Risk management and sustainability efforts of oil and gas companies

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Abstract

Environmental Risk Management and Sustainability Efforts of the Oil and Gas Companies Abstract Svetlana Vlady Brooklyn College, The City University of New York Low-carbon economy, geologic constraints on production, combined with environmental risks are expected to have profound implications for the oil and gas companies. Environmental and sustainability issues are becoming the most financially significant issues facing oil and gas companies today. Consequently, investors should be expected to modify the way they value companies, considering not only earnings and dividends, but also firms’ long-term environmental performance and the impact of environmental risk and sustainability effects on oil and gas companies. Corporate executives and management need accurately evaluate environmental risks, and pursuing environmental practices, and promote sustainability to sustain, increase profitability, attract investors, inspire employees, and satisfy customers. Non-traditional issues such as environmental risk, sustainability effects should be incorporated into the management decision-making process. Since the oil and gas companies are affected by climate change and are responsible for the greenhouse gas (GHG) emissions, the management decisions and environmental risk management could protect profitability and market value of the firms. The oil and gas industry have always been the important segment of economy and investors’ portfolios, but the environmental issues now at centre stage globally, raises the question: How, and to what extent do management of oil and gas companies and capital markets respond to this vital issue? How managers and, consequently, investors respond can greatly impact the industry. This research will analyse the environmental risks of multinational oil and gas companies and examine the effects and costs of sustainability on market value of the oil and gas companies.

Author

• Svetlana Vlady, The City University of New York, Brooklyn College