An Oil and Gas Company's Roadmap for Strategic Insights in a Quickly Evolving Regulatory Landscape

Customer Type

International petrochemicals company

User Base

Chief Sustainability Officer and the sustainability team, compliance, Executive Committee

Background

Reaching zero emissions by 2050 requires overhauling the economic and financial system. For this reason, sustainability regulation has been moving at a breathtaking pace. To drive the transformation, the European Union (EU) introduced an extensive sustainability package via the so-called "European Green Deal", approved in 2020. This sustainability regulatory milestone introduced a flurry of regulations regarding topics such as the circular economy, sustainable finance, biodiversity and more regulatory novel ties that companies are just learning to grapple with.

Stock exchanges worldwide support these developments by mandating sustainability requirements for those companies wanting to list with them, acting as quasi -regulators. In 2023, for example, the Security and Exchange Commission (SEC) unveiled disclosure rules which will require listed companies to disclose risks that are likely to have a material impact on their businesses, as well as greenhouse gas emissions.

Non-compliance exposes companies to court cases, fines, and reputational harm. Beyond identifying applicable rules and making sustainability a pure matter of compliance, businesses need to examine legislation from different angles, Including, but not limited to: 

• IT systems impact
• Product impact
• Operational impact
• Supply chain impact
• Business strategy impact

Understanding these impacts gives business the opportunity to get ahead of the curve, anticipate implementation costs, and send positive signals to investors an d other stakeholders they depend on. regulations.

Pain Points

A petrochemicals company wanted to understand the impact of the quickly changing regulatory landscape. In particular: 

• Understand which regulations apply to their company.
• Determine the effects of incoming laws on their products, IT systems, supply chains, and operations.
• Understand which regulations and frameworks need to be prioritized by management and strategy.
• Make sure they satisfy investor expectations and industry market practices.
• Disseminate knowledge within the organization via workshops.

The company had a history of working with S&P Global, being a longstanding client of IHS Markit. The client wanted to continue this cooperation, knowing that S&P Global Market Intelligence could combine industry knowledge from S&P Global Commodity Insights with vital sustainability intelligence.

Solution

The project followed a transparent methodology and approach, defined in agreement with the customer. The project was designed in four phases and around a workshop-based approach to disseminate knowledge throughout the organization and entice stakeholder engagement. As part of the kick-off workshops, S&P Global Market Intelligence and the client defined which entities were most concerned by regulatory changes to determine the project's geographic scope. With a clear understanding of entities and regions covered, S&P Global rolled out the project as follows:

Establish a relevant list of regulations.	S&P Global Market Intelligence examines the company structure and defines which entities are most concerned by regulatory changes. Then, S&P Global Market Intelligence identifies regulations applicable to these. In working groups, regulations are classified into high-, medium- and low-priority together with the customer. Only high- and medium priority regulations move to the project's next phase.
Evaluate the business impact.	S&P Global Market Intelligence provides a comprehensive impact analysis that helps companies identify the potential impact of the most essential regulations. Industry experts from across divisions support this effort. For each law, the client receives an impact analysis. This ensures that customers are ahead of the curve.
Create a regulatory timeline.	A clear timeline is crucial for strategy and business prioritization. S&P Global Market Intelligence offers a comprehensive service to help companies understand when they must comply with each sustainability regulation's different elements. The customer is given a timeline with action items so that operations, IT systems, supply chain management, and strategy partners can prepare accordingly.
Disseminate knowledge through workshops.	S&P Global Market Intelligence provides didactic workshops to disseminate project findings within the customer's organization. Workshops target the most critical stakeholders in different parts of the business and take on a practical, actionable approach.

Outcome

The customer was provided a regulatory roadmap detailing the European sustainability legislation's timeline and its potential impact on the customer's business. The customer benefitted from:

• Inputs to a detailed action plan based on the regulatory roadmap. The roadmap can be used at the client's discretion, guiding the company as it continues the transition to a more sustainable business model. By leveraging the roadmap, the customer successfully prioritized strategic initiatives and aligned its business model, particularly in Europe, with the forthcoming legislation.
• Access to a team of sustainability specialists with extensive knowledge of the sustainability regulatory landscape. This resource proved invaluable in navigating the complexities of sustainability regulations.
• Full project management support and oversight of all ongoing related processes, enabling the company to focus on strategy, preparation, and impact. This support allowed the company to concentrate on strategic planning, and the impact of their sustainability efforts, with the assurance that the project was managed efficiently and effectively.

S&P Global’s services were recommended to a sister company after the positive outcome. The referral underscored a practical acknowledgment of the value and effectiveness of the team's assistance in addressing their specific needs.