Is the opportunity window for Guyana’s successful export of crude oil still constrained to the 2050s?

Introduction

In both my initial column in the series on the public auction of oil block rights and the likely remaining opportunity window for successful Guyana crude oil exportation and my later re-cap of this column, I have remained steadfast in my view that this window is likely to last until the decade of the 2050s. With the fast approaching COP 28 to be convened in Dubai in November— December. I have been reviewing the Reports of the World Benchmarking Alliance, WBA and have become concerned about my declared conviction. In fairness to readers of this Sunday column I therefore report here what gives me cause for concern.

World Benchmarking Alliance, WBA

The WBA is a non-profit organization seeking to hold influential companies accountable for their contribution in achieving the United Nations Sustainable Development Goals. It does so by publishing benchmarks on companies’ performance. And, with an Alliance of over 350 stakeholders, it highlights best practices from leading companies and incentivizes laggards to catch up.

The WBA was launched in 2018 on the belief that change in the way in which business impact is measured is necessary for motivating and stimulating action for an energy transition to a sustainable future for everyone.

Five years on, the 2023 Climate and Energy Benchmark of the oil and gas sector is the second iteration of this benchmark. This second iteration brings together the assessment of companies’ climate strategy and performance together with social performance in the same benchmark and ranking. The performance on climate is examined through an Assessing Low-Carbon (ACT) assessment. Social performance is examined through the just transition indicators (JTI).

As reported, the WBA has identified “seven systems transformations that have a potential to put our society, planet and economy on a more sustainable and resilient path”. These transformations are varied, ranging from climate, nature, finance, urban, food, digital inclusion, to social aspects [such as, corporate human rights, companies acting ethically and providing decent work]. As noted WBA’s benchmark analysis focuses on areas for improvement, relying on governments to develop tailored policies and civil society to drive partnership efforts and investors to leverage their influence within companies.

This information will be made freely available to everyone; thereby allowing investors, governments, civil society, individuals and the companies themselves to be empowered. Investors can influence the companies they invest in. Governments can develop better policies and civil society can direct public support and partnership efforts. Individuals can decide where to spend their money and where they choose to work.

These benchmarks are intended to reveal both to companies and stakeholders where each company stands compared to its peers; where it can improve, and, where urgent action is needed to deliver on the SDGs. To turn business into a force for good. Ranking and measuring the companies will give them the guidance to drive change and create accountability for those who don’t change.

Five key findings

The 2023 Climate and Energy Benchmark in the oil and gas sector reveals valuable insights about the performance of companies in the industry. Even though the median scores result has improved compared to the previous iteration, most of the companies have not set targets that cover their scope 1, 2 and 3 emissions,

The findings also show that overall, only a minority of the assessed companies are engaged with necessary preconditions for a just transition, if undertaking a lowcarbon transition at all. As with the lowcarbon assessment, companies demonstrate a lack of commitment and action in their business relationships and value chain, as well as within the companies and for their own employees. A just transition requires urgent attention from companies and policymakers. A concerted effort is needed to bring people along in the transformation. Lack of action by companies could risk the success of the low-carbon transition and could lead to increased inequality, mass unemployment and civil unrest.

With no set date to phase out fossil fuels, companies fail to make credible transition plans. The phase out of fossil fuels is urgently needed to limit increase in global temperatures to 1.5˚C. The IEA’s Net Zero Emissions (NZE) by 2050 Scenario has given a firm directive that no new oil and gas expansion should occur beyond projects approved in 2021 and production must rapidly decline by the end of this decade. Nonetheless, oil and gas companies have persisted in their expansion efforts and show no sign of curtailing production. The keystone oil and gas companies are set to burn through their carbon budget by 2036.

The Verdict

.Given the above narrative, the WBA’s verdict on the eve of COP28 has been summed up as follows:

“Our planet faces enormous economic, social and environmental challenges and despite important progress, no country is on track to achieve all SDGs by 2030. Awareness is growing that the SDGs, the Paris Agreement and sustainable development beyond 2030 can only be achieved through transformational change and that without these transformations we will never achieve truly socially inclusive and environmentally sustainable economies and societies”.

The verdict admits that, dealing with such systemic issues requires systems-wide approaches. Systems change, [defined as the ‘intentional process designed to alter the status quo by shifting and realigning the form and function of a targeted system’ – is highly complex, it requires large-scale and fundamental transformations of the societal systems driving current environmental and social pressures. Such transformations will require changes in current institutions, practices, technologies, policies, lifestyles and thinking.

The WBA sees business playing a key role in leading these transformations by creating sustainable, inclusive and innovative solutions. Regrettably, however, for businesses these deep and long changes require roadmaps that are rooted in the pathways to sustainable futures. Benchmarks developed by the World Benchmarking Alliance provide exactly these roadmaps. Benchmark methodologies translate societal expectations into metrics,

Conclusion

The 2023 U N COP28, will be held from November 30 to December 12, this year in Dubai. Addressing the UN General Assembly, the UN Secretary-General highlighted his 2023 priorities. Describing 2023 as “a year of reckoning,” he urged Member States to change the mindset of decision making from near-term thinking to long-term thinking and develop a strategic vision to act decisively “in deep and systemic ways.”

He sounded a warning, “We have started 2023 staring down the barrel of a confluence of challenges unlike any other in our lifetimes, including wars, the climate crisis, extreme poverty, and geopolitical divisions, he said, calling for a “course correction.”

Next week I report on the WBA’s reporting on ExxonMobil