Republican policy makers in several U.S. states have raised obstacles against ESG (environment, social, governance) investing, with the apparent aim of protecting fossil energy stakeholders. However, they are swimming against a demographic tide. The up-and-coming workforce of today is simply not interested in aiding and abetting the very industries that threaten their health, their safety and the welfare of the planet.
A demographic crisis in the fossil energy industry
Employment in the coal industry has been declining for generations as machines replaced hand labor in the 20th century, and natural gas edged coal out of the power generation in the early 21st century. More recently, low-cost wind and solar technologies have been pushing coal out of the power generation sector. Renewable energy is also beginning to replace coal in steelmaking and other heavy industries.
In contrast, the oil and gas industry can still take advantage of opportunities in the areas of petrochemicals and transportation fuels – that is, if they can recruit enough workers to maintain a capable workforce. That is becoming a challenge.
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In 2018, the Editor-in-Chief of GEO ExPro Magazine, Jane Whaley, warned of a “poorly balanced” oil and gas workforce in terms of experience, gender and age.
“The demography of the oil and gas industry…is tilted towards an older age range, with a serious lack of middle management experience…Yet we must employ the younger generation, so they can learn from those with experience,” Whaley wrote.
Whaley indicated that recruiting more young women into the oil and gas workforce would help resolve the age issue. She put the blame squarely on the industry for failing to attract, retain and promote more women.
However, writing for Shale Magazine last July, reporter Vince Dawkins outlined a broader demographic problem for the oil and gas industry that an improvement in gender diversity cannot solve.
Dawkins drew attention to the impact of the COVID-19 pandemic on the U.S. workforce in general, and on the oil and gas industry in particular.
“The Great Resignation has struck all industries, leaving employers scrambling to try and fill the skill gap. For the oil and gas industry, the skills gap is even wider, because there’s also an age gap. The average age of someone working in the oil and gas workforce is 56, and over half of skilled engineering workers will be able to retire in the next ten years,” Dawkins observed.
“The industry is facing many challenges in finding and keeping a talented, skilled workforce. In the immediate future, there will be a predicted 1.9 million oil and gas positions that will need filling, and a deficit of hundreds of thousands will remain because of the skills and age gap,” he added.
E&P has an ESG problem
In particular, Dawkins draws attention to the highly specialized exploration and production (E&P) sector within the oil and gas industry.
“The E&P industry needs a particular set of skills to thrive,” he writes. “Generations with expertise and experience, people who know the foundations of the industry inside out, are the ones about to retire.”
“Younger generations often have a different set of priorities and interests, and don’t necessarily spend the time to learn about these foundational elements of E&P,” he adds.
That hits the nail on the head. Dawkins suggests that a generational difference in time management is behind the drift away from E&P careers, but he also notes a more specific root cause in the form of “a different set of priorities and interests.”
As strongly indicated by a growing body of surveys, those different “priorities and interests” focus squarely on ESG.
One recent example is the recent Deloitte Global 2022 Gen Z & Millennial Survey, which sampled young people around the world who were born in the 1980s through to the youngest within the Gen Z generation. The survey took place from November 2021 to January 2022. It ended just before Russia launched its unprovoked attack on Ukraine, but the findings indicated that Gen Zs and millennials were already “deeply worried about the state of the world.”
In a finding that is especially ominous for the oil and gas industry, Deloitte notes that young people are “pushing for more purposeful — and more flexible — work,” particularly in the area of climate change. Deloitte also noted that companies are more likely to retain young workers who are “satisfied with their employers’ societal and environmental impact.”
“Protecting the environment remains a top priority for Gen Zs and millennials. About three-quarters of respondents believe the world is at a tipping point in responding to climate change,” Deloitte emphasized.
ESG investing for everyone
Deloitte also noted that Gen Zs and millennials are “trying to invest in environmentally sustainable choices.” That is consistent with a recent survey from the 401(k) firm Sphere, which describes itself as “climate-friendly.” Sphere noted a strong worker interest in ESG 401(k) plans, even though most respondents did not know what exactly what the acronym “ESG” stands for.
Those findings suggest that employers can make a real difference — and retain talent — by educating their employees about ESG investing. Writing for Quartz earlier this week, reporter Gaurav Gupta also cited several surveys that suggest a close relationship between a company’s ESG profile and employee retention.
The surveys cited by Gupta include one from IBM, in which “70 percent of employees find sustainability programs make employers more appealing, and 80 percent want to help their company reach climate or ESG goals.”
In the face of this demographic reality, Republican policy makers have caught themselves in a trap of their own making. The party has historically aligned itself with corporate interests, and Republican leadership could be supporting U.S. businesses that are responding to the reality of the climate crisis. Instead, they have harnessed themselves to the anti-ESG platform amplified by former President Trump, who affirmed and accelerated the party’s long, steep slide into anti-science policy making.
In the meantime, the corporate ESG movement has a powerful ally in the Biden administration, which has focused like a laser on climate action and ESG principles. In one recent development, last month the Department of Labor announced that it will strike down Trump-era rules that were designed to inhibit ESG investing.
Chasing after the “woke” corporation canard with their eyes shut, Republican leadership has stepped into a minefield of religious extremism and anti-Jewish code words instead of responding to the real-world, fact-based concerns of business leaders and the working public. It will take generations to pick their way out, if they ever do.
Image credit: Gustavo Fring via Pexels
Tina writes frequently for TriplePundit and other websites, with a focus on military, government and corporate sustainability, clean tech research and emerging energy technologies. She is a former Deputy Director of Public Affairs of the New York City Department of Environmental Protection, and author of books and articles on recycling and other conservation themes.