Both True — Gamechanger’s Series: The Second Disruptor

“Climate” is everywhere. Regardless of political and election outcomes! Energy conversations often feature calls for a “fossil-free energy future” and “making climate a top political and economic priority.” Business, political, regulatory, or community discussions across North America will have climate and decarbonization on the agenda. And these shifts have blurred the lines between activism and activities that directly affect your business — such as investor priorities and receiving your project permit approvals.

Environmental activism gone mainstream: It’s the second of three disruptors for the oil and gas industry I outline in my new book, The Gamechanger’s Playbook: How Oil and Gas Leaders Thrive in an Era of Continuous Disruption. (See my Both True to catch up on the first disruptor: the rise of the millennials.)

As America’s oil and gas leaders, we cannot let that happen.

Both of these things are true:

  • Opposition to fossil fuels as a tactic to address climate change has become mainstream.
  • Oil and gas leadership presents the single greatest opportunity to address climate quickly, cost-effectively, and at scale.

The situation:

Concern about climate and prioritization of addressing climate change varies dramatically by party in the United States — and this gap has been widening over time.

  • A 2020 poll found that climate change remains a partisan issue nationally, with 88% of those who are or lean Democratic saying climate change is a major threat to the United States.
  • Of those who are or lean Republican, 31% respond the same way.
  • Both groups have been increasing steadily over time, and the composite of all adults is particularly remarkable: 60% view climate as a major threat.
  • Similarly, while U.S. adults are split based on party regarding support for proposals to reduce the use of fossil fuels, a clear majority in the country (60%) prefer to decrease them, as shown in the figure below.
Figure: 2019 Americans Who Support the Reduction of Fossil Fuels. (Gallup)

As public opinion has shifted on climate change, climate activism has moved from the fringe to the mainstream. In The Gamechanger’s Playbook, I look at how this trend has played out in five arenas. Quick examples include:

  1. Pressure from and on investors. In August 2020, activists also got an early start on a potential Biden administration, staging protests against the potential participation of BlackRock executives in an administration that did not yet exist!
  2. Aspirational policy, regulations, and legal challenges. Following New York’s aspirational climate legislation, New York Governor Andrew Cuomo denied a permit for the Williams Northeast Supply Enhancement pipeline, saying the pipeline did not align with New York’s climate goals.
  3. Directional indicators from the oil and gas majors. Quick example: The Climate Leadership Council, an international policy institute that is promoting a carbon dividends framework as a climate solution, has gained significant industry support. Founding members of the Council include BP, ConocoPhillips, ExxonMobil, Shell, and Total.
  4. Divest movement at scale. The pandemic and economic crisis have not reduced the pressure from divest-from-fossil-fuel activists. For example, in August, Extinction Rebellion committed to a fresh wave of direct action against non-divested colleges.
  5. Pressure from and on the tech sector. In May 2020, Google announced that they would no longer make artificial intelligence (AI) tools for new oil and gas clients, citing ethical concerns. Greenpeace had called out the company, along with Amazon and Microsoft, stating that their work for the oil and gas industry undermines their carbon commitments.

It matters because:

These now-mainstream pressures are not going anywhere — during or after the pandemic. They increasingly drive investor sentiment and policymakers’ plans.

Investors and policymakers around the world who have prioritized climate see their job as more than implementing pragmatic sidebars. They seek to drive innovation and the marketplace in dramatic ways, even where a pathway to zero carbon emissions is currently invisible. Even during the pandemic, the idea of the “green rebuild” is fueling new expectations for your company’s strategy and leadership.

The mistakes we make:

As an industry, we have become habituated to looking at the public discourse about climate through political partisanship and often our own political identity. Looking through this lens, it is easy to be dismissive about the trends in public urgency to address climate and calls for a green rebuild.

Yes: Our usual critiques – which range from “instant decarbonization isn’t realistic” to “private equity isn’t making these pledges” – often have merit. But we are not just engaging a few climate hawks and their energy priorities anymore. We face a growing storm, and our old arguments won’t deflect it. We need to prepare the house.

Seize the day:

The data overwhelmingly tell us that the public — and therefore our investors, civic leaders, regulators, and customers — are prioritizing addressing climate. Think about this wave of public opinion as a hurricane off the coast. We do not need to agree with the forecast. We do not even need to believe the forecast. We do need to take a calculating assessment of the risk and prepare our businesses to address the potential consequences of the 150 mph winds.

Astute oil and gas leaders are acknowledging that the public increasingly expects a decarbonizing energy future. And even in the demographics and strongholds where they do not, the millennial generation is sweeping into power and political relevance and they will further tip the scales.

Are you one of those astute leaders? If so, here are some next steps:

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