Your expert for questions
Senior Executive Advisor at PwC Strategy&
Tel: +49 89 54525-689
Sustainability has long been a key consideration for oil and gas companies. Adherence to health, safety and environmental regulations and increasing contributions to the societies in which they operate, form the core of existing sustainability strategies.
Now, growing momentum for a transition to low carbon is creating new requirements for sustainability strategies. Evolving Government climate policies, direct public and shareholder activism, and changing investment strategies by major institutions are creating urgency for oil and gas companies to reduce emissions. Through improved technologies and economics, low carbon energies are increasingly competitive with oil and gas creating threats and opportunities for oil and gas companies.
As oil and gas will remain a core part of the global energy mix for the foreseeable future, companies will need to develop proactive and transparent sustainability strategies that maintain their license to operate in their traditional business, whilst identifying and securing new opportunities arising from the transition to a low carbon economy.
"To remain attractive to investors, oil and gas companies will need to develop and communicate proactive integrated sustainability strategies that demonstrate continuously improving emissions performance, along with a clear position on diversification into low carbon forms of energy."
Sustainability strategies for oil and gas companies are evolving is response to changing expectations from societies across several dimensions:
As a result, sustainability has been elevated from an important element in oil and gas companies being good corporate citizens, to a critical pillar for future long-tern business competitiveness.
Reducing emissions from oil and gas operations requires companies to take actions across a range of company operations:
Mapping of energy flows and emissions across the company, internal and external performance benchmarking, target setting and reporting
Piloting and deployment of advanced technologies to monitor and reduce emissions, and develop new mitigation enabling technologies
Modifying investment screening criteria to incorporate the impact of future regulations, and consequent management of current and future portfolio
Strengthening and aligning internal governance and performance management structures to support achievement of sustainability objectives
Whilst all oil and gas companies will need to reduce emissions, not all will evolve into diversified energy companies. To evaluate the role of low carbon energy in their future portfolios, companies will need to consider several key questions, including:
What are the low carbon energies most aligned with existing footprint and technical and commercial capabilities? How can existing capabilities be developed and exploited to be successful in the low carbon energy sector?
What investments and financial resources would be required for successful diversification into low carbon energies? How would these investments be balanced against investments in core oil and gas?
How should the operating model evolve in order to accommodate new business sectors? Should new businesses be integrated to exploit shared services and synergies, or managed at arms-length?
How will existing shareholders and future investors balance existing returns from oil and gas with future growth in low carbon? What is the integrated value proposition for the company?
At Strategy& and PwC, we understand the challenge that oil and gas companies are facing to respond to new demands on sustainability whilst maintaining profitability against a backdrop of supply, demand and oil price volatility. We believe that each company is different and that the sustainability strategy adopted should reflect the specifics of each company.
We can help with:
Strategy: Development of integrated sustainability strategies aligned to the company portfolio and capabilities.
Climate-neutral energies: Evaluation of opportunities for expansion into low carbon energies where the company has the greatest right to win given existing capabilities.
Governance: We optimise the governance structures for sustainability within your organisation based on industry best practicesAmending and strengthening sustainability governance structures in line with industry best-practices.
Structure: Developing organization structures, and operating models to strengthen sustainability management and support low carbon energy investments.
New technologies: Developing emission abatement strategies and technology implementations strategies.
Our oil and gas industry sustainability team will assist you from start to finish. We are closely networked with the industry stakeholders, such as regulators, NGOs and global/regional forums, and have many years of experience in highly complex ecosystems within the energy sector – all around the world. Our objective: to work with you to create lasting value – for your company and for society as a whole.