Opportunity NOCs: how investors can jumpstart energy transitions in national oil companies

National oil companies (or NOCs) like Saudi Aramco and Russia’s Gazprom produce half of the world’s oil and gas, control two-thirds of global reserves, and serve as political giants in their home economies. This means that they will play a crucial role in the success or failure of the energy transition. Investors are financially exposed to NOC risks, but this exposure opens avenues for investor influence on NOCs and creates a strong incentive for investors to use such influence. If the world is to meet the goals of the Paris Agreement, NOC must being decarbonizing their activities.
The study encouraged investors to take some immediate steps to encourage NOCs to start decarbonizing their activities, and contextually reduce investors’ own exposure risk to NOCs such as direct NOCs to adhere to climate disclosure requirements to improve their transparency and prevent offshoring of emissions by IOCs to NOCs. Develop and apply ESG frameworks to NOCs similar to those increasingly applied to IOCs to reveal the myriad risks faced by investors, financial actors, and operational firms partnering with NOCs. Call on banks to refrain from financing new oil and gas expansion projects by NOCs.