Can Big Oil Go Carbon Neutral?

There are goals, stretch goals, and seemingly-impossible-to-achieve goals. It’s one of those last ambitions that has everyone talking.

The major energy company BP says it wants to cut its own net carbon emissions to zero and reduce a huge amount of carbon emitted by the oil, natural gas, and other products it produces by 2050. It’s an ambitious goal since the total amount of carbon the company and its products emit is currently more than 400 million metric tons a year. The question is, can BP do it?

Even the company’s executives say they do not quite know how they’ll accomplish it. Experts say a goal like BP’s can help define the direction of the company, but it also needs to be backed up with serious and long-term planning on a whole new scale. “There are a lot of dynamics to figure out how to manage,” says David Wagner, a Korn Ferry senior client partner who works with C-suite executives on assessment and development.

First among those dynamics may be figuring out the road map to get to the goal. With a goal as large as BP’s, experts say that means virtually anything is on the table, including asset sales, heavy investment in research and development, acquisitions, and changes to the company’s capital structure. Wagner says it’s often helpful to have external partners to help an organization’s leadership think through how to reach the goal.

The strategy, however, could slip if the organization isn’t set up to actually achieve the goal. Finding the high-skill talent needed is not easy for most firms, so it’ll require a combination of hiring many new employees and reskilling existing ones. At least in BP’s case, there’s plenty of enthusiasm internally to work on new technologies and renewable energy efforts, says Manu Rao, a former BP employee and a Korn Ferry senior client partner who works with the energy company. That amount of self-motivation will be crucial to maintain over the next 30 years if BP wants to get close to its objective.

After finding the employees, organizations then need to remodel their systems so they start tracking the right metrics. Importantly, employees need to be rewarded by reaching and exceeding the targets that track the overarching goal. In BP’s case, that would mean rewarding employees for making carbon declines throughout the organization, whether they’re in a renewable energy business or the traditional oil and natural gas business, Wagner says.

Along the way, senior leadership needs to be transparent about progress to company stakeholders. Rao says that type of communication also lets the organization’s employees know that this goal may be a long ways off but it isn’t a passing fad.

Pledges to curtail carbon emissions or otherwise improve the environment are the pledge du jour among many organizations around the world. Delta Air Lines says it will spend $1 billion over the next 10 years to reduce its greenhouse gas emissions and invest in ways to remove carbon dioxide from the atmosphere. Consumer products giant Unilever has vowed to cut its plastics usage in half over the next five years. Other oil producers have made pledges, too, although none are as close to BP’s in scope.

These environment-related goals have been pushed by both government regulations and outside stakeholders. Most recently, many financial heavyweights have said they want to see firms make significant progress toward reducing emissions or they’d remove them from investment consideration. Plus, many firms think they can either charge more for more environmentally friendly products or, at the least, cut their own costs.

People will be watching BP closely over the next 30 years, experts say, and there’s no way to know now whether it will be able to accomplish a goal that presently looks unrealistic to many. “It’s not impossible. It’s a big mountain to climb, but it’s a real start,” Rao says.