Tag: climate-change

How does your corporate “frame” the narrative around “climate change”? How do you evaluate the impact on business levers you associate with daily?

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In the face of growing climate concerns, major energy companies are being asked not only what they say about climate change but also how their narratives shape what they do. The way a company frames climate change, whether as a social responsibility, a business risk, or an opportunity for growth, is more than semantics; it drives how the company operates, the strategic bets it places, and how it measures success.

Is climate change primarily perceived as (a) a “responsibility” the company must take on to uphold its ‘contract’ with society, (b) a “risk” that threatens profitability, or (c) an “opportunity’ for further growth?1

A  study1 conducted a few years ago examined how three major energy companies, Total Energies (France), Suncor Energy (Canada), and Statoil (Norway, now Equinor), frame climate change in their corporate climate strategy disclosures and how these framings influence their operations, strategy, and performance. These companies were among the first in the sector to publish standalone climate strategy reports, signaling a growing trend in corporate climate communication.

The study found that each company adopts a distinct perspective on climate change. TotalEnergies presents it primarily as a matter of social responsibility, positioning itself as “the responsible energy major” and emphasizing its commitment to providing clean, affordable energy in alignment with global climate goals. In contrast, Suncor Energy approaches climate change as a business risk, with a particular focus on transition risks such as carbon pricing and regulatory uncertainty, which informs its more conservative and risk-managed operational and strategic decisions. Equinor, frames climate change as a business opportunity. Its strategy is centered on innovation, investment in renewables, and a deliberate shift toward becoming a broad energy company, viewing the energy transition as a chance to create competitive advantage.

These distinct framings go beyond rhetoric, shaping the companies’ investment priorities, operational choices, and the metrics by which they measure success. They also reflect differing approaches to corporate legitimacy, whether through social accountability, risk management, or strategic transformation in a decarbonizing world.

Table: Examples of Impact on Business Levers

FramingOperationsStrategyPerformance Metrics
ResponsibilityEmissions control, transparency, stakeholder dialogueLegitimacy, social license, ESG integrationESG ratings, stakeholder trust, impact disclosures
RiskCarbon compliance, facility resilienceRisk-adjusted returns, hedging against regulationRisk exposure, stranded asset avoidance, carbon cost
OpportunityNew energy ventures, innovationGrowth through clean tech, energy diversification% green revenue, innovation ROI, renewable investments

While all three companies reference elements of responsibility, risk, and opportunity to varying degrees, their dominant framing reveals much about how they are positioning themselves in the energy transition. As climate strategy disclosure becomes more mainstream and closely scrutinized by investors, regulators, and civil society, the coherence between a company’s framing and its actual business transformation will increasingly determine its credibility and success.

  1. Dahl, T. and Fløttum, K. (2019) ‘Climate change as a corporate strategy issue: A discourse analysis of three climate reports from the energy sector’, Corporate Communications: An International Journal, 24(3), pp. 499–514. Available at: https://doi.org/10.1108/CCIJ-08-2018-0088.

The Varied Faces of ESG: Compliance, Opportunity, and Everything In Between

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In modern business, few acronyms have garnered as much attention and diverse interpretations as ESG – Environmental, Social, and Governance. Depending on who you ask, ESG can represent compliance, opportunity, an existential threat, or even a business cost. And for some, ignorance might indeed seem blissful. Let’s explore the multifaceted nature of ESG and what it means for different stakeholders.

ESG as a compliance requirement

For many businesses, especially those operating in highly regulated industries or listed in progressive stock exchanges, ESG is synonymous with compliance. Government regulations, stock exchange requirements, international standards, and industry guidelines often mandate certain environmental, social, and governance practices. Compliance with these requirements is not optional; it’s a legal obligation that businesses must adhere to, often under the scrutiny of regulatory bodies and watchdog organizations.

While compliance may seem like a burden, it also allows businesses to demonstrate their commitment to responsible and ethical practices. By meeting or exceeding regulatory requirements, companies can enhance their reputation, build trust with stakeholders, and mitigate the risk of legal and financial penalties.

ESG as an opportunity

Contrary to viewing ESG as a mere compliance exercise, many forward-thinking businesses see it as an opportunity for innovation and growth. Embracing ESG principles can unlock new markets, attract socially conscious investors, and drive operational efficiencies. From developing sustainable products and services to implementing inclusive hiring practices, businesses prioritizing ESG stand to gain a competitive advantage in today’s socially and environmentally conscious marketplace.

Moreover, integrating ESG into business strategy can lead to cost savings, risk mitigation, and enhanced long-term value creation. By proactively addressing environmental and social challenges, companies can future-proof their operations and position themselves as sustainability and responsible governance leaders.

ESG as an existential threat

However, for some businesses, particularly those heavily reliant on fossil fuels or operating in environmentally sensitive industries, ESG poses an existential threat. The transition to a low-carbon economy, increased scrutiny of environmental impacts, and growing consumer demand for sustainable alternatives can pose significant challenges for traditional business models.

For these companies, ignoring or downplaying the importance of ESG is not an option. Failure to adapt to changing market dynamics and stakeholder expectations could result in reputational damage, financial losses, and even business failure. The existential threat posed by ESG underscores the urgent need for strategic transformation and innovation across industries.

ESG as financial burden or strategic investment?

From an operational standpoint, implementing ESG initiatives can indeed entail upfront costs. Whether investing in renewable energy infrastructure, conducting sustainability audits, or hiring specialized personnel, tangible expenses are associated with integrating ESG into business operations. However, it’s essential to view these costs not just as financial burdens but as strategic investments in the business’s future resilience and sustainability.

While the initial costs of ESG implementation may be significant, the long-term benefits – including enhanced brand reputation, access to new markets, and reduced risk exposure – often outweigh the upfront expenses. Moreover, as ESG practices become more mainstream and economies of scale kick in, the cost of sustainable business practices is expected to decrease over time.

Ignorance Is Bliss?

Finally, there are those who prefer to ignore the complexities and challenges of ESG. For some businesses, especially those operating in less regulated or scrutinized sectors, the temptation to prioritize short-term profits over long-term sustainability may be strong. However, ignorance is no longer a viable strategy in an era of heightened transparency, social media activism, and stakeholder activism.

Ignoring ESG risks exposes businesses to reputational damage and regulatory scrutiny and undermines their long-term viability. As societal expectations evolve and stakeholder demands intensify, businesses that fail to adapt to the realities of the ESG landscape may find themselves left behind.

In conclusion, ESG means different things to people – compliance, opportunity, existential threat, cost, or even ignorance. However, regardless of the interpretation, one thing is clear: ESG is reshaping the business landscape and challenging organizations to rethink their approach to sustainability, ethics, and governance. By embracing ESG principles and integrating them into business strategy, companies can mitigate risks and seize opportunities for growth, innovation, and long-term value creation.