Answer: Sustainability and profitability are not opposing concepts. Businesses in the energy sector are finding that focusing on sustainability is a strategy that leads to higher profits.
Lee Dacey, Senior Vice President, Refining
The pandemic sideswiped businesses with crashing waves of uncertainty. Social. Financial. Regulatory. These are just a few of the dynamic levers that are making it hard for companies to create an effective business continuity plan. One size does not fit all. Adding insult to injury, there’s no clear or guaranteed end in sight to the crisis.
But from the unpredictability, emerged a couple of certainties:
- There’s a cash crisis that’s requiring businesses to reassess their strategies. They’re looking for the path of least resistance to recovery.
- The energy transition is real. There are two main camps likely to emerge in the pandemic’s wake. Those who’ll accelerate their strategies and those who’ll decelerate, not because they want to, but because they must.
Assessing how energy transition fits into the business survival strategy
Putting it all together, we have cash strapped businesses trying to survive, recover, and remain committed to their pre-COVID-19 energy transition strategies.
Some major oil and gas companies can and will double down. They’ll be hyper-focused and accelerate into an 'every dollar counts' energy transition strategy. A few may find themselves in survival purgatory. They’ll bide their time until the market stabilizes, and then decide how and when they’ll shift back to focusing on sustainability.
A larger group hangs in the balance. Risk factors include a crisis of funding, unsustainable business models, and/or cascading failures (like dependency on dwindling supply chains). Without some operational resiliency soul-searching, they’ll likely be forced to decelerate their energy transition strategies.
We need to start thinking about all possible scenarios now. The energy transition is a growing global priority. It’s here to stay. But how about staying in business?
This is what you call a bonafide stress test. The crisis has put businesses on notice. And, indirectly brought the energy transition to the fore. Businesses will have to find ways to do more for less. They’ll have to make time to use it, wisely. Free up cash through proper capital expenditure analysis. Shift perspectives, priorities, and portfolios to minimize risks, leverage opportunities, and maximize returns.
If they can do this, they’ll emerge with a more robust, diversified and crisis-resilient strategy that also safeguards their energy transition commitments. Time will only tell.