Globally, PETRONAS’ leadership takes progressive steps to position the organisation forward in the environmental, social and governance (ESG) and sustainability fronts. These have become the key considerations in business investment and portfolio decisions alongside cash flows and profitability.

Where many corporations are still formulating their paths ahead in this regard, Malaysia’s only Fortune 500 company, Petroliam Nasional Berhad has announced its aspiration to achieve Net Zero Carbon Emissions by 2050 (NZCE 2050) in November 2020.

It certainly speaks volume for the national energy company to announce this aspiration, due to its nature of business in the oil and gas (O&G), one of the hard-to-abate sectors — which, to the unawares, is typically seen as a huge challenge in the journey towards environmental sustainability.

“For energy companies like PETRONAS, it is really important to show proof of our conviction, deliver real action, and be open about it or report about it,” says PETRONAS Vice President & Chief Sustainability Officer, Charlotte Wolff-Bye in an interview.

“In 2019, PETRONAS announced a new statement of purpose — a progressive energy and solutions partner, enriching lives for a sustainable future.”

“It really encapsulates the power of energy, and how energy is important in driving progress for society.”

“But it doesn’t actually talk about oil and gas, which is very interesting. It sort of opens up opportunities for the company to chart a different future from its past,” Charlotte says.

“I would say the door is wide open to really embrace not only the NZCE 2050 aspiration but also the whole ESG (environmental, social and governance) agenda,” she adds.

Appointed as PETRONAS’ Vice President & Chief Sustainability Officer on June 1, 2021, Charlotte brings her wealth of experiences in corporate, social and environmental sustainability across multiple industries including energy, steel, manufacturing and telecommunications.

Together with her team, Charlotte has set out to orchestrate PETRONAS’ roadmap for its NZCE 2050 aspiration, to guide future business propositions, and PETRONAS’ journey across the value chain in working towards this aspiration.

She leads the establishment of a Corporate Sustainability function in PETRONAS, which reports directly to the President and Group Chief Executive Officer, Datuk Tengku Muhammad Taufik.

“It’s such an exciting time to be in the O&G sector right now,” explains Charlotte. “The industry has developed and become a technology powerhouse over the years, but it has been a steady progress over a long period.”

“Now we have this tremendous transition that’s already begun, and which will only accelerate.”

“What is pertinent to PETRONAS in its capacity as a national energy company, is to develop its own unique narrative that is specific to Malaysia, and building on the strength and ambition of Malaysia as a nation,” she says.

“On the socio-economic side, we want to make sure that not only us, but our whole value chain is resilient for the future. The whole ecosystem is absolutely essential for us — we are only as strong as our whole value chain,” Charlotte says.

These undertakings require a lot of efforts from PETRONAS to be nimble and able to pivot towards new areas and collaborations beyond its core business of oil and gas.

Fortunately, it is not something new for PETRONAS, which has gone a long way from being a Malaysia-based oil and gas company since its inception in 1974, to now operate a workforce of 48,000 employees spread out in 65 countries, and which works closely with thousands of vendors in Malaysia alone.

“I believe we can take an analogy from the early days of oil and gas production in Malaysia to the situation today,” says Charlotte.

“If we go back to the 70s, the company would have been a pioneer in turning O&G resources into reserves and becoming like a net central contributor to Malaysia’s drive to grow and prosper.

“I would say today we are very much in the same situation. I’m fully confident with the skills that we have harnessed in the industry and in our company, and across the value chain are very transferrable into the new areas that we have to move into.

“It’s important that we work together, not just vendors or service providers in the O&G sector, but also the governments, to make sure that we have a common vision where we can benefit from each other’s investments as we develop the way forward,” she adds.

Globally PETRONAS provides a multitude of facilities and services including oil and gas, renewable energy (RE), biofuels, energy distribution, chemicals, motorsports, digital infrastructure, and even venture capital supporting industries like agriculture and food & beverages.

While the NZCE 2050 aspiration represents a long journey ahead, PETRONAS has already established mid-term targets up until 2024 in relation to its sustainability performance.

These are particularly significant targets for PETRONAS, as they include a pledge to cap the group’s emissions in absolute terms to 49.5 million tonnes of carbon dioxide equivalent— which will stay in place even if PETRONAS’ operations grow in the future.

“This is really an important target, because that means we have peak emissions,” says Charlotte.

“Whatever growth we might have after that will be decoupled from growth in emissions. So that is a very bold target that we set, and we’re making good progress towards that.”

Several major components are already in the works to reduce its net emissions — including renewable energy operations and electrification of PETRONAS’ own operations including in offshore assets to reduce flaring.

“Not every barrel of oil is the same,” Charlotte says. “While we are still producing the oil and gas that the world needs, we need to make sure they are the cleanest oil — make the process efficient and as green as possible. That really matters.”

PETRONAS is also hard at work to expand its gas business into green hydrogen that is produced via renewable energy, as well as to expand its offshore operations to deliver carbon, capture, utilisation, and storage (CCUS) projects that can cater for its own requirements or that of its clients.

By 2024, PETRONAS seeks to raise the capacity of its RE operations — currently in India, Dubai and Malaysia — to 3 gigawatts (GW).

“Our RE business which we have strong ambitions in and which we have made investments towards, must stand on its own feet. This is absolutely critical,” she says.

PETRONAS’ CCUS project located in offshore Sarawak is also progressing well with the support of multiple partners, with plans for completion by 2025.

