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Our analysis over the last year indicates ten ESG-related developments will distinctively impact the capital markets in 2024. For clarity, we define “ESG” as material non-fundamental data points that validate why a company should or should not receive a forward-looking valuation premium. Ironically, even though the regulatory burden within the energy space will intensify over the next year, we feel investors and governments will increasingly acknowledge the global importance and economic necessity of hydrocarbon industries.
However, that acknowledgment will come with a distinct caveat - namely, for investors to maintain exposure to the fossil fuels industry, corporates must enhance their quantitative reporting. The world will continue to rely on fossil fuels over the foreseeable future, but corporate management teams must understand that enhanced quantitative reporting will facilitate the financial sector’s ability to provide quality capital to them. This landscape will inevitably evolve as an advanced data exercise, and we encourage our clients to take the emotion out of the equation.
This will come down to the math. Five countries are responsible for over half of global oil production – the United States, Saudi Arabia, Russia, Canada, and Iraq. The investor landscape, regulatory environment, and competitive bell curve will require objective quantitative metrics deemed material to valuation premium to showcase how their profile is accretive to the existing U.S. best-in-class profile. At your convenience, please review our most recent thought leadership piece outlining how these material trends will impact the global capital markets.
