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What To Watch: Majors – Topic 2, Decarbonizing Commitments

August 8, 2019

To our knowledge, only one international major, Shell, has had a group of investors buy its stock specifically to pressure the company to decarbonize. Nevertheless, all of the international majors are publicly pledging to reduce their carbon emissions. What does this mean for your company? 

Both of these things are true:

  • The world’s thirst for oil and gas and their byproducts continues to grow, increasing their relevance as the lifeblood of economies and prosperity.  
  • Increasingly, stakeholders from investors to communities are demanding that oil and gas companies reduce their carbon footprint, tying their commitments to executive compensation.

The problem path forward:

Like the tech investments covered in last week’s installment, the international oil and gas majors are charting a course in decarbonization commitments. These efforts eclipse the idea of reducing emissions and present a more holistic course.

  • I like BP’s headline for their efforts: Information on our low carbon ambitions. As you by now well know, I believe the best bridge builder to a climate-concerned public is shared ambitions. In addition to emissions reductions, BP has committed to carbon offsets, offering lower-carbon products, and investing in low carbon businesses and activities.
  • Norway-based Equinor was already an early-mover on climate and carbon commitments. Nevertheless, they doubled down in April with a joint announcement with Climate Action 100+ (a global investor initiative representing trillion$). They agreed to make additional commitments laying out climate-related ambitions beyond 2030 including capital investments, stress testing their portfolio, reporting, and ties to executive and employee compensation. Like Shell, they agreed to include the carbon intensity of their products and services.
  • ExxonMobil has made commitments related to climate and carbon in four areas: mitigating emissions, developing scalable technology, providing solutions that reduce customer greenhouse gas emissions, and engaging on climate change policy. Exxon’s extensive emissions reporting is worth checking out.
  • Total has a very evolved report entitled Integrating Climate Into Our Strategy that lays out numerous strategic commitments including measuring the carbon intensity of their products and reducing it by 15 percent by 2030. This sentence caught me by surprise, “Our objective is therefore to be actively involved along the entire value chain, from primary energy production to final energy consumption, as a means of combating global warming.” Now that’s powerfully embracing a shared, ambitious energy future. It says: we are engaging so we can provide solutions.

It matters because:

As the largest companies articulate their role in an innovative, decarbonizing energy future, it begs the question: What about you?

The critical mistake companies are making

The public isn’t cutting the international majors any slack. Companies who observe this and conclude “why bother?” will reinforce the notion that they exist in the past and probably belong there.

Seize the daySuccessful companies will: 

  • Deal with your emissions. Reducing methane emissions is an expectation. In a climate-centric world, don’t expect a parade for your innovative, stellar emissions reductions. It has required a significant commitment, numerous investments, and a lot of work. I’m proud of you, but the public will say, Duh.
  • Get fluent. You can’t make the case for the energy future if you can’t talk about climate, carbon, and innovation like a native. Spend 15 minutes reading through the links above to see how the majors are talking about carbon.

The world is changing fast, and it’s hard to keep up with all of these developments. That is why this is the second of five installments of the commitments the international majors are making on carbon. Read ‘em and weep. And then get to work.

I welcome your ideas, commentary, and push back. Send me a message and let me know what you think.

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