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
19 March 2026
The regional crisis highlights the undervalued role of fixed pipelines in the age of tanker flexibility
18 March 2026
Rising LNG exports and AI-driven power demand have raised concerns that US gas prices could climb sharply, but analysts say abundant shale supply and continued productivity gains should keep Henry Hub within a range that preserves the competitiveness of US LNG
18 March 2026
Risks of shortages in oil products may cause world leaders to panic and make mistakes instead of letting the market do what it does best
17 March 2026
The crisis in the Middle East has put LNG’s ability to offer security and flexibility under uncomfortable scrutiny
