We need to ask new questions.
In the face of disruption, oil and gas thinking that was once strategic is quickly becoming obsolete.
This shift is playing out across your game-changing playbook — spanning investor pressure, a new federal sheriff in town, community opposition, racial equity, and our place in the energy future.
Let’s look at the foundational questions oil and gas leaders need to ask as we embark upon each element of game-changing leadership.
Both of these things are true:
- The world urgently requires oil and gas industry leadership to build a prosperous, equitable energy future.
- Oil and gas leaders must embrace new questions to develop their game-changing strategy.
In the last month, the disruptors have kept coming — giving oil and gas leaders clear signals to ask new questions:
- The federal paradigm shift. As I laid out in my special edition, the speed and depth of quick federal action prioritizing climate action has sparked a new day. The old playbook of fight, explain, sue, and wait-it-out aren’t your company’s survival plan anymore — they’re its death wish.
- Shift to carbon management. Houston-based E&P company Occidental Petroleum laid out a paradigm shift for traditional oil and gas companies of all sizes: become a carbon management company. This clever reframing of oil and gas operations acknowledges the new reality of a climate-dominated energy and environmental conversation. Notably, Oxy also joined the net-zero march I documented in November 2020 with their own leading-edge commitments:
- Decrease upstream oil and gas greenhouse gas and methane emissions intensities by 2025;
- Reduce the carbon emissions of chemical products by 2025;
- Eliminate routine flaring by 2030;
- Establish a pathway to:
- Net-zero for operational and energy use emissions (Scope 1 and 2) before 2040, with the ambition to accomplish before 2035;
- Net-zero for total emissions inventory, including product use (Scope 1, 2 and 3) before 2050; and
- Total carbon impact through carbon removal and storage technology and development beyond 2050.
- Board accountability. BlackRock’s fast march toward decarbonization pressure on portfolio companies is now focused on board accountability, ensuring that climate action is aligned with financial returns. As I discussed in January, BlackRock intends to hold board directors responsible “to shape and monitor management’s approach to material sustainability factors.” And speaking of accountability …
- Exxon revamp. ExxonMobil’s staid course, doubling down on capital expenditures with plans to increase oil and gas production, has come to an end. As we looked at in December 2020, investor debutant Engine No. 1 has taken on ExxonMobil’s historic stance directly. This pressure on ExxonMobil is now exacerbated by pressure from investor D.E. Shaw. And, of course, BlackRock is a major investor in ExxonMobil, as well. As a result, ExxonMobil is signaling changes to both its board makeup and company efforts to reduce carbon emissions.
Seize the day:
Game-changing leaders see that these disruptors are directional in nature and accelerating — and are strategically disrupting in response by asking the following new questions:
- How does societal pressure to decarbonize change the way we think about our business today? What opportunities does this create for us in 5, 10, and 15 years? And how should we be rethinking our investments to ensure that we are an energy system leader in 10, 20, and 30 years?
- Does our company culture:
- Embrace disruption and hold an entrepreneurial footing?
- Connect with millennials within and outside our company?
- Speak climate and decarbonization fluently?
- Address diversity, equity, and inclusion directly?
- Transcend political parties and political division?
- Engage in civic and community leadership — addressing community needs, creating opportunity equity, and building enduring prosperity?
- Have we articulated our role in a shared energy future — building a bridge to our communities, elected leaders, regulators, shareholders, and employees?
- In what ways will our company create, lead, and empower (perhaps literally) a decarbonizing energy future?
If you’re uncertain about where to begin, hit reply and let’s talk about how my firm can help you frame these questions for your situation — for your decarbonization toolbox and/or your diversity and inclusion strategy.
Also, be sure to check out Adamantine’s millennial secret weapon Anne Carto — she was absolutely spectacular on the Talk.Energy podcast, addressing future-proofing the oil and gas industry.
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