If you work in the industrial sector and worry that fostering greater sustainability is an insurmountable challenge, you should listen to Jason Olbekson.
As Salesforce’s Industry Advisor Director for Oil and Gas, Jason is seeing first-hand how companies are responding to the call to cut greenhouse gas emissions. Instead of feeling threatened by the changes they need to make, he says he is witnessing many of these firms pursue wide-ranging transformation.
“When you look at that increasing pressure on carbon emissions, it’s really driving oil and gas companies to rethink their energy portfolios,” Jason said during a recent Salesforce webinar, ‘The Future of Canada’s Industrial Sector is Net Zero. “It’s not just their ESG or carbon footprint they’re worried about. It’s also the product they sell. They’re pivoting to greener technologies. They’re evolving their business models.”
These optimistic signs couldn’t come at a better time. If the world is going to manage a secure, successful energy transition, the role of the traditional energy companies — with all their expertise, resources and capabilities — is going to be critical.
As Salesforce Vice-President of Sustainability Solutions Georges Smine pointed out, there is a tidal wave of sustainability and ESG demands that are bringing Net Zero to the forefront. This not only includes ever-evolving industry regulations, but increased pressure from shareholders who want to see more transparency and carbon accounting in ESG reporting.
Perhaps as a result, Georges added, CFOs are also paying greater attention to sustainability as they begin to see a correlation between higher ESG ratings and improved financial performance. This in turn leads to the third area of pressure: consumers. With more choice than ever, Georges pointed out that consumers are actively looking to companies that produce goods based on a green manufacturing approach.
Put all these factors together, and it’s no wonder sustainability is becoming a top business priority for the sector. Business leaders are also realizing the magnitude of the task before them.
“In order to limit global warming, we need to cut emissions by half by 2030, and that’s more than 100 gigatons of CO2 or equivalent,” Georges said.
The real goal, however, should be net zero, which refers to completely negating the amount of greenhouse gas produced from human activity, including what happens in manufacturing and oil and gas companies.
Without reporting on their progress towards net zero, Georges said heavy industry risks greater challenges in raising capital, keeping customers, protecting their brand reputation and wearing out already-overworked sustainability teams.
How Industrial Sector Expertise is Transferable to Net Zero Initiatives
On the plus side, Jason noted that there are a number of similarities between traditional oil and gas assets and some newer renewables or alternative fuels. This includes:
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The need for complex project management expertise
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Asset management and maintenance is mission critical.
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A comparable commercialization model and deal structure (ie, the long terms of oil purchase contracts and the power purchase agreements for renewables)
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A vast ecosystem of stakeholders, landowners and government entities.
This might mean the transition to green manufacturing might not be as night-and-day as some initially imagined.
In any case, the industrial sector is hardly standing still. According to Scott Mattoon, Salesforce’s Industry Advisor and Director for Manufacturing, the initial impetus of meeting regulatory targets is quickly giving way to meeting consumer demand.
There is now more demand for electric vehicles in their pipeline, for instance, than there is for internal combustion engine vehicles, he said.
“I think what we want to avoid is a kind of prescriptive one-size-fits-all approach,” he added. “The rate of transition is important, but will vary a lot by sector. An oil exploration company is going to look very different from a food packaging business in terms of their energy profile and their ability to substitute energy sources.”
Where the Past Offers a Hint to a More Sustainable Future
Doing what’s right for the planet might also seem less daunting if you take a quick look back at history.
Jason discussed how the British Navy was the original catalyst in terms of moving from coal to petrochemical fuel, which essentially created our modern industrial complex. There are equally influential organizations that are advocating for green manufacturing today.
“When you look at a company like Amazon that’s saying, ‘Hey we might move all of our fleet vehicles to hydrogen,’ I think that’s going to be kind of a watershed moment,” he said.
By achieving net zero, the industrial sector is also presented with opportunities to innovate from a customer experience perspective. Think about what happens at most gas stations today: most of us stand next to a pump, waiting impatiently for a tank to fill up so we can get on with our day. Contrast that with coffee shop brands that set up charging stations for electric vehicle drivers, or petroleum companies that introduce a cafe-like experience for the same kind of customer, Jason said.
Reskilling, Upskilling and Developing a Greener Industrial Workforce
The path to net zero is also paved with an unprecedented chance for manufacturing and oil and gas firms to reimagine the way they develop their teams. The pandemic meant many firms have already been losing skilled workers, a problem Jason said could get worse if employers don’t take steps to prepare their workforces for a more sustainable future.
This should translate into codifying institutional knowledge and automating work processes like carbon accounting, he said. It also required enabling ‘digital natives’ who don’t want to be bogged down with manual processes.
Scott agreed, predicting that the top talent will have high expectations.
“Industrial sector workers are going to be looking to work for a company that’s got modern technology, to be able to work where they are and when the work needs to get done, even if it’s just on a mobile device,” he said. “They’ll want to be able to have access to the right information at the right time to make decisions without having to move into the mid and upper ranks of leadership.”
We can’t afford to ignore the difficulties or minimize the effort that Net Zero requires. However Scott said there is every indication that many companies across the industrial sector are approaching sustainability with the right mind set.
“The savvy manufacturers that we’re hearing from recognize that this is an opportunity to go beyond working with the supply chain on emissions targets, and are really enhancing their global supply chain effectiveness,” he said. It ultimately is an opportunity for them to deliver with speed, and to improve their company’s image as a leader in their industry.”
