Climate Action 100+
Oil & Gas
Jared Sharp, Simon Dietz, Shafaq Ashraf and Hayli Chiu
The TPI Centre has assessed the transition plans of 10 of the world’s largest, publicly listed oil and gas companies (five from Europe and five from North America) using the new Net Zero Standard for Oil & Gas.
The Standard is designed to provide a more in-depth, sectoral analysis of oil and gas companies’ transition plans compared with frameworks available previously. Uniquely, it focuses on comprehensiveness and alignment with limiting global warming to 1.5°C above pre-industrial levels, investigating aspects of transition planning disclosure that were historically not possible to assess due to low data availability. It therefore offers investors new, sector-specific insights into the ambition and robustness of transition plans, and the net zero transition risks faced by companies in a highly exposed sector.
The Standard was developed by the Institutional Investors Group on Climate Change (IIGCC) with support from the TPI Centre.
Key findings
- Companies assessed on the Standard score on only 19% of applicable metrics, on average. Such weak results provide evidence that transition plans within the oil and gas sector are still insufficiently detailed for investors to accurately assess transition risk.
- Scoring on the Standard varies widely between companies. The best performing company scores on more than 50% of applicable metrics, while the worst performing scores on none. The substantial variation in companies’ ambition demonstrates that progress in transition planning is possible among oil and gas companies but is not currently being achieved by most.
- More disclosure is required on the central aspects of transition planning, including measures to neutralise emissions, and production forecasts. Most companies are missing out these crucial elements, with companies failing to score on 87% of metrics related to the quantification of emissions reductions and on 89% of metrics relating to future oil and gas production.
- There are significant differences in approach to transition planning between European and North American companies. European companies, on average, score highest on ‘Solutions’ metrics, which assess whether a company is diversifying into low-carbon energy products. European companies score on 46% of Solutions metrics while, in contrast, North American companies score on 3% of Solutions metrics, leaving them exposed to future demand fluctuations.
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