regulators elsewhere.

Scrutiny of alleged greenwashing is also heating up in the EU, where lawmakers voted last month to push for a ban about companies using carbon offsets to claim their products were carbon neutral.

Gustaf Duhs, a partner at Stevens & Bolton who previously worked at the UK Competition and Markets Authority, said companies should be particularly wary of using “blanket claims” to promote their green credentials. Shell’s video included the hashtag “#PoweringProgress,” which the ASA said could give a misleading impression of the company’s business.

Shell argued it would be “impractical” if companies were required to provide an overview of their entire business in every ad they produced. The ASA risked slowing the UK’s push into renewable energy, he added, hampering Shell’s efforts to raise awareness of green energy alternatives available to consumers.

But selling more green offerings wasn’t the primary focus of advertising campaigns by Shell and other oil producers, said Solitaire Townsend, co-founder of sustainability consultancy Futerra.

He said such efforts were best seen as “lobbying”: aimed not at driving demand for products, but at shifting public sentiment towards the big oil and gas companies, and thereby mitigating political pressure for a policy tougher around them.

“They’re trying to align with something the public is already very positive about, which is renewable energy,” Townsend said. “Having Shell seen as part of the solution has significant financial value for them, which is why they spend so much money on advertising.” (Simon Mundy)

Smart reading

If you somehow missed it yesterday, now is the time to read it explosive and disturbing FT investigation over extensive allegations of long-standing sexual abuse by British hedge fund tycoon Crispin Odey.