Not only did shareholders at ExxonMobil successfully back a campaign to hand two board seats to climate activists but a Dutch court ordered Shell to accelerate and deepen its emissions cuts. And to round out the day, Chevron’s shareholders voted at their AGM to cut scope 3 emissions.
The energy transition has been underway for some time. The financial impact from oil prices during the pandemic accelerated the transition. The three May 26th decisions have firmly placed the energy transition on steroids. Transitions to new business models, carbon reduction and portfolio realignments will have to be further accelerated. Energy organizations will also come under increased scrutiny from investors, governments, consumers and activists. Future court mandates may demand further accelerations to meet climate targets. It is an uncertain world.
The acceleration of the energy transition will require radical retooling of talent models, acquisition & retention propositions and reward structures as well as reconfiguring the employee experience. But repurposing these important human resources themes alone won’t be the determining factor for energy firms making their energy transition to succeed and flourish.
What’s the missing piece?
It will need to change and adapt quickly to the new reality facing the energy industry. This is a today leadership issue rather than a tomorrow one.
And, it’s not clear that leaders across the industry have fully faced up to the need to adapt culture to the new reality. In late 2020, Mercer asked the energy industry what the main challenges were to scaling flexible work. The top response was leadership/manager attitudes to flexible work followed by wanting to maintain existing culture. Hardly an endorsement for the rapid, radical sustained culture required by the industry in light of the events of May 26th.
Taking a look across all industries, the importance of culture is increasingly becoming evident. According to the latest Global Culture Survey from Virginpulse, 65% of executives state that culture is more important for the performance of their company than their strategy or operating model. And 80% of employees are asking to see significant change in their corporate culture.
Culture sits at the heart of the people agenda and the need to drive this change provides a huge opportunity for HR professionals across the industry to show how their expertise and experience can be at the very heart of the corporate strategic agenda.
A drive to corporate change without focus and attention on changing culture is unlikely to succeed given the very rapid changes being dealt to the energy industry.
Milan Taylor is a Partner and Mercer’s Global Natural Resources & Energy Leader.
As a global consultancy for people management, Mercer offers all services to support transformation for energy businesses. Its Organizational Capabilities Assessment can quickly pinpoint the fields for action. Whether starting small by implementing ESG criteria in LTIs, broadening the scope towards our awarded DE&I services or applying our organization and workforce transformation expertise, Mercer is the trusted advisor for organizations to transform towards true sustainability.