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Dynamix Capital Insight: Did COP28 Light a Fire Under Oil & Gas Companies?
Dynamix Capital Insight: Did COP28 Light a Fire Under Oil & Gas Companies?
Global oil and gas producers are under increasing international pressure to decarbonize in the wake of the recent COP28 agreement to “transition away from” fossil fuels and amid a growing wave of mandatory ESG and climate disclosure standards for the industry.
Yet oil and gas producers remain severely misaligned with the net zero by 2050 target and their overall management score with respect to climate change is weak, according to new research from Morningstar Sustainalytics based on its Low Carbon Transition Ratings (LCTR).
In its most recent Low Carbon Transition Rating Industry Report, focusing on the Oil and Gas Producers industry, Dynamix Capital Climate Research Specialist takes a closer look at this sector and the role that oil and gas companies are playing in the global climate transition.
The analysis, which looks at 143 of the largest oil and gas companies globally in three subindustries – Exploration and Production, Coal and Integrated Oil and Gas, depicts an industry that made very little progress toward decarbonization objectives in 2023 as growing geopolitical uncertainty forced companies to focus more on energy security and less on climate targets.
In fact, 60% of the companies in the oil and gas producer industry are currently categorized as Severely Misaligned or Highly Misaligned to meet future net zero targets.
Yet there are some bright spots. Oil and gas companies that have invested in renewable energy production and away from fossil shows achieve better relative LCTR management scores. And Europe with its mix of favorable climate-related policies and regulations, contains the top performers.
Our Climate Research Associate Director
“While there are some bright spots and changing company behavior leading to slow progress toward decarbonization targets amid global oil and gas producers, the reality is that this sector still has a significant distance to travel on its road to net zero. And while emerging regulation and the global call to action at COP28 around the transition away from fossil fuels is encouraging, the reality is that company action is needed to take the next step.”
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