#ESG – Towards growth through sustainable development

| May 22, 2019

The current volatile business market environment is increasingly characterised by valuations driven by sentiment. Investor attention and interest around the topic of Environment, Society and Governance (ESG). While solid company fundamentals remain the core of the story, it is critical for a company to shape a positive public and investor perception. The largest global investors already regard ESG as compulsory factors in investment decisions. An appraisal of “ESG” includes tackling ecological, social issues, corporate governance and other fields valued by society such as infrastructure and microeconomic spheres.

 

Commodities and particularly energy companies make a decent share in the portfolios of leading fund management and investment companies. On the one hand, oil and gas industry continues to be one of the vital revenue resources in the current backdrop, on the other it is an indispensable component of many other industries in the economic landscape.

 

Speaking on corporate social responsibility and sustainability, Waldemar Herdt, a German businessman and member of the Bundestag, said: “A company’s profitability and dividends used to be considered the main indicators composing the positive image of an enterprise. Today, humanity has reached the stage where the assessment of the environmental impact of production has become a priority factor in the rating system for enterprises.”

 

What is true is that the oil and gas companies are more than ever implementing drastic measures to combat this negative impact and lead the global effort in reducing atmospheric pollution. A number of significant steps have already been made by the industry along with commitments to battle the global environmental crisis. A war is being waged for a more sustainable future for the Earth, and it is the oil and gas sector that finds itself on the front line of this conflict.

 

An example of the stewardship to improve the situation is to be found in the British oil and gas industry. For instance, carbon dioxide emissions have steadily decreased with a 10% reduction in 2007 compared with 2000 and continue to do so. Among the key policy factors contributing to this are British participation in the EU’s Emissions Trading Scheme, the aim of which is to reduce CO2 emissions. The industry also has the ambition to minimise harm to nature by 2020 through the promotion of Environmental Management Systems.

 

Oil and gas companies in developed markets pay special attention to sustainability. Considered an essential component of corporate strategy today, it is crucial to actively involve companies from other regions in taking comprehensive action to improve human lives and environmental protection at the global level.

 

A rising number of businesses in developing markets have come to realise that sustainability supports growth, spurs income opportunities, and provides incentives for innovation. Increasingly, leading companies are embedding the principle of sustainability into their business operations.

 

For instance, the leader of Russia’s petroleum industry and the world’s largest publicly traded petroleum company Rosneft shows how the sector is increasingly accommodating the world’s environmental needs. The company acknowledges the essentials to make profound and long-term changes and enhance its collaboration in determining solutions to sustainability challenges. As industry analysts think it is a result of the company’s shareholder structure – Rosneft has BP among its shareholders for instance. In addition, among the largest shareholders of the company is one of the most famous sovereign funds in the world – the Qatar Investments Authority – which has stakes in such world major leaders as Volkswagen, Deutsche Bank and Glencore.

 

Mr. Herdt believes, that in this regard, the goals and objectives, as well as the activities and investments of Rosneft aimed at reducing the environmental impact of production, are far-sighted. This is a wise decision that will ensure the future of Rosneft as a company and consolidate its leading role in the production of energy commodities using environmentally friendly technologies and practices.

 

Growing concern over sustainability has brought an increasing number of companies together. Initiatives such as the UN Sustainable Development Goals, the Paris Agreement on Climate Change and the UN Guiding Principles on Business and Human Rights have raised awareness and have helped participating companies to unite and successfully collaborate in defining solutions to the world’s most complex challenges.

 

Pledging sharp emission cuts as a result of their strategy, Rosneft has reduced the greenhouse gas emissions in its refining business by 11% in 2018 compared with 2017. The company has for the last five years invested more than 240 billion roubles in green projects, and 300 billion more are to be spent in the near future in collaboration with its international partners and shareholders.

 

 

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Category: A Frontpage, Energy, Energy market, European Energy Security Strategy

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