50 Shades of Greenwashing: BP vs. Delta Airlines

Greenwashing, also known as green sheen, is a deceptive marketing practice falsely portraying an organization's products, goals, or policies as environmentally friendly.

Beyond Petroleum

2000: BP rebranded itself as "Beyond Petroleum" to emphasize its commitment to renewable energy.

2010: The Deepwater Horizon oil spill, one of the worst environmental disasters in history.

2020: BP announced plans to become a net-zero company by 2050.

2023: BP announced that it would aim for only a 25% production decrease by 2030, down from the original 40%. Earlier this year, as the company exited some high-profile renewable energy, it advanced long-term oil extraction efforts in the Gulf of Mexico, Iraq and Azerbaijan. Between 2020 and 2023, as the “decade of delivery” took shape, the company’s percentage of low-carbon capital expenditure never broke into the double digits.

Delta Airlines and SAF (Sustainable Aviation Fuel)

• SAF can be made from feedstocks including agricultural waste, algae, animal fats, corn and captured carbon dioxide. It can be blended with conventional jet fuel at a ratio of up to 50 per cent. The biggest problem with SAF continues to be a lack of supply... It’s more expensive — $2 to $4 per gallon more than traditional fuel.

• The new refundable tax credit provides $1.50 per gallon of sustainable aviation fuel produced or blended in Minnesota and sold for use in planes departing Minnesota airports.

• Delta aims to procure over 400 million gallons of SAF annually by the end of 2030.

• Delta uses approximately 4 billion gallons of jet fuel annually and has set a goal of 10% SAF usage by 2030.

• Delta Air Lines has funded a production hub in Minnesota and signed long-term contracts for a supply of 200 million gallons, about half of what Delta needs to reach the 2030 goal.

• Delta is the first major U.S. airline to say it will not roll back its climate targets after President Donald Trump withdrew the country from the Paris Agreement.

Math to the Rescue

I wanted to give an example of Delta as a silver lining in the ESG arena - slow but strategic and consistent. Not until I read the last article.

Whenever I'm confused, I'm calling math to the rescue:

• The additional cost of SAF is $3 per gallon.

• Tax benefit: $1.50 per gallon.

• Total consumption: 4 billion gallons per year.

• Substitution percentage: 50%.

Delta Airlines will lose $3 billion if they substitute 50% kerosene with SAF.

Their profit margin would drop from 5.6% in 2024 to -19.4%.

Hold my beer

According to this study, a decrease in the profit margin could lead to a 37.5% drop in stock price, implying that the company's value over 600 million shares might fall by $15.25 billion.

Is this the current cost of sustainability for Delta Airlines?

$1 billion lawsuit, you said? Hold my beer.