Published Mar 15, 2021 by Maggie Martin
Below is a guest article from Andrew Bruce, CEO and Founder of Data Gumbo, a Houston-based technology company with a "smart contract" network powered and secured by blockchain. The company helps generate so-called smart contracts for oil and gas, construction and other industrial customers.
CERAWeek 2021, the largest global energy conference centered on the future of the global energy markets, geopolitics and technology, recently wrapped up in Houston. A dominant theme explored this year: Environmental, social and governance (ESG).
The Wall Street Journal recently highlighted the increasing acceleration of energy’s green transition sandwiched between hot button topics like climate change and the shifting political landscape. The article pointed to CERAWeek's agenda as an example of new terrain the energy industry is navigating, and noted goals to reduce net carbon emissions by 2050 have become a benchmark for companies and investors' strategies.
The Houston Business Journal echoed similar sentiments about the conference, noting that experts are focusing on the financial pressure and decapitalization of oil and gas. Other topics explored included the reallocation of investments toward renewables and carbon offsetting alongside acknowledgement that cleaner energy in general will require traditional oil and gas companies to be successful.
So what does this mean for our local Houston ecosystem?
As the energy capital, Houston innovation has a major role to play. The already robust startup scene is being further imbued by a massive entrepreneurial swelling as companies migrate away from previous epicenters, including New York and California. Examples include Hewlett Packard Enterprise, Oracle and Tesla. In addition, a large talent pool of creative engineers, incubator programs, angel investors and hungry venture capitalists are contributing to a perfect storm of innovation, yielding an ecosystem primed to solve global challenges and backed by a solid network prepared to fund great ideas. And the next target has been earmarked: industrial ESG and digital transformation in oil and gas.
Full Change Ahead
Change is in the air, and it’s being driven by investors and interested parties pushing U.S. energy companies to gain traction in wind, solar, carbon and other sustainability initiatives. As evidenced by financial pressure, investors are catalyzing boards to drive new behaviors surrounding timely and transparent ESG agendas. In a letter from BlackRock's CEO earlier this year, Larry Fink called on financial firms to reach net-zero greenhouse gas emissions by 2050, aligning with global efforts. He also emphasized the need for better data to improve disclosures of emissions and set rigorous short, medium and long-term targets to reduce them.
This is a trend that’s been a long time coming: the idea that companies are responsible for their role in society in addition to making money for shareholders, a notable theme from the World Economic Forum’s annual Davos Conference. Those that can’t serve up measurable environmental progress stand to lose.
But the tools needed to be successful in ESG measurement and meaningful change exist right here in Houston.
First and Foremost, Accurate and Timely Sustainability Data
For companies to monitor and prove carbon progress, timely and accurate data is a must. Companies are looking to implement ESG strategies that can help them meet lofty, impactful and publicly declared green goals — with many players pledging 2050 for carbon net-zero.
To do so, companies must first be able to prove a performance baseline. Then, figure out how to create, pay for and deploy an accurate ESG infrastructure in support of a strategy that can dovetail with reporting standards. For many operating in today's tight economy, this may seem like an insurmountable task.
Framework bodies like the Sustainability Accounting Standards Board (SASB) are working to generate blueprints for companies to follow, but the onus of cost still befalls the companies. In the digital and energy transition space, technology must solve this ESG equation. Ways to tether aspirations to performance and operations must be deciphered. Technologies that stand to move the needle include blockchain, machine learning, Internet of Things and connected sensor networks, and cutting-edge data analytics applications.
It’s in these that efficiency, transparency, speed and ease will make the energy transition and ESG wave possible. And Houston has the creative people, the appetite, and drive to lead the innovation charge starting with what we know best: energy, and technology.
Andrew Bruce, CEO and Founder of Data Gumbo, will be a featured speaker at Houston House at South by Southwest on Tuesday, March 16 at 11:10 a.m. for a conversation with Al Carnrite, CEO of The Carnrite Group, moderated by Natalie Harms, Inaugural Editor of Houston InnovationMap.