Funnily enough, we published an article on this topic at the same time as the Semafor article, which if memory serves was when a few of the oil supermajors released their round of Q1 2023 earnings.
My read is that this analysis from our 8 Feb article still stands:
Oil & Gas as a sector is a fiercely cyclical, and when demand surges as it did following the loosening of lockdown restrictions and outpaces the supply, you tend to see extremely strong earnings from the large oil companies. No matter what the appeal of ESG is in a long-term sense, equity portfolio managers struggle to stay away from the returns on these stocks.
The contrarian in me wonders if the upsurge in ESG-focused industries and investments prior to the past few months was at least partially a response to the muted earnings posted in Oil & Gas prior to the industry's change in fortunes. I had a look just now at the year-over-year (YoY) earnings for BP, Exxon, and Chevron between 31 December 2018 and 31 December 2022 and they all follow a similar pattern of severe YoY declining profitability from 2018 to 2021, with all posting pre-tax losses in 2021. While this is an extremely superficial analysis, I suppose you could argue that investors — and with them, market commentators more generally — were more willing to embrace renewables and sing their virtues because they had little to lose by not backing Big Oil.
I guess my point here is that when asking about large industry thematics as we are now doing, it is worth looking at the underlying profitability, because the market tends to chase short-term returns even if it runs contrary to what we know is in our long-term interests. In other words, we know that hydrocarbons are existentially bad for the environment but supply/demand factors and our continued reliance on hydrocarbons still makes them profitable from time to time.
But again, this is a cynical perspective. Even if Big Oil has revised downwards the extent to which they are cutting their investments in hydrocarbons, the fact remains they are in the process of rebranding and repositioning themselves for the long-term move to renewables. Is this greenwashing? Probably at least partially so. Big Oil has to hedge itself against the political, social, and ecological forces at play here. In this sense, I think the tension between short-termism and a long-view really comes into play here. The board of the supermajors knows that if they don't seize on the chance for short-term returns (surging demand for oil/gas), they will lose out to their competitors who will.
As to your point about the real estate industry, I wonder how an analysis of the factors discussed here and their implications for the sector might differ. My amateur understanding is that the nature of (commercial) real estate development and investment — building permanent, fixed structures designed to give investors steady rental yields far into the future — means that investors/developers have to always think about the long-term. Nearly every new commercial real estate developer these days spends half of their marketing materials on how their developments are the greenest and most sustainable ones yet. They have very little to gain by not embracing sustainability, because commercial tenants under ESG pressures of their own would be reluctant to sign a 15 year lease in an older, energy inefficient development.
(All this said, this is more speculation than anything else. I know very little about Oil & Gas and even less so about Real Estate. Just want to encourage discussion!).
