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ESG (Environmental, Social, and Governance) Report

ESG (Environmental, Social, and Governance) in Oil and Gas – Thematic Research

ESG disruption will shake up oil and gas market and is an opportunity for companies

Hydrocarbon demand is set to fall in the coming decades due to the measures the Paris Agreement signee governments will take to discourage emissions and ensure the success of net-zero goals. This agreement will render conventional oil and gas activity less and less viable. In order to reduce emissions and minimize loses, oil and gas companies should adopt measures such as carbon pricing by altering processes across the value chain.

This report reveals that technological innovation and increased consumer mindfulness will make sustainable alternatives to hydrocarbon-intensive products more and more attractive. For example, in transport, historically the largest hydrocarbon-demanding sector, conventional cars will be displaced almost entirely by electric vehicles (EVs).

George Monaghan, Oil and Gas Analyst at GlobalData, comments: “Though some demand will remain, survival for most current oil and gas companies will mean transitioning to a new product. While there are many options for products, with renewable energy being the most popular, companies will only succeed if they invest while demand is there to capitalise on already strong cashflows by the time demand falls. Companies that wait until hydrocarbon revenues dry up will have insufficient cash to fund a transition.”

  • What you need to know
  • Comprehensive ESG framework. Identification of contributing factors for each of environmental, social, and governance and mitigating actions companies can take against them.
  • Explanation of GlobalData’s ESG feedback loop and the opportunity for companies to establish a virtuous cycle of sustainable action that benefits all stakeholders and finances.
  • Listing of all technological and macroeconomic trends relevant to ESG in oil and gas with explanation of their ramifications.
  • Extensive coverage of the threats and opportunities that ESG concerns present to the oil and gas industry.
  • Coverage and analysis of all relevant companies’ relative positions in the ESG theme: 11 oil and gas operators, 9 equipment and services providers.
  • Unique thematic scorecard that ranks oil & gas companies according to their positioning in the ten themes most important to the industry.

Oil and gas companies will need effective governance to steer themselves through the existential disruption that the next three or four decades will bring. A balancing act will be necessary: meeting net-zero objectives while retaining scale demands deft leadership. For example, companies must sustain sufficient cashflows to handle demand volatility, overhaul their asset portfolios, make astute investments, and satisfy sustainability-minded stakeholders, all while providing stable dividends.

Monaghan comments: “As millennials come to dominate the consumer base and workforce and begin to assert their preferences, companies that fail to maintain good social practices (toward workers and affected local communities) will struggle to attract and retain customers and employees.”

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