In the first four months of this year, every economy in every country and every company regardless of size has had to face up to the seismic impact of the COVID19 pandemic.
The oil and gas sector has successfully navigated periods of economic challenge before – but the COVID19 challenge is different. It’s both a health and an economic disruption, and it’s global. As many companies mobilize to overcome the initial shock and short term business continuity issues, highlighted by the turmoil of oil prices, longer-term ambitions and strategies may have been put on hold, or slowed. However, one such issue that still features in the conversations we have with clients is how best to address the transition to a low carbon economy.
For the past 18 months we’ve heard CEOs make ambitious statements in achieving carbon reductions from their company by a set date (usually 2030, or 2050). However in many cases there has been little detail of the ‘how’. This paper examines some of the drivers that will still exist post COVID19 and what companies can do to operationalize climate risk.
About ERM's white paper
Based on ERM’s primary research on this topic with the likes of Chevron, Total, Petronas, Enbridge, TC Energy and Engie, more detailed interviews with senior executives and our own insights from the many clients we speak to daily, this paper provides important insights into the drivers and challenges ahead in the transition to a low carbon economy.
This paper begins with current attitudes to the transition, particularly in light of the relentless increase in energy demand throughout the world. It then looks at the drivers of change and, in particular, the increased expectations and scrutiny of investors. The paper then explores some of the challenges ahead to operationalize these ambitions and highlights data and the ‘war for talent’ as two crucial areas. Ulimately it concludes with five observations that we see the winners doing to operationalize climate risk, namely;
- They will get real – and transparent – with their investors.
- Exacerbated by the COVID pandemic, they will recognize that this is a period of deep structural transformation – not yet another cyclical price swing.
- They will equip the people running this new ‘carbon data front line’ with the tools and confidence to answer the challenge more robustly has to be a key priority.
- They will equip themselves and their operational managers to lead staff through the transition.
- They will walk the talk every day by doing whatever it takes to eliminate emissions from ongoing operations.