“This is a very important engineering solution to remove carbon. The oldest carbon capture and storage project is in the North Sea and along the Norwegian coast, and they’ve been sequestering carbon now for well in excess of 20 years,” Charlotte says.

“Nature-based carbon solutions like forestry are very important too, but sometimes the premise is a challenge. CCUS is a very important tool in the toolbox to decarbonise the energy systems. It requires engineering solutions which will also create new opportunities of strength for PETRONAS and Malaysia,” she adds.

Indeed, Malaysia has affirmed its own net zero GHG emissions aspiration by as early as 2050, ahead of some regional peers. Based on the recent studies, Malaysia is ranked 21st place for its preparedness and ability of industries and countries to reach net zero by 2050.

As one of the components in Malaysia’s journey, PETRONAS plays its role through the huge undertaking towards low carbon solutions, focusing on removing emissions from its own operations, as well as supporting its own customers to decarbonise.

Aside from NZCE 2050, PETRONAS has also signed up for different global pledges including the Zero Routine Flaring by 2030 initiative by the World Bank Group.

It has also publicly supported the recommendations of Task Force on Climate related Financial Disclosures (TCFD), with plans to start a reporting regime that would create transparency and provide clarity on how the company performs relative to its net zero aspirations.

“It’s also important that we sign up for this international framework and commit to public reporting of our performance. I believe this will help us to be trusted and to be a partner of society also in the future,” Charlotte says.

With the headline pledges and initial policies in place for both the company and the country, Charlotte sees the ecosystem on the right track to contribute to the global journey towards net zero.

“The global banking sector has pledged where US$133 trillion in assets under management would be geared towards supporting decarbonisation of energy systems, and for developing countries to benefit from that.

“We see this unprecedented flow of investments going into energy systems internationally. It is very important for Malaysia to ensure that not only will we benefit from some of those financial flows to decarbonise our energy system, but also to create our own capabilities in servicing that whole new direction so we have our own technologies and capabilities to help others reduce their emissions,” Charlotte adds.

At home, PETRONAS is part of Malaysia’s CEO Action Network which brings together the Corporate leaders in Malaysia to discuss the goings of the NZCE aspiration, and the sustainable practices for corporates in Malaysia and beyond. PETRONAS President & Group CEO is currently the Chairman of CEO Action Network.

“This has been hugely helpful,” says Charlotte. It also informs government policy and is supportive of the transition of entire industries, as the government has been deliberating around its own carbon neutral goal.

“Hopefully it has given the confidence to the government a strong body of corporates that can support the broader national ambitions,” she says.

Charlotte also lauded the government’s decision to work towards putting a price on carbon as announced in Budget 2022 and the 12th Malaysia Plan (12MP), beginning with a voluntary carbon market platform for trading of carbon credits between green asset owners and other entities

“Putting a price on carbon is the most effective way for an economy to decarbonise. It’s technology neutral, and if you have a market mechanism it will allow the market to do their job in driving down emissions.

“We’ve seen in the EU, how this has really driven down emissions across industries as part of that trading scheme,” she says.

“The EU industry is really developing a real competitive strength in low carbon manufacturing, energy production, and innovation. And we really applaud the Malaysian government for taking this bold step,” she adds.

The 12MP, she says, is aligned with environmental sustainability and also the wellbeing of the society — which is aligned with PETRONAS’ own sustainability agenda.

“What’s particularly encouraging is that it puts sustainability and sustainable development part of the growth strategy and economic development going forward.

“PETRONAS has been proactively working with Malaysian stakeholders and provided directions and aspirations to become a net zero GHG emissions nation as early as 2050.”

On that note, PETRONAS has made real commitments to support this 30-year agenda by setting a target to increase its education beneficiaries to more than 24,000 in the five-year period of 2020-2024.

“Right now, it is so important that we support the next generation of specialists, engineers and leaders that will be able to deliver on this net-zero agenda,” Charlotte points out. “We need to prepare the younger generation with the right skills that are future-fit and can help on that journey and make sure Malaysia can also prosper in the future.”

With the onset of Covid-19, the world has seen a sharp rise in the awareness towards environmental sustainability, as seen in the heightened participation at the 2021 United Nations Climate Change Conference (UNFCCC), Conference of the Parties 26 (COP26).

Among the positive developments, include pledges to end and reverse deforestation, a deal to cut methane emission levels by 30% by 2030, and new commitments to phase out coal power — all of which are targeted to limit global warming by 1.5 degree Celsius.

“I have been to many COPs before,” comments Charlotte, who this time attended the summit as a PETRONAS representative.

“There’s been a lot of talk, but short on action. But this time it was very different — it was all about showcasing technologies, looking for real partnerships, as well as scaling up and matching project opportunities. It did not disappoint.”

It is public knowledge that country-to-country negotiations were the highlights, but it is with the non-states — which includes corporations like PETRONAS— where commitments and collaborations were at an “unprecedented” scale, says Charlotte.

“It is hugely encouraging. At the same time, we also see many countries step up on their pledges, and that is something that will inform our own strategy and the speed and scale that we have to adopt in our own NZCE aspiration agenda,” she adds.

“There is no flash-in-the-pan solution. The energy transition will require a monumental transformation of how we use and consume energy, which will have ripple effects on how we live our lives and conduct our lives, cutting across the whole world. It is a whole system change.”