by Emma Foehringer Merchant
November 02, 2018

ExxonMobil reported its third-quarter earnings Friday at $6.2 billion, a 57 percent increase over the same period last year. According to the oil and gas company, its cash flow from operating activities is the highest it has been since Q3 2014.

But that healthy financial report belies challenges many analysts say are coming for companies that rely on fossil fuels. At Greentech Media, we often cover how oil and gas majors are confronting — or avoiding — a future changed by the energy transition. Exxon is among the U.S. companies that are somewhat sheltered from pressures to move toward a more sustainable business model. But that protection may not last. A recent report from Goldman Sachs adds another voice to the chorus pushing oil and gas majors toward a strategic transition. 

The report argues that becoming “broader, cleaner energy providers” (what Goldman describes as “Big Energy”) can yield greater returns and a new source of value for majors. Though “Big Oil” companies account for just 10 to 15 percent of global power-sector emissions, reorienting those companies could also result in carbon emissions reductions of over 20 percent in that sector. Plus, the bank notes, transitioning is essential to shield majors from a similar plight to that faced by companies now being impacted by the downfall of coal.   

“We believe that it is very important for Big Oil to lay out a strategy toward becoming Big Energy…in order to avoid the divestments and de-rating that the coal sector has experienced over the past five years,” reads the report.