Net-zero & ESG Driving Strategy and Change for Oil & Gas
September 16, 2021
By: Melissa Dakas and Mark Hall
The ESG and Net-zero State of the Union
In the past year, there has been a torrent of announcements from companies declaring their intentions to go net-zero, publish their first environmental, social and governance (ESG) report, update their sustainability goals, or better align with published ESG frameworks. An important driver is pressure form stakeholders for companies to disclose their operations’ impact on the environment. This past spring, acting chair of the U.S. Securities and Exchange Commission (SEC), Allison Herren Lee, said ESG “issues are fundamental to our markets, and investors want to and can help drive sustainable solutions on these issues.” That same day, Lee requested public input to help the SEC draft ESG disclosure rules that produce consistent, comparable and reliable data that investors need.
While we await these new regulatory requirements, we are also tracking the changing expectations of non-investing stakeholders, such as customers, suppliers, community members, lending institutions, and employees. Their choices about who to work with and purchase from are increasingly based on ESG issues. Larry Fink, CEO of the world’s largest asset manager, BlackRock, wrote in his 2021 letter to shareholders: “As the transition accelerates, companies with a well-articulated long-term strategy, and a clear plan to address the transition to net zero, will distinguish themselves with their stakeholders—with customers, policymakers, employees and shareholders—by inspiring confidence that they can navigate this global transformation. But companies that are not quickly preparing themselves will see their businesses and valuations suffer.” And importantly, taking action doesn’t always mean reduced profitability and bleaker prospects.
Fink further emphasized performance of organizations that embrace the net-zero goal: “During 2020, 81% of a globally-representative selection of sustainable indexes outperformed their parent benchmarks. This outperformance was even more pronounced during the first quarter downturn, another instance of sustainable funds’ resilience that we have seen in prior downturns.…But the story goes deeper. It’s not just that broad-market ESG indexes are outperforming counterparts. It’s that within industries—from automobiles to banks to oil and gas companies—we are seeing another divergence: companies with better ESG profiles are performing better than their peers, enjoying a ‘sustainability premium.’”
So, what does this mean for your organization and what challenges and opportunities will ESG and net-zero goals offer you going forward?
The Net-Zero Challenge for Oil & Gas
Net-zero targets and practices can be more difficult in some industries than others. In the oil and gas industry, however, shareholder pressure and healthy competition has led many companies to establish programs and set commitments to drive down their greenhouse gas (GHG) emissions.
While emissions reduction targets initially focused on the limited number of assets subject to regulatory reporting, companies are now moving rapidly to more precisely quantify all their emissions streams. These efforts are providing the data they need to more accurately and transparently disclose the emissions associated with their products while raising the bar for their peers. The pace of change makes the oil and gas industry stand out among all other sectors, and the net-zero goals of the 18 oil major companies, if achieved, will reduce their emissions by 3.3B metric tons of CO2e, equivalent to 10% of global oil & gas emissions.
How Montrose Can Help
Here at Montrose, we have experience advising clients on the many diverse ESG reporting standards, frameworks, and initiatives. We have deep expertise in a wide variety of environmental monitoring and emissions reduction technologies and practices. And we help clients tailor communications to their particular stakeholders.
We understand the significance of this global effort, and we’re here to assist you in achieving your ESG and net-zero goals. We leverage our extensive industry experience, broad relationships, and technical expertise to provide you the assistance you need.
- Strategy and Program Development
- GHG Baseline Assessments and Determination of Assessment Frameworks
- Emission Factor Development
- GHG Reduction Programs (Fugitives, energy use optimization, ﬂeet conversions, carbon capture)
- Renewable Energy Development (Solar, WHP)
- Offset Procurement (RECs, Carbon Offsets)
- Measurement and Veriﬁcation
- Data Management and Reporting
Whether your organization is actively engaged in meeting net-zero goals or building out your first ESG or net-zero framework, we can help with the strategic development, project management and monitoring and reporting – all with the goal of moving you closer to your finish line.
Ms. Dakas has 20 years of project management and solution development experience in the chemical engineering and environmental compliance fields. The last 15 years of her career have been spent in environmental consulting navigating the complex environmental requirements of the Northeast states, the Caribbean, and the Texas Gulf Coast Regions. Ms. Dakas specializes in air permitting and compliance through working with both industry and government to implement business objectives while conforming to environmental regulations.
Mark leads our Advisory Services Team, supporting our oil & gas, manufacturing, renewable energy and power generation clients with management consulting support to assist in developing world class strategies to address their biggest environmental and sustainability challenges. With over 30 years of experience in a variety of senior executive and leadership roles with both public and private power generation and renewable energy companies, as well as consulting/engineering firms, Mark’s corporate responsibilities have included strategic planning, EH&S programs, government affairs, marketing & communications, investor relations and business development. Mark is active in several trade associations and was a founding board member and past chair of the US Combined Heat and Power Association where he testified before Congress and organized and chaired three international conferences. He holds a Master’s degree in Environmental Science from Indiana University, and a Bachelors of Arts in Chemistry from Austin College.