KUALA LUMPUR: Climate change is a great threat facing humanity, and it is a long, hard, battle the world must win.
This clarion call to combat the global crisis requires firm belief and strong commitment — one which has compelled governments and corporations the world over to rethink their strategies and operations.
In 2015, 195 nations came together to sign the Paris Climate Agreement, which set out a global framework to avoid this dangerous event.
Malaysia is one of the countries that ratified the agreement, committing itself to reducing greenhouse gas (GHG) emissions.
Leading the charge is the country's very own national oil company, PETRONAS, eyeing a Net Zero Carbon Emissions (NZCE) aspiration by the year 2050.
Using its scale, size, and positioning, PETRONAS is advocating for change through business transformation and efficient use of resources.
PETRONAS Group Health, Safety, Security & Environment vice-president Dzafri Sham Ahmad explains that climate change not only requires businesses to embrace the resolve but also needs a global coalition and strategy to address this common objective.
"We recognise that it is our corporate responsibility to sustainably produce affordable and reliable energy, while balancing the issue of climate change," he said.
The company announced its aspiration last year to achieve NZCE by 2050 as part of its holistic approach to sustainability, finding a fair negotiation between the aspects of Environment, Social and Governance (ESG).
"Our NZCE declaration made in October last year was not a spur of the moment event, nor were we pressured to do so.
"In fact, it is something on which we have deliberated extensively as sustainability is an area that we have long been involved in, for over 20 years."
PETRONAS' Sustainable Development journey goes as far back as 2001, said Dzafri, when the company's Corporate Sustainability Framework was conceptualised.
Affirming its commitment in reducing its carbon footprint, the company launched the PETRONAS Carbon Commitments in 2012, followed by the PETRONAS Human Rights Commitment in 2015.
"These are some of our efforts in driving sustainable actions throughout the organisation. There are other examples which demonstrate our long-standing commitment in 'Environment' such as hazardous waste management, freshwater consumption, air emissions; and 'Governance', like the PETRONAS Code of Conduct and Business Ethics (CoBE) implementation, risk and opportunity integration into business processes, research and development in low-carbon solutions and internal carbon prices in investments, which make up the other elements within ESG."
Dzafri said PETRONAS has accelerated even more Sustainable Development actions to date, adopting seven out of 17 United Nations Sustainable Development Goals, and disclosing three short-term targets by 2024.
The organisation, he added, saw the importance of minimising the impact of carbon footprint in existing and future operations, and deploying more low-carbon solutions technologies.
With the added load of the Covid-19 pandemic and weakening market conditions, Dzafri said the need to future-proof the organisation had never been more critical.
"Depressed oil and gas market prices have narrowed margins, strengthening resolve among energy players to transition to lower carbon energy systems and solutions.
"Realising this, we fell back on our Statement of Purpose — a progressive energy and solutions partner, enriching lives for a sustainable future — and stayed focused on our three-pronged strategy, particularly in 'Stepping Out', which mainly supports diversification of business with stronger commitment to sustainability."
These sound strategies — 'Maximising Cash Generators', 'Expanding Core Business', and 'Stepping Out' — were put in place since 2018, formulated to help the organisation focus on growth.
As a national oil company, declaring the 2050 aspiration was a proud moment for all in the PETRONAS family, said Dzafri, but they realised that this pledge came with its own set of challenges which would require striking an equitable balance between providing low-carbon solutions, while still ensuring energy security and business profitability.
"Our target of capping greenhouse gas (GHG) emissions by 49.5 million metric tonnes of CO2 equivalent (tCO2e) by 2024, which we announced in 2019, sets the anchor for us to move forward, gradually reducing emissions further to meet the Net Zero Carbon Emissions aspiration.
"The continuous emission reduction in the short term is also supported by increasing renewable energy installed capacity by 2024 as part of the strategy," said Dzafri.
To complement this, PETRONAS has also identified forest-based carbon offsets as a viable and feasible solution to consider towards its 2050 target.
This holistic approach, Dzafri added, would be steered by the organisation's four sustainability lenses, namely, Continued Value Creation; Safeguard the Environment; Positive Social Impact; and Responsible Governance.
"We want to approach sustainability better, in a more orchestrated way, taking in a top-down approach, ensuring that this long-term aspiration of ours eventually becomes a 'North Star' for PETRONAS."
Dzafri further explains that PETRONAS' 2050 aspiration is grounded on the principles of Measure, Reduce and Offsets.
This strategy would allow PETRONAS to gradually reduce its emissions as planned, while increasing energy efficiencies through reduction of hydrocarbon flaring, venting, or fuel gas usage from its operations.
Acknowledging that operational excellence alone would not be enough, Dzafri said PETRONAS had also lined-up renewable energies and hydrogen as energy offsets as well as nature-based carbon offsets.
"PETRONAS will continue leveraging technology in its strategy. We also plan to use carbon capture and storage, and other technology solutions including energy storage, electrification of gas turbines and wind turbines, which are in the pipeline for deployment starting 2025.
"Digital technology will be a key enabler in our aspiration to operationalise the key guiding principles to ensure accurate and transparent GHG accounting, reduction and offsets."
While the company is determined about its ambitions, Dzafri said the complexity of businesses connected with sustainability warrants an effective collaboration among industries, policy makers, customers and other stakeholders.
These also include strategic collaboration with the government, which he said were vital to develop the right policies and incentives.
Technological innovations also need to progress towards more cost-effective solutions, and consumers and investors need to embrace the energy transition and approach sustainability in a holistic way.
"We need everyone to be on board in this journey. Ultimately, we believe that the future lies in being a responsible organisation that is steadfast in our commitment to sustainability.
"The 2050 Aspiration is our pledge to the future. More than just a strategy to future-proof the organisation in line with the global energy transition to a low-carbon economy, the aspiration is our way of giving back to the people and planet," he added.