This past year has seen a dramatic uptick in the number of private and public organizations developing and implementing sustainable environmental, social and governance ("ESG") policies. Good for each of them, and collectively, better for our world.
However, recent history shows what a difficult task this can be for leaders of organizations. On November 1, President Biden was at COP26, the UN climate change summit in Glasgow, where he noted that, "[w]e’re standing at an inflection point in world history. We have the ability to invest in ourselves and build an equitable clean-energy future and in the process create millions of good-paying jobs and opportunities around the world . . . . "
At the same time, world-side supply chain issues have resulted in rising prices, including gasoline. By November 16, the President requested that OPEC nations increase crude oil production so as to mitigate the rising cost of gasoline prices in the United States. That request was rejected, and yesterday, the President announced the US would release 50 million barrels of oil from the US Strategic Petroleum Reserve to alleviate domestic supply chain and rising fuel cost issues. While additional supply of oil may help with prices, it is a relatively small amount of oil compared to our national consumption, and certainly is not a sustainable solution to current supply chain and logistics problems.
This is not a criticism of the President. Rather, it is merely an observation of just how difficult the "governance" element of an ESG policy is when trying to balance the "E" and "S" components of ESG - as well as the needs and concerns of all stakeholders impacted by an organization's competing goals and decisions. ESG is here to stay. Strategic "governance" is becoming increasingly imperative to make it succeed..
Today, the President is announcing that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply.