Oil and Natural Gas Corp. (ONGC), a state-owned enterprise, is the largest crude oil and natural gas company in India. In July 2024, ONGC published a Decarbonization Roadmap, outlining its strategy to achieve Net-Zero Operational Emissions (Scope 1 & Scope 2) by 2038, a move much welcomed by investors. This Roadmap is the first step in ONGC’s efforts to outline its approach for achieving its climate goals. It also underscores ONGC’s strategic focus to align with India’s national vision to become self-reliant whilst addressing investor expectations on decarbonization efforts.
Investor’s engagement journey on climate
Building on existing dialogue between local investors and ONGC, Climate Action 100+ engagements commenced in 2020, with a focus on target setting, improved disclosures, and the company’s decarbonization strategies. Despite challenges posed by frequent rotations within senior leadership in ONGC, investors’ efforts to maintain dialogue in an aligned manner to advance climate goals continued. Understanding the role of ONGC as a Public Sector Undertaking (PSU) supporting India’s basic economic infrastructure was crucial. This understanding was embedded within investors’ engagement with ONGC which ranged from private letters to bilateral group meetings.
ONGC’s Decarbonization Roadmap
ONGC’s decarbonization roadmap acknowledges that the global net-zero emissions target will significantly impact the Oil & Gas sector and potentially reshape the future of the industry. It highlights demand reduction as one of the key factors responsible for this transformation and emphasizes the necessity for oil and gas companies to strategically pivot, by diversifying their portfolios to ensure long-term sustainability and viability.
The company has committed to an investment of INR 2 trillion (approximately US$24 billion) to achieve its goals and provided a breakdown of detailed, site-specific plans in its roadmap. The roadmap outlines various measures to decarbonize, including renewable energy technologies, green hydrogen production, and biofuel utilization. From the company’s plans, it considers various measures including eliminating of routine flaring, reducing fugitive methane emissions, implementing Carbon Capture Utilization & Storage (CCUS), deploying Battery Energy Storage Systems, adopting electric vehicles (EVs), and carbon offsetting.
With the transparency on the various measures being considered, investors will now be able to ascertain the role and credibility of each of these decarbonization levers through further engagement.
Quote by SBI Funds Management
“We appreciate and welcome ONGC’s ongoing commitment to its climate goals and improved disclosures, especially given its position as a Public Sector Undertaking in an emerging economy on an advanced growth trajectory. We look forward to continuing our engagement with the company as it implements these plans and aligns its capital expenditure with these goals.”
Setting the engagement team up for further success
ONGC disclosing its standalone Scope 3 emissions in the 2023-24 integrated annual report is a foundational step that sets the engagement team up for an informed dialogue on target setting and alignment on Scope 3 emissions. Whilst the roadmap facilitates investor dialogue on the effectiveness of the various decarbonization levers listed, there are additional aspects that warrant attention. By strengthening investors’ understanding on how ONGC intends to implement its decarbonization strategies, the engagement team will be better positioned to identify the relevant technological transfer and climate finance mechanisms that can help accelerate the process in a just and credible manner.
Access the full Decarbonization Roadmap here.