![]() And third, use new business models to enable growth and close valuation discounts. Second, incorporate transition risks and rewards into differentiated investment hurdles rates. First, shift to a transition growth mindset while nurturing legacy cash cows. We have identified three ways for companies to manage this complex dynamic. On the other, transition laggards face rising costs of capital and will have to either improve or accept a narrowing opportunity set. ![]() On the one hand, the transition leaders have moderated their pace, moving closer to the herd. Stakeholders need to build on this progress to drive low-carbon technologies and new transition material supply through the investment inflection point to enable rapid scale-up. Crucially, governments have increased incentives and regulation to drive investment in the transition. Financial institutions still think of climate risk as a material investment risk – and an opportunity. High-profile course corrections on portfolio greening have contributed to a perception that companies are not rising to the challenge, exacerbated by a vocal, anti-ESG backlash.īut the reality is more nuanced than it was in the aftermath of the COP26 climate conference – arguably, peak-ESG – in 2021.Ĭompanies are still responding to the challenges and opportunities of the transition but tending to their legacy cash cows for a bit longer. Coal is resurgent in the electricity mix to help keep the lights on. The heavyweight Glasgow Financial Alliance for Net Zero (GFANZ) has lost momentum and been forced by its members to adapt. With energy security trumping sustainability, some elements driving the decarbonisation agenda have certainly gone backwards. Renewables are struggling to compete with resurgent fossil fuels as far as returns are concerned and there are worries that the mining sector won’t deliver the necessary metals and minerals. Environmental, social and governance (ESG) issues are on the back foot and investors are favouring value and cash flow over carbon commitments. Shareholders are constraining companies by focusing on capital discipline. The corporate energy transition is experiencing an identity crisis. MA, Natural Sciences, Cambridge University ![]() MA, Petroleum Economics and Management, IFP School, Paris As the focus shifts to renewables, Tom strives to continue to develop our corporate research offering in the new energy sector. Tom is often sought out for his insights into the evolving corporate oil and gas sector, frequently presenting at conferences and industry events. His current portfolio includes ExxonMobil, TotalEnergies and Repsol. During his time on the team, he has led the analysis of over 40 companies in the Corporate Service, including all the Majors, leading Independents and the main Asian national oil companies. Tom is now exclusively focused on corporate research. More recently he has led the corporate research team which spans the Corporate Service, M&A Service and the Corporate Benchmarking Tool. He then played a leading role in founding the corporate team and managing the development and launch of its products and offering. Having started his career as an upstream analyst, Tom has worked in our Southeast Asia and North Sea teams, where he developed a deep understanding of the challenges unique to those areas. As senior vice president of our corporate research team, he guides the development of our corporate analysis and thought leadership pieces. Tom has worked at Wood Mackenzie for more than 25 years.
0 Comments
Leave a Reply. |