Oil and gas companies are focusing on ESG challenges for long-term solution

GlobalData Energy 13 May 2020 (Last Updated May 13th, 2020 11:11)

Oil and gas companies are focusing on ESG challenges for long-term solution
The environmental threat of oil and gas industry is widely recognised and various governments have initiated preventive measures to mitigate it. Credit: curraheeshutter / Shutterstock.

GlobalData’s latest thematic report ‘Sustainability in Oil & Gas’ sets out a comprehensive framework for sustainability in the oil and gas industry based on environmental, social, and governance (ESG) issues.

The environmental threat of oil and gas industry is widely recognised and various governments have initiated preventive measures to mitigate it. Subsequently, many oil and gas companies are taking steps to curb the environmental impact, primarily due to regulatory and shareholder obligations. Total SA has invested in diverse renewable energy projects, ranging from solar, wind and hydropower. In 2019, Equinor announced plans to align its business strategy with the goals of the Paris Agreement.

Large oil and gas corporations have also undertaken ESG activities as part of their individual CSR portfolios. There is a conscious effort to bridge the gender gap in workplaces, maintain diversity and ensure overall wellbeing of the employees. ExxonMobil has led the adoption of stricter safety standards in its oil and gas operations to create a safer workplace environment.

Although the industry is gradually reforming itself to improve environmental sustainability, it still lags to some extent on social and governance fronts. Oil majors and other multinationals have adopted best practices in ensuring employee health and safety. However, the same is not true in case of the national oil companies. Many of these companies lag on the social and corporate governance front.

Adopting a holistic approach can help company leaders to ensure all aspects of sustainability are covered in their ESG strategy. In the coming years, the pressure will mount on companies to be more transparent about their ESG credentials.

Some of the leading oil and gas players in the sustainability theme are Equinor, Shell, ExxonMobil, Total, Chevron and OMV.

Figure: Leaders and laggards in the oil and gas industry in the sustainability theme