ESG (Environmental, Social, and Governance) in Oil and Gas – Thematic Research

Climate change measures will fundamentally alter the industry

The measures the Paris Agreement signee governments will take to discourage emissions and ensure the success of net-zero goals will render conventional oil and gas activity less and less viable.

In the next decade, wherein hydrocarbon demand will not fall significantly, oil and gas companies should minimize losses to emissions-discouraging measures such as carbon pricing by altering processes across the value chain to reduce emissions.

In subsequent decades hydrocarbon demand will fall. Technological innovation and increased consumer mindfulness will make sustainable alternatives to hydrocarbon-intensive products more and more attractive. For example, in transport, historically the largest hydrocarbon-demanding sector, conventional cars will be displaced almost entirely by electric vehicles (EVs). Though some demand will remain, survival for most current oil and gas companies will mean transitioning to a new product. There are many options for products (renewable energy will be the most popular), but success in any requires that companies invest soon so that cashflows are already strong by the time demand falls. Companies that wait until hydrocarbon revenues dry up will have insufficient cash to fund a transition.

Strong governance and social practices are vital for the transition

Oil and gas companies will need effective governance to steer themselves through the existential disruption that the next three or four decades will bring. The balancing act necessary for companies to meet net-zero objectives while retaining scale demands deft leadership: companies must sustain sufficient cashflows to handle demand volatility, overhaul their asset portfolios, make astute investments, and satisfy sustainability-minded stakeholders, all while providing stable dividends.

As millennials come to dominate the consumer base and workforce and begin to assert their preferences, companies that fail to maintain good social practices (toward workers and affected local communities) will struggle to attract and retain customers and employees.

Scope

Comprehensive ESG framework. Identification of contributing factors for each of environmental, social, and governance and mitigating actions companies can take against them.

Explanation of GlobalData’s ESG feedback loop and the opportunity for companies to establish a virtuous cycle of sustainable action that benefits all stakeholders and finances.

Listing of all technological and macroeconomic trends relevant to ESG in oil and gas with explanation of their ramifications.

Extensive coverage of the threats and opportunities that ESG concerns present to the oil and gas industry.

Coverage and analysis of all relevant companies’ relative positions in the ESG theme: 11 oil and gas operators, 9 equipment and services providers.

Unique thematic scorecard that ranks oil & gas companies according to their positioning in the ten themes most important to the industry.

Reasons to buy

Survive future demand drops and inhospitable regulation by understanding the threats and opportunities ESG concerns present to the industry.Position yourself for future success by making the correct ESG investments.

Cut through the noise with GlobalData’s ESG framework that identifies contributing factors and mitigating actions.

Uncover the oil and gas companies excelling with GlobalData’s thematic scorecard. Understand and replicate their success with the extensive coverage of each leading company’s activity in the companies section.

Develop relevant and credible sales and marketing messages for oil and gas companies by understanding key industry challenges and which ESG products and services are desired. Identify attractive investment targets by understanding which companies are most advanced in the themes that will determine future success in the oil and gas industry.

Table of Contents

Executive summary 3

GlobalData’s ESG framework 4

Contributing factors and mitigating actions 5

Trends 6

Technology trends 6

Macroeconomic trends 9

The ESG action feedback loop 13

ESG challenges in oil and gas 14

Environmental challenges 14

Social challenges 30

Governance challenges 37

Case studies 40

Environmental 40

Social 40

Governance 41

ESG timeline 42

Companies 43

Sector scorecard 48

Integrated oil and gas sector scorecard 48

Glossary 51

Further reading 55

| Our thematic research methodology 56

| About GlobalData 58

| Contact Us 59

List of Tables

Technology trends

Macroeconomic trends

Norway's pipeline of future field electrification projects

Examples of planned and active wind integration projects

Examples of active and planned solar integration projects

Major upcoming renewable energy projects of oil and gas companies

Largest capacity renewable fuel refineries

Company analysis: oil and gas operators

Company analysis: equipment and services providers

List of Figures

GlobalData's ESG Framework

Contributing factors and mitigating actions

The ESG action feedback loop

The two approaches to reducing emissions

Potential sources of emissions in the oil and gas value chain

Opportunities to integrate renewable technologies across the upstream value chain

Benefits and challenges of renewables integration

Green hydrogen explanation

Global power generation by technology

Renewable energy deals by leading oil and gas companies by region

BP leads in renewable energy capacity

The wind power value chain

The size of the global wind power market, 2010-2030

Wind power installed capacity by region, 2030

Mentions of 'carbon capture' in company filings of oil and gas companies, 2016-2020

BP's partnership with Kelvin

The oil and gas industry mapped to the sustainable development goals

The long-term energy transition targets of IOCs

Renewable pipeline capacity by technology

Major IOC's GHG emissions in 2019

ESG timeline

Sector scorecards

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