The energy transition is fundamentally shifting the way oil and gas companies operate; as demand falls for fossil fuels, traditional hydrocarbon business segments will become obsolete.

Companies with some of the most ambitious policies are among the worst offenders. BP has pledged to cut emissions from production and use of its products by 35-40% by 2030, yet 30% of executives’ total pay package is determined by remuneration targets that directly or indirectly incentivise production growth. Eni, TotalEnergies and Repsol have pledged cuts of 30-35% by 2030, but growth targets determine 18%, 15% and 12%, of management pay respectively.

The analysis of 35 of the largest listed oil and gas companies reveals that many have increased executives’ incentives to grow production including BP, TotalEnergies, and Repsol as well as Chevron, where they determine 10% of total target pay. Despite a small reduction, ExxonMobil still has 41% of pay linked to production growth metrics. They have also fallen at Shell, but still determine 20% of pay.


Key Findings

  • Oil and gas company executives are still being rewarded for increasing production growth.
  • Company strategies must be backed up with executive remuneration policies that incentivise a shift away from fossil fuel production in order for their claims of energy transition leadership to be credible.
  • Promoting fossil production at this stage of the energy transition will exacerbate company and investor exposure to transition risk.
  • ‘Transition positive’ metrics have grown more common as executive performance conditions.
  • Executives are often rewarded for less ambitious emissions reductions compared to their companies’ wider targets.
  • ‘Low-carbon’ business growth targets frequently include increasing fossil gas production so are essentially direct growth metrics in disguise.
  • The compensation policies of bp, Eni, and TotalEnergies still include targets which directly incentivise oil and gas production growth, despite ‘net zero’ goals and promises to cut oil production.
  • US companies continue to lag behind on ‘transition positive’ metrics, where they comprise a much lower portion of incentives than in Europe.
  • Shareholders should demand incentives that prioritise value over oil and gas volume growth to protect the value of their investments as the energy transition unfolds.