Environmental, social, and governance (ESG) refers to three central factors in measuring the sustainability and ethical impact of investments. A growing number of investors rely on these factors to determine whether they ultimately want to invest or continue to invest in a given business. While ESG investment may be characterised as ethical in its approach to capture environmental and social impacts, at its core, ESG investment involves gauging a company’s long-term, rather than short-term sustainability.
ESG investing is quickly emerging as one of the most prominent and long-lasting megatrends of the oil industry as support grows for initiatives to promote renewable energy, sustainability, and the energy transition. As it has a significant impact on how investors make investments in the sector and may ultimately select winners and losers in the market moving forward, the perception of ESG in the energy sector has changed from being a nice-to-have feature to a must-have prerequisite as oil and gas firms who ignore ESG will be at a competitive disadvantage and will be vulnerable to regulatory sanctions.
Therefore, it is crucial to understand the ESG’s basis and how these principles relate to the oil sector.
