Carbon Tracker Initiative

The closure of Investors for Paris Compliance has prompted renewed debate about whether investor pressure on climate ever really mattered. 

Critics argue that shareholder resolutions rarely succeeded, that companies continue to produce oil and gas, and that governments and state policies ultimately matter more than investors. 

There is truth in some of those observations. But they also miss where investor influence is most visible. 

The strongest evidence is not found in annual general meetings. It is found in capital allocation. 

Geology dictates what is in the ground. Capital expenditure dictates what comes out. 

For decades, oil companies were rewarded for growth. Investors celebrated reserve additions, production increases and large-scale project development. The assumption was simple: future demand would be higher than today, so more reserves meant more value. Over the past decade that assumption has become far less certain. 

Investors began asking different questions. What if oil demand growth slows? What if electric vehicles scale faster than expected? What if renewable power becomes cheaper? What if some reserves prove less valuable than markets assume? 

Carbon Tracker’s work on stranded assets, our analysis of whether O&G production plans aligned with IEA net-zero scenarios, helped bring these questions into the mainstream of investor debate. Divestment campaigns and broader climate narratives reinforced them.  

As confidence in future demand weakened, investors became less willing to fund growth at any cost. Demand uncertainty, a wider climate context and declining confidence in long-dated projects helped shift investor priorities towards capital discipline, a theme we set out in Carbon Tracker’s landmark report Blueprint for an Energy Transition in 2015. As investors increasingly prioritised capital discipline over growth, behaviour across the sector started to change. 

Following the shale boom, oil companies were pushed to prioritise free cash flow, dividends and share buybacks over aggressive expansion. This shift is now visible across much of the listed oil industry: reserve replacement rates have fallen, exploration spending has declined, shareholder distributions have risen, and consolidation has accelerated. Many companies increasingly resemble mature cash-generating businesses rather than growth businesses. 

In 2023 Goldman Sachs noted that since 2014, “concerns around future demand and stranded assets had contributed to a sharp reduction in oil industry resource life, which it estimated had fallen from more than 50 years in 2014 to around 23 years.”  

Whether one agrees with every aspect of that analysis is almost secondary. Even critics of climate-focused investing increasingly acknowledge that investor expectations changed. 

The question is not whether investor pressure worked. If investor pressure had no influence, we might expect companies to continue pursuing reserve growth as aggressively as they did during the commodity supercycle.  

A more searching question is:  if projects became more economic, why were fewer sanctioned? And why did reserve life continue to fall?  

The answer lies at least partly in changing investor preferences and expectations, as well as better knowledge of the risks involved. 

At the same time, the debate itself has evolved. 

Ten years ago, much of the discussion revolved around scenarios, forecasts and long-term climate targets. Critics could dismiss these as hypothetical. 

Today the transition is increasingly observable. Decreasing oil company capital expenditure is measurable. Declining reserve replacement is measurable. Rapidly increasing buybacks and dividends are measurable. And on the other side of the ledger, surging electric vehicle sales are measurable. Global-scale industrial wind and solar deployment is measurable. Battery manufacturing is growing at exponential rates. 

The argument is becoming less about what might happen and more about what is already happening.

Investor pressure by itself will rarely determine the outcome. But it helped change what investors considered valuable. And when investors change what they value, companies eventually change how they behave. 

The balance sheets and capital allocation decisions of the oil industry suggest that the process is already under way. 

That does not mean the work is finished. As transition trends become more visible, debates increasingly focus on what those trends mean for competitiveness, industrial policy, security and investment decisions. The risk is not a lack of evidence, but a failure to respond to it. 

To hear more about the evidence, read our ‘Quiet Retreat’ and our interview on the topic with Christiana Figueres on Outrage & Optimism.

The post Does Investor Pressure Matter? Look at What Oil Companies Are Actually Doing appeared first on Carbon Tracker Initiative.

