Benchmarking Corporate Resilience and Sustainability – a framework for assessing corporate positioning in the face of uncertainty and risk

Abstract

Low carbon is still a key stock market theme, but war and changing economic conditions through 2022 have placed greater emphasis on the security of supply. Yet our longstanding view still holds: the energy transition will happen, and oil and gas companies have significant value at risk. In the face of tightening carbon policies or the eventual decline in oil and gas demand, companies that fail to adapt to the emerging low-carbon world will suffer a deterioration in market rating. Plotting a strategy for the energy transition has become more complex than ever. Satisfying investors, government and public stakeholders while pursuing secure, affordable and sustainable sources of energy requires a delicate balance. Unanticipated shocks like the global pandemic or Russia’s invasion of Ukraine make strategic planning a veritable high-wire act. The complexity in mapping out an approach to the energy transition makes it even harder to benchmark the different strategies companies may employ. How are companies positioned to navigate the energy transition over the coming decades? Which companies are best situated to handle shocks to the market in the next few years? We believe these questions of near-term resilience and long-term sustainability can be answered by examining (a) a company’s financial position and scale, (b) its portfolio outlook and (c) its carbon exposure and transition strategy. Building on these concepts of Corporate Resilience and Sustainability, we can compare the strategies of Australia’s largest energy players against their international peers. We can highlight their strengths, weaknesses and areas for focus. We can show you what ‘best-in-class’ looks like.