Research spotlight: how are major oil and gas firms scoring on transition planning?
Some of the world’s largest listed oil and gas firms have come under fire for insufficiently preparing for the energy transition. Research reveals significant divergence between firms, who are the leaders and laggards?
With the AGM season for some of the world’s largest listed oil and gas firms coming up, the Transition Pathway Initiative (TPI) has teamed up with ClimateAction100+ to examine their strategies for the energy transition.
The transition plans for ten oil and gas firms in Europe and North America have been surveyed factoring both their disclosure standards, their investments in climate solutions and alignment with a 1.5 degree pathway.
The results are damning: Among the ten firms, not a single one offered a comprehensive transition plan, the research concluded. Companies score especially poorly on their decarbonisation strategies, where firms were ranked as 0% on average. Meanwhile, firms appeared to have made greater efforts investing in the energy transition, with an average rating of 33%.
They also failed to meet the criteria for 1.5 degree alignment, where companies scored on average 8%. “The conclusion, inevitably, is that current transition plans are incompatible with 1.5°C” TPI researchers found.
At the same time, the research also reveals a significant regional divergences with European companies scoring far better than their North American counterparts. The top five firms were all European and the highest-scoring North American company, ranking sixth, scores on only 13% of the metrics. The average score for North American companies is 7%, compared with 32% for European companies, TPI said.
The results show that Total Energies overall comes out as highest scoring, followed by Eni and BP while Oxy, Suncor and Exxon score lowest.
The report emphasised that even the top performing companies in the scorecard did not come close to meeting minimum requirements on transition planning. "This shows how far oil and gas companies’ transition plans have to go before they can be considered robust" researchers warned.
Dan Gardiner, head of Transition Research at the IIGCC commented: “The oil & gas sector typically represents the largest and most concentrated source of transition risk in investors’ portfolios. By showing the wide variation in the quality of companies’ disclosure and diversification strategies, this analysis enables investors to see where this risk is most acute. While a few companies have made progress, most are failing to set out even a basic transition strategy.”
All ten companies are due to have their AGM's in the coming weeks. BP is due to hold its AGM on 25 April, followed by Occidental Petroleum on the 2nd May.
This is followed by the Suncor AGM on 7 May, Repsol on the 7th of May with Eni and ConocoPhillips shareholders meeting on the 14th of May. Shell and BP investors are due to gather at the end of May while Chevron and Exxon are still to confirm dates for their AGM's.
Asset owners are filing a resolution at the Shell AGM but are unlikely to file climate activist resolution at the BP and Exxon AGM's.