Carbon Tracker analysis finds widespread under-reporting of automaker emissions creating hidden transition risks for investors

LONDON, 2 June, 2026 

New research from financial think tank Carbon Tracker shows that several legacy automakers carry climate-related financial risks comparable to traditional oil and gas producers. The findings are particularly relevant for Japanese OEMs ahead of the country’s AGM season, given their continued reliance on hybrid vehicles and their outsized role in global vehicle production.

The research, from financial think tank Carbon Tracker, finds that major automakers are systematically understating the emissions linked to their vehicles. Across a sample of 17 of the world’s largest OEMs, representing 80% of passenger vehicle sales, Carbon Tracker found an average discrepancy of 33% between reported and real-world emissions from vehicle use.

This “Carbon Gap” stems from widespread use of unrealistic lifetime mileage assumptions, optimistic plug-in hybrid vehicle (PHEV) usage estimates, and the exclusion of upstream fuel-production emissions.

Using a standardised methodology designed to reflect real-world vehicle usage, Carbon Tracker found that several automakers exhibit carbon intensity levels higher than major oil and gas companies when measured on the basis of emissions as a proportion of enterprise value (tCO₂e/EVIC).

Ben Scott, Head of Energy Demand at Carbon Tracker and co-author of the report, said: 

“Automakers are the gatekeepers of future oil consumption. Passenger vehicles are the largest source (27%) of global oil demand and every ICE or hybrid vehicle sold today locks in 10-20 years of additional consumption.  

Automakers’ flawed emissions reporting masks the reality that a dollar invested in legacy automotive firms is in many cases just as carbon intensive as a dollar invested in oil and gas.” 

The analysis identifies major differences both in transition strategy and emissions disclosure practices across the automotive sector, with some automakers aligning more closely with electrification trends and transparent reporting than others.

Renault and Stellantis emerged as relative leaders on emissions transparency, with reported Scope 3 emissions closely aligned with Carbon Tracker’s estimates, while companies such as BYD and BMW demonstrated substantially higher BEV sales shares than hybrid-heavy peers.

These issues are particularly relevant to Toyota, whose AGM falls on June 17. As the world’s largest automotive manufacturer by volume, with more than 10 million annual vehicle sales, Toyota maintains a hybrid-heavy strategy, selling approximately 27 hybrids for every battery electric vehicle in 2024.

Michael Wells CFA, Analyst at Carbon Tracker and co-author of the report, said: 

“Toyota’s hybrid emissions are an outlier in the sector, exceeding the total emissions of entire manufacturing groups such as BMW. Its hybrid-heavy resource allocation indicates a commitment to technology that faces obsolescence. As major markets move toward outright bans on internal combustion components, Toyota’s hybrid-heavy portfolio risks becoming a fleet of stranded assets.” 

Ken Maeda, Founder of Undertones Consulting, said:  

“Toyota’s heavy reliance on hybrids has delivered short-term sales success but carries significant long-term financial and market risks for both Toyota and the wider Japanese automotive industry. By locking in long-term oil consumption, this strategy heightens stranded asset risks at a time when global peers are accelerating electrification.”  

Mazda and Mitsubishi display the highest emissions intensities, of 10.2 and 9.9 tCO₂e/EVIC, respectively, compared with 4.0 for Shell, the highest intensity oil and gas firm featured in the report.

General Motors exhibits the sector’s largest absolute emissions gap, driven by a high-intensity product mix heavily weighted toward trucks and SUVs in the North American market, combined with the most significant disclosure deficit in the peer group. 

Subaru showed the largest relative reporting gap, with emissions potentially understated by more than 200% due to reporting assumptions that fail to reflect the high-mileage reality of its predominantly US-based fleet. 

The financial risks of delaying the EV transition are being compounded by global energy shocks. The ongoing crisis in the Strait of Hormuz underscores the extreme vulnerability of the legacy automotive business model. Automakers persisting with ICE and hybrid technology are effectively locking consumers into highly volatile, inflated fuel costs for decades to come.

