Petronas investing in a better, sustainable future

The NOC is embracing the global energy transition and the shift towards a low carbon future 

by NUR HANANI AZMAN / pic by MUHD AMIN NAHARUL

ENVIRONMENTAL, social and governance (ESG) factors and climate change concerns are having a major impact on the energy industry which is under pressure to help transition to a low carbon economy. 

The shift to a greener economy offers big investment and job opportunities but needs the buy-in from all stakeholders. 

Petroliam Nasional Bhd’s (Petronas) chief sustainability officer Charlotte Wolff-Bye said investment in ESG portfolios and low-carbon assets will speed up the energy transition, and gain greater acceptance and impact. 

She said it is now critical for the private sector to develop low carbon and renewable energy projects as well as nature-based climate solutions with robust credentials that will deliver sustainable value for the long-term, as this will attract more patient capital and reduce volatility. 

“Energy transition will accelerate in pace and magnitude on a global scale and has the potential of creating both winners and losers. We are likely to see unprecedented amounts of investments into new energy systems globally. 

“Petronas strides towards embracing the global energy transition and the shift towards a low carbon future, which will require coordinated and collective action from all stakeholders. Collaboration and partnership among industries, policymakers, customers and various other stakeholders are key in the planning,” she told The Malaysian Reserve. 

Climate science is accelerating the pace of energy transition and demands tangible and urgent actions. Doing nothing is not an option. 

Recognising the signs early on, Malaysia’s national oil company (NOC) announced in October last year its aspiration to achieve net-zero carbon emissions (NZCE) by 2050, the first oil and gas (O&G) company in Asia to do so. 

It has also endorsed the World Bank’s Zero Routine Flaring by 2030 Initiative and the recommendations of the Task Force on Climate-related Financial Disclosures, as part of its broader effort for greater transparency around its action on climate change, in line with the group’s aspiration to achieve net zero. 

The Zero Routine Flaring Initiative aims to end routine flaring of associated gas from oil production. 

Under the initiative, Petronas pledges to avoid routine flaring in new oil field developments and end routine flaring at existing oil production sites by 2030. 

Doing Its Part and The Importance of ESG

ESG disclosures are essential to complement the financial performance of Petronas and its group of companies, as the disclosures enable investors, lenders and other stakeholders to assess and appropriately evaluate the group’s performance and capability to serve customer markets while also generating positive value for society. 

Wolff-Bye said the NOC recognises the importance of ESG in shaping the future of business and has thus aligned its sustainability core metrics to international frameworks and standards like the Stakeholder Capitalism Metrics that are promoted by the World Economic Forum. 

“The building blocks are there. As we go down the ESG path throughout our operations, we are committed to the sustainable production of resources. We are placing particular emphasis on emission reductions. We have put in place effective measures to address flaring and venting of gas and to improve energy efficiency. 

“We are also making good progress on introducing carbon capture and storage to some of our fields, while we are developing new business opportunities in biofuels, hydrogen and circular economy practices. All these efforts will strengthen our business as well as reduce our carbon footprint alongside our growing renewables business,” she added. 

The Economic Benefit of Green Growth

A study by the WWF and Boston Consulting Group called “Malaysia’s Potential Net Zero Pathway 2021” revealed that if the country adopts a NZCE by 2050 pathway, it could generate 11%-16% additional growth in GDP and a net benefit of 140,000-240,000 of new jobs. 

Wolff-Bye said Petronas can be a strong catalyst to Malaysia’s green growth as the group is aligned with the National Energy Policy to support the Shared Prosperity Vision 2030. 

“Petronas is actively discussing and exploring collaboration opportunities across the Malaysian society, including with Bank Negara Malaysia, Securities Commission, The Malaysian O&G Services Council among others, on efforts to increase financial sector readiness to manage climate risks and support value chain partners and vendors as we are transitioning to a “greener” economy. 

“What is important for any organisation, and in particular for Petronas is to strike a good balance between economic pursuits and the concurrent environmental and societal gains to address the many existing and emerging challenges,” she said. 

Coherent, Supportive and Forward-Looking Policy Is Key

From an energy industry insider’s perspective, the path to a greener future need to be based on optimal balance in providing secure and affordable access to energy, environmental sustainability and economic development, and social progress. 

Wolff-Bye stressed that coherent, supportive and forward-looking policy is key. The right ecosystems of policies, regulations and infrastructure need to promote wider usage of energy from clean and sustainable sources. 

“Stakeholder energy literacy and heightened awareness is crucial in embracing this transition. The single biggest challenge is mindset and behaviour — sustainable is not going to work if it remains just a strategy. 

“It should be adopted as our culture. Industry has a big role to play but consumer behaviour must also shift towards more sustainable lifestyles. We must not under-estimate the transformative changes required to solve the sustainability challenges of present times,” she said. 

As the economy and technology evolves and develop more, we need to find ways to either mitigate, and perhaps even move towards carbon negative — that’s the challenge in going down a longer path to become net zero by 2050, she added.