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A moving of the goal posts
At times of economic uncertainty , there typically follows a prioritization of the short-term over the long-term goals . Whilst we have seen this with the energy companies , what has been clear is that investment in oil and gas is going up , not down .
What we have seen happen with energy prices has re-invigorated the belief that there is still a longterm need for oil and gas , and most definitely a short-term opportunity . Given that oil and gas remain the core business of the major energy companies and will likely remain so for many years to come , they are only doing what any business would do when demand for its product goes up . Unfortunately , the knock-on effect is for the pathway to net zero to lower in priority . For now , at least .
A steeper trajectory will be required
Because of this , the trajectory to net zero for oil and gas companies will now have to be much steeper between 2030 and 2050 than previously thought if they are to reach the goals they previously set themselves .
The move will also , of course , impact cumulative global emissions , making it far more difficult to meet the Paris Agreement that was adopted by 196 Parties at the UN Climate Change Conference ( COP21 ) in 2015 to aim to ‘ limit the temperature increase to 1.5 ° C above pre-industrial levels .’
Scaling back on climate targets will also have a knock-on impact for those organizations that currently use oil and gas in their supply chain . If there are fewer low carbon energy alternatives , they will find it more challenging to decarbonize their own businesses .
The need to strike a balance
The ramifications of scaling back on climate targets run deep . It could impact investor confidence and the ability to attract capital for future green investments . It could also do untold damage to a brand . This is because consumers are increasingly looking for the companies they buy from to have traceable – and ethical – supply chains . So much so , that a recent study showed that organizations seen as environmental , social , and governance ( ESG ) leaders are 43 percent more likely to outperform similar organization in terms of profitability .
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