This exposure is particularly acute for the Japanese automotive sector. Japan is overwhelmingly dependent on foreign energy, importing more than 90% of its oil, largely from the Middle East through vulnerable chokepoints like Hormuz. By continuing to build vehicles that rely entirely on liquid fossil fuels, domestic giants like Toyota expose both their global consumer base and their home economy to structural macroeconomic instability.

Scott added: “The crisis in the Strait of Hormuz is a stark reminder that the real-world cost of driving a legacy vehicle isn’t static. When an OEM sells a hybrid or an ICE vehicle today, they aren’t just selling hardware – they are anchoring a consumer to the oil tap for the next fifteen years. In an era of acute geopolitical supply shocks, failing to decouple transport from crude oil is no longer just an environmental misstep; it is active destruction of consumer value and an unhedged risk for investors.”

Carbon Tracker argues that that inconsistent and potentially understated emissions reporting creates material challenges for investors attempting to assess automaker transition risk and carbon exposure accurately.

The report finds that differing assumptions around vehicle lifetime mileage, hybrid usage and fuel-cycle emissions can materially distort reported Scope 3 Category 11 emissions, reducing comparability across issuers and potentially leading to the mispricing of carbon-intensive business models.  

Giuseppe (Joseph) Jacobelli, Managing Partner at Bourne Impact Capital Ltd and Founder of actE, said: 

“As for many other industries, carmakers failing to transition from carbon-intensive legacy assets to bankable ones face significant financial liabilities. Institutional portfolios must navigate this ‘bumpy flight’ by prioritising the economic inevitability of the green shift to prevent systemic capital erosion and asset stranding.” 

Carbon Tracker said that investors should move beyond headline emissions disclosures and scrutinise the assumptions underpinning automaker climate reporting, particularly ahead of key shareholder votes and transition-related engagements, such as Toyota’s AGM on 17 June. 

In particular it urges investors to focus on BEV Sales Share as the core transition KPI and incorporate carbon intensity (tCO₂e/EVIC) into corporate valuation models to avoid mispricing high-emission business models. 

The report, Oil Companies in Disguise, can be downloaded free of charge from here. 

 To arrange an interview please contact:   

Conor Quinn conor.quinn@greenhouse.agency  +44 7444 696 214 

Greenhouse Communications  TrackerGroup@greenhouse.agency     

A Japanese version of the press release is available here.

The post Legacy automakers are just as carbon-intensive as oil and gas firms, new analysis shows appeared first on Carbon Tracker Initiative.

24 June | London | Online

Join us during London Climate Action Week for a timely discussion on the global shift away from fossil fuels – and what it means for investors navigating an increasingly volatile energy landscape. 

Investors are at a critical inflection point. Recent geopolitical tensions and market shocks have underscored the fragility of the global fossil fuel system. At the same time, clean energy and electrification are scaling rapidly, reshaping long-term oil and gas demand. International climate dialogues, including those from the recent Santa Marta process, are also sending increasingly clear signals about the direction and pace of fossil fuel phaseout. 

The session will explore how shifting demand and global policy alignment are reshaping fossil fuel markets and redefining risk, returns and capital allocation. 

Limited space in person, join us online 

• Key takeaways from the Santa Marta process and what they signal for policy and capital markets 
  • Official conference takeaways can be found here 
• The latest evidence on the global scaling of clean energy 
• How Middle Eastern stakeholders are navigating the transition and what this means for global supply, pricing and risk 
• What structural shifts in fossil fuel demand mean for investors and capital allocation 

Opening Welcome:  Dana Lanza, Confluence Philanthropy 

• Sandrine Dixson-Declève, Club of Rome 
• Jules Kortenhorst, Energy Transitions Commission 
• Mark Campanale, Carbon Tracker Initiative 
• [Additional speaker TBC] 

The post LCAW 2026: From Santa Marta to Crisis in the Middle East: Fossil Fuel Phaseout, Energy Transition and Implications for Investors appeared first on Carbon Tracker Initiative.