We’re all heading towards a lower carbon future. There will be challenges on the way, but we need to remind ourselves that this is a transition and not an immediate switch.
Change doesn’t happen overnight. So, while action is paramount, it is important to be able to communicate the strategy of what you want to achieve and how you’ll get there in that transition journey.
We are seeing more oil and gas companies articulate their services and technology offerings as contributing to lower carbon production.
The basis for making this assertion varies, case-by-case, but it demonstrates recognition of the importance being placed on environmental messaging in a sector that is challenged on its (still much needed) place in life.
Clear articulation of this strategy and progress against it, will pique the interest of potential investors looking to work with businesses that are taking action to reduce their carbon footprint and it also shows new talent what opportunities they’ll have joining a company focused on a greener future.
Barriers to ESG
For some, it will be relatively straight forward to make changes to support a lower carbon future. But for those starting from scratch or in carbon intensive industries, there is clearly a considerable amount of work to be done.
Take the oil and gas sector for example. The Covid-19 pandemic – and prior to that the OPEC/Russia dispute – resulted in a global energy supply/demand imbalance, challenging the industry’s resilience.
While some oil and gas companies have net zero emissions targets in place, many are still working through current economic challenges. But change is needed now as investors, both public and private, are increasingly interested in their plans to go green.
The sheer quality of the skilled workforce in this sector is a considerable advantage. Now is the time to consider how we define the role of these highly skilled workers.
We need to explore how their skills can be adapted and merged with greener measures that will not only support the sectors’ economic resilience, but also help it on its way to a lower-carbon future.
The importance of Environmental, Social and Governance (ESG) factors is only going to get stronger and taking advantage of the accelerating demand for renewable alternatives will be essential for the oil and gas sector’s success.
While there is clearly a lot of focus on the environmental element of ESG, it’s vital we also address the social and governance factors. These will help businesses engage with its communities, tap into growth opportunities, and ensure essential operations including compliance are all in order.
We’re also seeing increasing pressure from investors around greener tax policies, and how it can be used to drive change as we move towards the net zero goal.
This is where enhanced tax reliefs that reward those innovating in areas of sustainability, appeal to potential investors.
If the oil and gas industry is to lead the way in the transition to net zero, these policies need to be considered and where possible, introduced to help the sector’s contribution towards the energy transition.
Retaining talent in an ESG world
The narrative around ESG isn’t only going to appeal to investors, it’s key to the successful recruitment, retention and development of talent.
Bringing people into the oil and gas sector and retaining them is challenging, especially for more junior people looking to start their careers. Employers need to show a more diverse set of future opportunities and challenges that will be available to employees looking to explore a career in oil and gas.
People want to see how their skills can be used and how ESG is going to create new and exciting development opportunities for them. The oil and gas sector is price cyclical and can therefore be seen as a risk for many looking for their first or next career role.
Widening the experience and roles across energy more generally – through increased diversification/service offerings by service providers – will surely help.
We a have a long way to go but we’re already making waves in the energy transition. And that’s what it is – a transition.
We don’t have a “one-size-fits-all” approach, but we if adopt and introduce appropriate measures and set goals now, businesses – including those in the oil and gas sector – can benefit from growth opportunities as we all work towards 2050 together.