Empowering Energy Transition from the Board Perspective

NACD Northern California enjoyed another special evening of rich discussion at our private dinner on the topic of "Empowering Energy Transition from the Board Perspective." Key discussion points included:

• Disclosure—Be fully informed when disclosing energy-transition goals and progress toward those goals. Recognize tensions between the aspirational and the achievable, ask questions and evaluate assumptions, and use supporting data to reach conclusions.

• Oversight and Strategy—Assess both risks and opportunities in setting decarbonization strategy, including competitive and reputational risks, impacts on stakeholders, opportunities presented by innovative technologies, and stranded assets. Be mindful of shifts in energy that will arise during the transition, including the significant expected growth of power demand in the US over the next five years and its impact on decarbonization strategies.

• Sustainable Sustainability Efforts—Develop a clear long-term strategy for energy transition that aligns with the company's overall business objectives and sustainability goals. Profitability and sustainability cannot become competing priorities.

• Measuring and Reporting—Have management establish metrics and key performance indicators to track progress toward energy-transition goals. Prepare for reporting requirements on sustainability performance to investors, regulators, and potentially other stakeholders. Evaluate the risks and rewards around reporting when not required, at least until the treatment of reported information and litigation risks are clearer.

• Financial Implication—Evaluate the financial implications of energy transition, including the costs of transitioning to and benefits of renewable energy sources, potential cost savings from energy efficiency measures, and opportunities presented by sustainable practices.

• Government Subsidies—Current government subsidies incentivize energy transition. If the subsidies go away, the cost of continuing to pursue energy-transition goals and strategies may increase substantially. Boards should understand the resulting potential fiscal impact.

A special thank you to our wonderful hosts from Baker Botts, Jason Bennett, Samantha Crispin, Jonathan Gordon, and Catherine Zinn, for generously hosting this dinner, guiding the conversation, and bringing us all together.