Money is a sticking point in climate-change negotiations around the world. As economists warn that limiting global warming to 1.5 degrees Celsius will cost many more trillions than anticipated, WSJ looks at how the funds could be spent, and who would pay. Illustration: Preston Jessee/WSJ

LONDON—BP PLC BP -2.15% Chief Executive Bernard Looney plans to dial back elements of the oil giant’s high-profile push into renewable energy, according to people familiar with recent discussions.

Mr. Looney has said he is disappointed in the returns from some of the oil giant’s renewable investments and plans to pursue a narrower green-energy strategy, the people said. He has told some people close to the company that BP needs to do more to convince shareholders of its strategy to maximize profits in areas where it has a competitive advantage, including its legacy oil-and-gas operations.

In some of the conversations, Mr. Looney has said he plans to place less emphasis on so-called ESG goals—a catchall term for environmental, social and governance—to help clarify that those aren’t distracting the company from its ability to deliver profits, the people said.

Mr. Looney, the people said, is casting the moves as a modest short-term course correction rather than a major strategic pivot for the 114-year-old company.

Analysts and some investors say pledges by BP to shift away from fossil fuels and into renewable energy risk handicapping the company’s performance. Many companies are struggling to transition to new green technologies while still relying heavily on traditional energy sources.

A BP spokesman referred to previous public statements Mr. Looney and BP have made about the company’s strategy, including its commitment to reducing carbon emissions and shifting investments to green energy. Mr. Looney declined to comment through the spokesman.

BP is scheduled to report full-year earnings Feb. 7 after consecutive bumper quarters boosted by massive profit in its natural-gas trading arm. The company will update investors on its strategic progress at that time, the spokesman said.

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As BP appears headed toward a narrower green-energy strategy, a picture of a solar farm hangs in the London office of its solar business.

Mr. Looney, a 32-year BP veteran, took over as CEO in early 2020 and soon announced commitments to shrink greenhouse-gas emissions, including from oil and gas the company sells. Analysts said at the time that the new targets went further than rivals’ plans. Investors questioned how renewables could make up for fossil-fuel businesses that typically produced higher—if volatile—returns.

Shares of BP and London-based rival Shell PLC over the past several years have lagged behind those of U.S. competitors, especially the biggest, Exxon Mobil Corp. BP shares are up about 7% from the end of January 2020, having recovered from pandemic lows, while Exxon shares have nearly doubled over the same period.

As European oil companies, BP and Shell face greater investor and government scrutiny over their carbon-reduction plans than do U.S. rivals, which have stuck more to their core oil-and-gas businesses. Still, overall, the sector globally has been caught between some large investors and governments calling for these companies to move away from fossil fuels, while others demand the profits those assets can generate.

BP shares climbed more than 1% on Wednesday morning in early trading.

Mr. Looney has said in some of the recent discussions that the company will continue its push into renewable energy, but with a finer-tuned focus to avoid spreading resources too thinly or relying too heavily on renewables in its broader strategy. He has suggested that areas of continued emphasis will include developing climate-friendly hydrogen, biogas and electric-vehicle partnerships and charging networks, the people said.

He and other BP executives have suggested that the company could play down future investment in areas including solar energy and offshore wind, according to some of the people.

Discussions about the company’s direction have caused rifts inside BP over the past year, people close to the company say.

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BP CEO Bernard Looney has said he is disappointed with returns from some of the company’s renewable investments, according to people familiar with the discussions.

Mr. Looney’s comments follow a challenging three years as CEO for the 52-year-old Irishman. He took over the role as the pandemic was beginning to destroy global energy demand and kneecap U.S. and European major oil companies. BP in 2020 suffered brutal losses and, like peers, slashed its dividend.