Relations between energy and natural resources (ENR) companies and ESG investors have become strained, particularly on issues of carbon emissions and climate change.
Shareholder pressure to set climate targets, link compensation to outcomes, and adopt resolutions at annual meetings has increased, and companies are looking for ways to manage them. These shareholder challenges are becoming more common across the energy and resource sectors as carbon emissions, water use, and transparency become higher profile issues.
However, if we think about the relationship between ESG investors and the ENR sector as progressing in waves, it may be time to declare that this first, adversarial wave has run its course.
The adversarial wave has achieved a great deal. Executives have a better understanding of the scale and urgency of the challenge before us, and most have committed to greater sustainability in their operations and products.
Pilot programs are well underway, but to achieve scale industrialisation of these transitions, we’ll need to take a different tack. Both sides, companies and investors, must begin to realise that they’re more likely to achieve their objectives through collaboration rather than confrontation.
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