Capital Allocators Forcing Energy Transition

Capital allocation is a critical lifeline for the oil & gas industry. The industry is incredibly capital intensive: pipelines, refineries, rigs, fracking sites… are all multi-billion dollar efforts.

Given the capital intensity to build and maintain these carbon-emitting assets, when the money talks, the executives listen. And the money is beginning to talk:

Last year, Larry Fink at BlackRock wrote an impactful note to his fellow CEOs on climate change.

Climate Risk is Investment Risk: In the near future – and sooner than most anticipate – there will be a significant reallocation of capital.

The proclamation was bold, but not specifically targeting any asset or company. But now the allocators are calling out companies and climate negative firms.

That is a big change in communications and I expect we will see this level of climate-related activism grow. And the firms will listen.