As the energy industry has faced COVID-19 and the subsequent dramatic fall in the oil price, the global Energy + Industrials team at H+K Strategies decided to write a series of short perspectives about how energy brands were responding in their respective markets.

This short paper sets out a fascinating journey through those perspectives, detailing how energy companies are supporting the front line fight against the virus and helping local economies and job creation while grappling with severe business challenges and the continuing imperative to drive forward through the energy transition.

We hope you enjoy reading this document and we look forward to discussing the issues it raises with you across the next few months.

Download the document here: H+K – Global Energy Brands

Executive Summary

While the effects of the COVID-19 pandemic are still playing out across the global energy sector, one trend has emerged in the course of our review which is reshaping the communications priorities of big energy companies, at least until an effective vaccine is developed.

The major change in strategy is the urgent new need for energy companies to establish closer digital contact with their spread-out workforces, even at remote production facilities. At stake are not just health and safety issues but caring for the overall wellness of isolated employees.

New shorter lines of communication have become necessary because staff outbreaks of COVID-19 not only can threaten health and safety, but productivity, energy security and brand reputations.

From Canada to Saudi Arabia to China and Africa, energy firms have been forced to quickly strengthen digital communication links to rank-and-file employees or erect them where often none existed before. This new form of internal outreach – usually through video town halls and webinars by CEOs and other top managers – varies by market but usually involves close, intense, focused mass communication.

The response has also varied based on national or regional context. In Asia, Shell stopped its marketing communications and focused on highlighting its contributions to frontline workers in healthcare and law enforcement. In North America, Petro Canada is supporting fuel truck delivery drivers by keeping open one of the nation’s few remaining public bathroom networks. In Saudi Arabia, the Aramco chairman is now a frequent video visitor to the firm’s 76,000 employees. In Norway, Equinor has secured its rigs and doubled down on its dual commitment to value creation and environmental sustainability.

In China, utility Capital Water is rebuilding field hospitals in Hubei province and helping transport garbage. In Brazil, Grupo Ultra’s Iparanga put a mask over its official corporate logo, offered fuel discounts to medical workers, while securing the health and wellbeing of its own workforce.

While such measures have been embraced across the sector, major questions remain about the future of communications in a post-pandemic world. Will energy companies’ newfound closeness to their rank-and-file end once a vaccine is developed, or will companies see lasting value in this new technology-led proximity to workers? Externally, will energy company communications on environmental sustainability issues resume with the same level of forcefulness as before, or continue to take a back seat to COVID-related reality as the economic effects of the virus play out?

In the coming months, answers to some of these questions may come into focus. The following review paints an initial picture of the global energy industry in transition, balancing multiple challenges of a tenacious deadly virus, a faltering world economy and a communication manager’s need to maintain appropriate distance while holding energy workers closer than ever before.

We are seeing a mixed reaction across the energy sector due to COVID-19. Electricity demand has dropped with the lockdown and so have emissions. Renewables have enjoyed perhaps the greatest resilience in the category and traditional utilities and grid operators have been sheltered for now – though in the distance looms greater debt delinquency as unemployment levels rise. The biggest changes have been for the large oil and gas companies.

COVID-19 and the demand supply imbalance that saw oil prices drop temporarily into negative territory has meant significant cutting of capital and operating expenditure. For some, it has meant sacrificing some sacred cows, for example Equinor and Shell cutting their dividend. Perhaps surprisingly it has also meant a recommitment by many of the European majors to their climate change commitments, especially Shell and BP whose CEOs slapped backs in public support for each other’s net zero plans on LinkedIn. This is very different to the commitments from the large US oil and gas companies, who had notably different quarterly results presentations and contrasting soundbites from senior executives.

Shell and BP are now firmly on the path to transition and their message is settled on achieving net zero. Ultimately it is the CEOs who have led the narrative and the change in agenda,
and their commitment to leadership has been largely welcomed by those concerned about meeting the commitments of the Paris Climate Agreement. The pathways they highlight are different and this has led to media criticism of the difficulties in comparing the commitments of each company. Certainly, Shell’s plan to ultimately take responsibility for scope three emissions – those produced by their customers driving cars or flying in aeroplanes – looks ambitious. Despite this, both continue to be criticised for the pace of transition and the extent to which they are switching a comparatively small proportion of capital expenditure into their low or zero carbon ventures.

The next challenge for communicators though will be engaging with consumers. To take responsibility for scope three emissions requires significant changes in customer behaviours. COVID-19 has certainly provided evidence that massive changes in behaviour are possible and this will have improved the public’s sense of agency in tackling climate change, but for those behaviours to stick will require massive investment in changing lifestyles and creating a new business, with new sources of low carbon revenue. In this sense, for the UK’s biggest oil and gas companies, the challenges facing their business have really only just begun.