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Some major oil companies such as Shell and BP that once were touted as leading the way in clean energy investments are now to refocus on oil and gas production. Others, such as Exxon Mobil and Chevron, have concentrated on oil and gas but announced recent investments in carbon capture projects, as well as in and .

National oil companies have also been investing in renewable energy. For example, Saudi Aramco has while at the same time asserting that .

But the larger question is why oil companies would invest in clean energy at all, especially at a time when many and , at least in the United States.

Some answers . More traditional petroleum industry followers would urge the companies to keep focused on their core fossil fuel businesses to meet growing energy demand and corresponding near-term shareholder returns. Other shareholders and stakeholders concerned about and the – including an increasing number of – would likely point out the .

Other answers depend on the particular company itself. have different business plans than very large private and public companies. . And such as Saudi Aramco, Gazprom and the China National Petroleum Corp. of the world’s oil and gas resources with revenues that support their national economies.

Despite the relatively by oil and gas companies so far, there are several business reasons oil companies would increase their investments in clean energy over time.

The oil and gas industry has provided energy that has helped create much of modern society and technology, though those advances have also come with significant environmental and social costs. My own experience in the oil industry gave me insight into how at least some of these companies try to reconcile this tension and to make . Now the managing director and a at the Ray C. Anderson Center for Sustainable Business at ɫ����, I seek ways to eliminate the boundaries and identify mutually reinforcing innovations among .

Diversification and Financial Drivers

Just like financial advisers tell you to , companies do so to weather different kinds of volatility, from commodity prices to political instability. Oil and gas markets are , so investments in clean energy can hedge against these shifts for companies and investors alike.

Clean energy can also provide opportunities for new revenue. Many customers want to buy clean energy, and oil companies want to be as this transition occurs. By developing employees’ expertise and investing in emerging technologies, they can be ready for commercial opportunities in biofuels, renewable natural gas, hydrogen and other pathways that may overlap with their existing, core business competencies.

Fossil fuel companies have also found what other companies have: Clean energy can reduce costs. Some oil companies not only invest in energy efficiency for their buildings but use . And adding renewable energy to their activities can also .

Public Pressure

All companies, including those in oil and gas, are under , from the public, from other companies with whom they do business and from government regulators – at least outside the U.S. For example, campaigns seeking to are increasing along with . Government policies focused on both are also making headway in some locations.

In response, many oil companies are and setting targets to that they sell – though many observers . Other companies are investing in emerging technologies such as hydrogen and methods to

Some companies, such as BP and Equinor, have previously even gone so far as and acquiring clean energy businesses. But those efforts have also been criticized as “,” taking actions for public relations value rather than real results.

How Far Can This Go?

It is even possible for a fossil fuel company to reinvent itself as a . Denmark’s Orsted – formerly known as Danish Oil and Natural Gas – transitioned from fossil fuels to become a global leader in offshore wind. The company, whose majority owner is the Danish government, made the shift, however, with the help of significant public and political support.

But most large oil companies anytime soon. Making that change requires leadership, investor pressure, customer demand and shifts in government policy, such as putting a .

To show students in my sustainability classes how companies’ choices affect both the environment and the industry as a whole, I use the . Students run fictional fishing companies competing for profit. Even when they know the fish population is finite, they overfish, leading to the . cause long-term disaster for the fishery and the businesses that depend on it.

The metaphor for oil and gas is clear: As fossil fuels continue to be extracted and burned, they release , . They also pose substantial .

Yet students in a recent class showed me that a more collective way of thinking may be possible. Teams voluntarily reduced their fishing levels to preserve long-term business and environmental sustainability, and they even cooperated with their competitors. They did so without in-game regulatory threats, shareholder or customer complaints, or lawsuits.

Their shared understanding that the future of their own fishing companies was at stake makes me hopeful that this type of leadership may take hold in real companies and the energy system as a whole. But the question remains about how fast that change can happen, amid the accelerating global demand for more energy along with the .

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