Capital costs rise on sustainability concerns
An intensifying investor focus on sustainable investing and the climate emergency is impacting the oil and gas sector
Investors are increasingly focused on the threat of global warming and the need to rapidly decarbonise the global economy, with up to $118tn of funds committed to making climate risk disclosures by 2020. And they are responding by divesting oil and gas holdings, or, at a minimum, fully integrating sustainability into their investment process, driving an incrementally negative view of the sector. Consequently, the sector's weighted average cost of capital (WACC) has risen, causing a valuation derating, reduced capital availability and low market liquidity. Devaluation This negative increase in the industry WACC occurs in several ways. Firstly, capital flows out of the sector as new issua
Also in this section
10 March 2026
From Venezuela to Hormuz, the US—backed by the most powerful military force ever assembled—is redrawing not only oil and gas flows but also the global balance of energy power
10 March 2026
By shutting the Strait of Hormuz, Iran has cut exports of distillate-rich Middle Eastern crude, jet fuel and diesel, and is holding the energy market hostage
10 March 2026
Eni’s director for global gas and LNG portfolio, Cristian Signoretto, discusses how demand will respond to rising LNG supply, and how the company is expanding its own gas and LNG operations through disciplined, capital-efficient investments
9 March 2026
Petroleum Economist analysis sees increases in output from Saudi Arabia, Venezuela and Kazakhstan among others before region’s murky descent
