Oil and Gas Companies are Gravitating Towards Sustainability Practices

Oil and gas companies are facing increasing scrutiny for their carbon intensive operations. With the passing of the 2015 United Nations Climate Change Framework, the demand for the oil and gas industry to curb its carbon emissions is becoming even stronger. Companies that implement concrete measures to reduce their environmental impact are best placed to succeed in the coming years, says GlobalData, a leading data and analytics company.

GlobalData’s latest thematic report, ‘Sustainability in Oil & Gas’, reflects that the environmental threat of oil and gas industry is widely recognized 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. However, when it comes to social and governance factors, there appears to be a distinct differentiation in the way different companies handle these issues.

Large oil and gas corporations have undertaken social welfare activities as per 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. Increased accountability has improved overall governance across the oil and gas value chain.

Puranik adds, “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 also lag on the corporate governance front as their operations are prone to corruption and crony capitalism”

GlobalData’s thematic research identifies that Equinor, Shell, ExxonMobil, Total, Chevron and OMV are among the leaders in the sustainability theme in the oil and gas industry.

The outbreak of COVID-19 has put workforce wellbeing at the center stage. Oilfield workers in many regions have contracted the disease, highlighting the importance of social sustainability. The pandemic has also raised governance challenges as different companies have adopted different approaches at handling this unprecedented crisis.

Puranik concludes: “Adopting a holistic approach can help company leaders to ensure all aspects of sustainability are covered in their ESG strategy. In 2020, the pressure will mount on companies to be more transparent about their ESG credentials.”