Both True — My Crystal Ball Returns

In early 2019, I spit-shined my crystal ball and then wrote what seemed like a bunch of crazy stuff born from desperation. My desperation was prompted by the realization that nothing we in oil and gas were doing was working to win over hearts and minds to the importance of oil and gas. So I began to look for ways to break the they-oppose/we-educate-them/they-just-oppose-us-more cycle. Of course, I turned to data to look for trends, as we scientists and engineers in the oil and gas industry love to do.

Today we look at some of the biggest trends for our sector that I’ve predicted since 2019, what has happened, and what it all means for your game-changing leadership strategy in 2021.

Both of these things are true:

  • The world needs oil and gas more than ever before.
  • There is growing opposition to oil and gas that we cannot ignore.

The situation:

Believe it or not, I found each of the following predictions terrifying to make. But not only has each trend I foresaw played out — each has continued to accelerate and widen across the industry. Game-changing leaders understand these dynamics — and will be working to get ahead of them in 2021.

  • You will soon be facing investor pressure.
    • The original prediction. In May 2019, I advised you to start watching investor pressure. By October 2019, I predicted that investors would be coming in hot with climate expectations of your company. That was risk, and several of you told me I needed to get out of Boulder and get a more balanced perspective! Today it is a given that oil and gas companies must have a proactive climate and decarbonization strategy to articulate to their investors.
    • For 2021. This expectation continues. Earlier this month, the $226B New York State pension fund – the third largest pension fund in the U.S – brought this message home, saying they will actively assess the climate plans of fossil fuel companies and divest those least prepared to address climate. The state’s announced plan is the result of negotiations with climate activists (see next bullet for more on activists!). Notably, the plan does not call for divesting from fossil fuels entirely, but instead “forces energy companies to drastically change their businesses or face divestment.” (As reported in the New York Times.)
  • You will regret a slow ESG strategy.
    • The original prediction. In May of 2019, I foreshadowed that the cost of capital would increase for those sluggish in their embrace of a proactive ESG strategy. Throughout 2020, I’ve been covering BlackRock’s climate-forward shift.
    • For 2021. In early December, BlackRock released their 2021 stewardship expectations. It lays out “the shift we expect to see by companies to align their underlying business models with the goal of limiting global warming to well below 2 degrees Celsius and reaching net zero greenhouse gas emissions globally by 2050.” That chicken has definitely come home to roost.
  • It is time to “share aspirations.”
    • The original prediction. In the very first edition of Both True in May 2019, the scariest thing I wrote was the recommendation that oil and gas companies must share the aspirations of the public for a decarbonizing energy future. It felt terrifying. But it was the only path I could chart out of the opposition-education-more-opposition cycle. In July 2019, I advised North American companies to watch the international majors, foreshadowing that their commitments on carbon would translate into pressure on every oil and gas company. We have since seen a stream of ever-increasing commitments and expectations.
    • For 2021. These concerns were all given fresh urgency when last week, a brand new activist investor organization, Engine No.1, targeted Exxon Mobil. Their letter is worth reading. Engine No. 1 seeks to replace four board directors with their own hand-picked candidates as part of its pressure on the company leading into the changing energy future.
  • You will want to hold two opposing ideas at the same time.
    • The original prediction: Nearly every single email I’ve written to you over the last two years has been built around this theme: the ability to hold two contradictory yet equally true ideas about what’s happening around oil and gas will be fundamental to your leadership success going forward.
    • For 2021. Just last week, Brené Brown interviewed President Obama for her Daring to Lead podcast. Imagine my delight when their conversation kicked off with this quote, “There is a belief that people who can hold the discomfort of paradox are truly the most transformative leaders among us, and it is a very rare skillset because it requires a level of comfort with ambiguity.” In fact, both of these ideas can be true resounded through the conversation. And my crystal ball says it will continue to resound throughout 2021.

Seize the day:

This look back has reinforced in me the importance of courage. As I take some down time over the holidays, I am going to ask myself which emerging trends and tough truths must be faced in 2021 — whether I like it or not. Only game-changing oil and gas trailblazers can transform the oppose-educate-oppose cycle into a new paradigm of energy leadership.

It’s our move.

Reply and tell me your courageous plan for changing the game in 2021.

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