Overview:

• The client was commended by the government for its innovative strategy to develop renewable and environmentally friendly materials.

Challenge:

A major oil and gas company was coming under increasing government and public pressure to commit to more sustainable forms of development. It decided to embark on a comprehensive green growth strategy that involved two key types of green products: chemicals made from renewable feedstocks, such as bioplastics, and materials that would help users reduce their carbon footprint and energy requirements, such as insulation materials.Since this was an entirely new venture for the organisation, they approached Challenge Advisory to assist them in creating a detailed implementation plan.

The Revelation:

Challenge Advisory’s energy conducted a detailed opportunity screening to identify chemicals that could be produced from renewable resources, such as biofuels, oleochemicals, bioplastics, and oils from algae. The sustainability team also looked at chemicals that could help reduce energy and carbon emissions, such as lightweight materials for cars, insulation materials, and chemicals for electric vehicle batteries.

Together the sustainability and energy teams identified more than 150 materials that could both be produced economically and offer significant growth opportunities over the next 10 years. Then, Challenge Advisory helped the client to prioritise the main areas for growth, including automotive, health and nutrition, packaging, and construction. After this, we helped the client to develop a portfolio of business initiatives that took into account the attractiveness of individual markets in terms of size, growth, and margins, as well as the client’s distinctive profile in terms of capabilities, assets, market access, and partnerships.

In the following four weeks, Challenge Advisory collaborated with the client to produce a business-building strategy in green chemicals that would be relevant for the next decade, including a detailed implementation plan which specified investment requirements, a survey of potential acquisition targets, as well as an analysis of the capabilities the client would need to manage the growth of the new business.

Outcomes:

The client outlined its intentions to the press just two days after the final steering committee meeting, outlining a spending plan of $500 million per year towards green initiatives, such as carbon abatement measures to improve its own energy consumption. Within six months, they had already achieved their spending target, and had completed three acquisitions of leading companies identified by the project team. The client also announced a major investment in building a new bioplastics joint venture, with Challenge Advisory assisting by conducting due diligence on several of the targets that the client was looking to purchase.

The client was commended by the government for its innovative strategy to develop renewable and environmentally friendly materials, and received a public relations boost in the process; a rarity for organisations in the oil and gas industries.