[Editor's note: A version of this story appears in the March 2020 edition of Oil and Gas Investor. Subscribe to the magazine here.]

As environmental, social and governance (ESG) issues have become such a widely discussed topic, it’s hardly surprising that instances of irony arise as various sweeping proposals come under scrutiny.

Environmental activists are critical of the energy sector even though the industry is likely best suited to develop some of the large-scale solutions they say are urgently needed in the renewable field. Energy producers are scolded for extracting and refining crude oil, but, by one estimate, these activities make up 20% to 30% of CO2 emissions versus some 70% to 80% emitted by energy consumers.

Yes, it is energy consumers—those who like their homes heated, their tanks topped up and their flights viable for vacations and work—that the energy industry is serving.

The Times recently reported that students occupying an Oxford college in protest were demanding the school’s immediate divestment of integrated oil stocks held in an endowment fund. St. John’s College, Oxford, bursar Andrew Parker told the students that this could not be done at short notice, “but I can arrange for the gas central heating in the college to be switched off with immediate effect.”

Parker acceded to being provocative but hoped he was “provoking some clear thinking,” he said. “It is all too easy to request others to do things that carry no personal cost to yourself. The question is whether you and others are prepared to make personal sacrifices to achieve the goals of environmental improvement (which I support as a goal).”

Others have talked the talk more than they’ve walked the walk. Engie Impact, a division of a French utility, has a business designed to help companies and governments convert climate pledges into reality. A study it conducted last year found that, of 1,200 companies that had set carbon reduction goals, less than one quarter were on track to meet their goals.

“It isn’t a lack of willingness,” said CEO Mathias Lelievre. “It’s just super complex.”

John Hess, CEO of Hess Corp., recently addressed a Houston meeting, saying “climate change is real.” However, not only would breakthroughs in technology be needed, but the industry would also have to grapple with decarbonizing liquid fuels while making “the electric grid stable when it’s dependent on intermittent renewable energy,” he said.

Former CEO of BP Plc, Bob Dudley, warned against investing in new technologies prematurely, because “if you go too fast and you don’t get it right, you can drive yourself out of business.” Speaking on a podcast by Columbia Energy Exchange, he continued, “If we understand where we are going and invest, the best thing we can do strategically is have a strong balance sheet.”

Hosting the podcast with Dudley was Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University. Earlier, Bordoff attended the World Economic Forum at Davos, which he said on his way home “seemed at times more like a climate change conference.

“Oil and gas companies face growing pressure to shift more of their capital budgets more quickly toward low-carbon energy sources, and yet risk being penalized in their share prices if they move too quickly in that direction, because they can’t earn the same returns and because oil and gas demand remains robust,” observed Bordoff in his notes from Davos.

The industry needs to invest in technologies “that can deliver carbon-free energy at scale,” he said. This involves far more than just generating electricity from renewable or other sources, which make up only about 20% of final energy consumption. “Hard-to-abate sectors like industry, heating, shipping, aviation and trucking will require solutions that are not visible or at least cost competitive today.”

Assuming functional solutions—carbon capture, carbon removal, hydrogen and others—it is the large oil and gas companies that “have the engineering, financial and project management capabilities to develop and scale such technologies,” according to Bordoff. “Yet the climate activists calling for rapid action in Davos have no trust in the industry, no faith it won’t stymie progress,” he added.

“Given the range of technologies and scale of investment needed to accelerate a clean energy transition, rebuilding some measure of common ground and trust between the climate community and oil and gas community is an important, and daunting, challenge,” said Bordoff.

Clearly, social and governance issues are far wider than the environmental aspects addressed here. But one has to wonder how wide a range of goals is realistic for producers already striving to be self-funding, dividend-paying, balance sheet-improving vehicles. And now ESG is the next indispensable objective.

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