The global goals for the decarbonisation of the economy are highly demanding so as to ensure the sustainability of the planet. To achieve them, energy transition is of paramount importance and, fortunately, is occurring at a steady pace. Although there is still much work to be done, according to Bloomberg, European entities lead the world ranking of the oil companies that are best preparing for energy transition. Total, Galp, Equinor, BP and Royal Dutch Shell hold the first five places in the table in that order.
Bloomberg's Climate Transition Scores conducted an analysis of the business of 39 global oil and gas companies and established this ranking based on two of the company´s models, the Business Model Transition Score and the Carbon Transition Score, conducted by Bloomberg NEF (BNEF) and Bloomberg Intelligence (BI) respectively. Cross-referencing the two analyses made it possible to assess where the oil companies stand today and where they plan to be in the future with regard to carbon emissions, in accordance with their current business model and the measures they are taking to transform their business into a low environmental impact activity. With respect to business models, BNEF conducted an analysis at almost forty companies of factors such as the implementation of new technologies, the growth of the fossil fuel business, corporate governance, the adaptation of business models to the different pillars supporting the activity and their exposure to risks. Furthermore, BI studied the current carbon emissions and future forecasts for each group, which provides each company with an indicator of the intensity of current and future carbon emissions, in addition to the expected reduction in this regard.
The top-ranked energy groups - Galp is placed second on the podium - have achieved this success due to the environmental goals they intend to meet and the investments they are making to guarantee a smooth energy transition process, thereby dealing with the significant energy transition-related risks associated with this industry. According to Bloomberg, the top 5 companies account for 11 GW of renewable energy production, or in other words, the equivalent of 78% of the assets producing energy from renewable sources in the universe of the 39 groups analysed.
“The transition to a low-carbon economy in the Oil & Gas sector is complex and requires major changes pursuant to a gradual departure from business models based on fossil fuels. The scores published by Bloomberg Climate Transition provide a global view of how companies are preparing for this transition”, says Patrícia Torres, the head of Bloomberg's Sustainable Finance Solutions department, on the importance of research to this industry.
Bloomberg also explains that this ranking compares the performance of the different companies, so the scores are relative to a company´s position vis-à-vis its competitors and do not mean that the companies are totally ready.
Galp joins forces with seven other companies in the transition process
What is certain is that the biggest companies in the world are investing all their efforts in speeding up the energy transition process and are joining forces to this end. Late last year, Galp signed up with seven other global giants - BP, Eni, Equinor, Occidental, Repsol, Royal Dutch Shell and Total - to define six Energy Transition Principles designed to promote the collective acceleration of the industry towards achieving the goals of the Paris Agreement. The idea is to conduct a joint effort to reduce greenhouse gas emissions and to underline the importance of transparency and alignment on climate change with associations from the different sectors.