The Accenture Energy Transition Strategy and the Challenges of Global Energy Transition

Oil and gas companies must reduce their emissions to mitigate the effects of climate change and embrace sustainability. 

A global energy research company, Accenture, created an oil and gas reinvention index (RI) score that evaluates the energy transition gaps between oil and gas companies in the top 10% versus the laggers at the bottom.

In our latest 5x5 series interview, Lasse Kari, Global Energy Research Lead at Accenture, sat down with Rachel Gregory, Digital Host at The Global Energy Show, to discuss his new data from their research study: Necessity is the Mother of Reinvention. 

Global Energy Show - Lasse Kari, Global Energy Research Lead from Accenture

Necessity is the Mother of Reinvention: The Purpose of the Research

Rachel: Thank you so much for joining us, Lasse. Could you tell us more about this study and its purpose? 

Lasse: Many oil and gas companies are still looking to understand where they really stand in the reinvention journey, and we wanted to bring light into that darkness. 

Accenture created a global survey with more than 200 executives worldwide, including international oil companies and independent oil companies. We looked into the differences between the regions, types of companies, maturity of the technology implementation, the reduction of the emissions, the approaches today, and also the ambitions behind them. This helped us find gaps between those oil and gas companies in the top 10% versus the laggers at the bottom. 

The Five C’s of Reinvention

Rachel: Your study discusses the five C's of reinvention. What are these, and out of your findings, were there results that surprised you?

Lasse: In the universe of the different kinds of oil and gas companies, we wanted to create a structure that is objectively looking into business reinvention plans. 

The first of those is really about the customer experience. The second is the culture. So, the employees experience, innovation and collaboration skills. The third dimension is carbon, reducing emissions, building new low carbon businesses, and improving ESG performance. The fourth is connectivity, the glue connecting all of those other aspects. The last dimension is competitiveness, which is the hard result of combining the four other aspects.

What we expected was a balance between those five dimensions. We were surprised that leaders were actually prioritizing key factors related to competitiveness, carbon and connectivity. 

How Companies Meet The Challenges of the Energy Transition

Rachel: What are some of the key findings of how companies are meeting energy transition challenges?

Lasse: The energy transition is definitely not a trade-off anymore; you need to reduce your emissions. 

You need to improve your ESG performance, but you don't need to compromise your returns. Average leaders expect the new reinvention initiatives to have a minimum margin growth of 7% in the next three years. On top of their current plans, that's twice as much as what laggers are saying.

The other area is that the energy transition is not just about building new, low-carbon businesses. 80% of the leaders say that connectivity is at the center of it. It's about remote operations, connecting the remote locations, connectivity between the teams and operations, and cloud functions. According to the leaders, all of that together can drive up to 20% emissions reduction in the next three years.

How Oil and Gas Companies are Headed Towards a Sustainable and Profitable Future

Rachel: How would you describe the difference in expectations and approaches to carbon between the leaders and the laggers?

Lasse: The leaders are being bolder and more realistic. 60% of the leaders expect hydrogen will make up more than 7% of the revenue growth by 2030. The same applies to biofuels; 1/4 of leading companies say it's going up, versus the laggards saying none. The leaders are also more realistic about the short-term implications. In the next 12 months, the leaders are prioritizing more than the laggards, the better technology for emissions detection, energy management, or process efficiency, all those gradual margin improvements instead of only building new low carbon assets themselves.

The Gaps in The Oil and Gas Industry 

Rachel: Let's talk about the gaps that exist in the oil and gas industry and their company cultures. What are the executive views on what is needed to drive improvement?

Lasse: There are four key areas. The first is definitely collaboration. The second is around the employee experience. Only half of the leaders say they're delivering strongly on the employee experience on ethics and diversity. Only one out of six leaders are actually saying that they monitor the employee experience. In the third part, we have the talent and skill, potentially the most critical ones. We have gaps in the data, analytic skills and digital skills. One-third of the leaders are saying that they actually have strong customer engagement skills, but not more than that. Then we have the low carbon skills, where we see a lot of gaps, which is frankly quite alarming considering how many of these companies are actually planning to go current to make a substantial part of their business in the future.

How the Energy Transition Impacts Oil and Gas Companies of All Sizes

No matter how big or small oil and gas companies are, the global energy transition affects them all. Due to the data in Accenture’s recent study, it’s clear to see that reinvention leaders are committed to radical reinvention strategies but, the laggers aren’t necessarily there yet. 

If you're interested in learning more about environmental accountability from the people actively changing the game in North America's energy industry, register for the next Global Energy Show today.