Dear Colleague:

Industries in the energy and natural resources sector―oil and gas, utilities, chemicals, mining, and agriculture―face a unique and intense period of change as they navigate through the energy and resource transition.

None of the old imperatives have gone away: these companies still need to produce and deliver energy, materials, food, and services, efficiently, to their demanding customers. But that’s only table stakes now. Climate change, shifting consumer preferences, demands for greater accountability, and unprecedented levels of business competition will all require new ways of working, technological breakthroughs, and leadership that can rapidly scale their deployment.

Over the past two years, our work with clients in these industries has changed, with three themes emerging.

• Innovation. The need to harness transformative technologies and practices to evolve their businesses will enable companies to continue to thrive while preserving the planet for future generations.
• Impact. More than ever before, the ability to work with customers and other stakeholders will be critical to ensure companies maintain the social license to operate complex businesses in the heart of our communities and fragile environments.
• Economics. Funding these transitions will require new levels of investor management and regulatory engagement. Companies will need to create extraordinary economic value to draw the capital and access the resources necessary to tackle these challenges. 

We’ve written this report, the first in a planned annual series, to share emerging insights from this work and to support all of you as we collectively tackle the world’s most important issues. We’ve taken a general manager’s perspective to help you understand the issues and what you need to know to move ahead.

The report’s first chapter unpacks the issues ENR companies are facing and explains why we believe it’s essential for leaders to deliver on all three of these imperatives.

The next section highlights critical trends we see underpinning the energy and resource transition, emphasizing the connections across sectors and the speed of change. We look at these challenges through a future-back, customer-oriented view of the future―a perspective our clients find more compelling than air-filled forecasts of massive profits or doomsday prognostications. It’s also the approach we’re taking with much of our client work, because it allows us to paint the target and work with organizations to find ways to reach it.

In the last section, we describe a set of strategic advantages that we see industry leaders building to shape the future. Managing through the transitions will require a fundamentally different approach to strategy, the operational model, and implementation priorities. Much of our work with clients focuses on building new capabilities, including operational decarbonization, second engines of growth, more efficient capital projects, scale digital and automation, and transformed supply chains, all with the aim of becoming a strategic differentiator. At the same time, the traditional core businesses must continue to generate revenues to fund the transitions, as they become more sustainable, too.

The energy and resource transition are likely to be a top priority for many of us for the rest of our careers. ENR leaders will drive the next wave of transformative innovation, evolve the social compact with customers and communities, and generate the capital required to create a more sustainable future. We at Bain look forward to continuing the discussion with our friends across the interconnected energy and natural resources industries.