ESG Strategies in the Oil and Gas Industry from the Maritime & Logistics Perspective - Opportunities & Risks

Abstract

Abstract The global energy sector is shifting towards a more sustainable, environmentally friendly production, and consumption of all energy sources. ESG topics are opening interesting debates about its benefit reflected on the long-term prospects of a company, which takes into consideration businesses’ financial performance, resilience, and the ability to sustain their operations & business continuity during adverse situations. As it is widely known, stakeholders are requiring more transparency and more substantiated facts in reporting ESG (Environment, Social, and Governance), because what gets measured gets managed in a more efficient manner. Operators are also more focused on energy efficiencies to tackle emissions reduction and satisfy global Climate Change initiatives driven by the Paris Agreement. Currently, ESG is also becoming more marked over longer time horizons, which is playing an integral role in the company valuation, reputation, and the availability and quality of capital that companies are able to access. Today, sustainability & ESG reporting mandates in ADNOC, which is leading a real transition along with other global energy companies. ADNOC Logistics & Services has started this journey by conducting a benchmark to analyze what other companies or competitors are doing in the sector in terms of ESG standards, Sustainable Development Goals (SDGs), strategic topics, number of KPIs, and goals. A methodology was created to assess the Group’s material topics & relevant actions to measure progress into a new performance management approach with includes internal and external stakeholders and how the Group can meet their expectations based on the company’s value proposition. Risk management, corporate governance, and market drivers were also key elements considered in the sustainability strategy deployment in terms of accuracy and reliability. Every shortlisted material topic has perfectly matched the ADNOC sustainability pillars and UN SDGs and principles- (1) Business sustainability, (2) Social & economic contribution, (3) Climate emissions and energy, (4) Environment, (5) Health, safety, and security, and (6) Workforce, diversity & development. This framework allowed the team to define a roadmap with specific actions based on relevant priorities and redefine its sustainability KPIs on a broader scope, and targets. Achieving ESG targets requires collaboration between industry, service companies, regulators (e.g., IMO- International Maritime Organization), and governments. Therefore, the UAE sustainability plans, ADNOC sustainability pillars, and IMO stricter regulations are incentivizing the sector to meet ambitious goals by 2030 and 2050. Climate change and social topics are now driving a steady increase in reporting and assessment activities towards net-zero targets, and more diversity & inclusion practices. All these elements are making ESG a real enabler for the ADNOC growth and sustainability plans.