(This content was produced by a division of Thomson Reuters outside of Reuters Editorial.)
Leadership in the 21st century looks different than it did a decade ago.
In an era of increasing regulation, extended supply chains, environmental pressure and geopolitical unrest, leadership requires more than a healthy balance sheet.
To succeed in today’s environment, multinational companies must not only get the basics of running their businesses right—identifying the right markets, investing in the infrastructure required to grow, accurately forecasting supply and demand – they must also manage an interconnected patchwork of legal, regulatory, operational, environmental, supply chain and technological variables that have the power to make or break the best laid plans for strategic business growth.
The Alstom example
Take, for example, the misfortune that befell Alstom, the French power company, when it was charged with paying more than $75 million in bribes to government officials in Egypt, Indonesia, Saudi Arabia, the Bahamas and Taiwan via a network of third-party consultants. The company pleaded guilty to international bribery under the Foreign Corrupt Practices Act and was sentenced to pay a $772.3 million criminal fine, the largest fine at the time levied in a foreign bribery case, while several executives were condemned in the public spotlight.
This reputational fiasco also resulted in the dissolution of Alstom’s power division, which was acquired by GE, in a deal that involved paying fines to the U.S. Department of Justice.
Risk lurks in new areas
This incident is indicative of just how quickly a business can be undone by activities that are seemingly beyond the scope of typical business evaluation metrics. It shines a light on the challenges of aggressive expansion into high-risk markets where the rules of engagement for winning contracts can sometimes test the limits of increasingly vigilant global law enforcement and regulatory regimes.
Managing risk in this new world order, while continuing to make bold bets that unlock growth and drive revenue, is the modern-day formula for energy sector leadership.
A new way of assessing leadership
To find out which companies are today’s energy leaders, Thomson Reuters Labs developed a first-of-its-kind evaluation framework that looks holistically at each organization to see which ones are performing best across eight pillars of assessment: Financial Performance, Management and Investor Confidence, Risk and Resilience, Legal Compliance, Innovation, People and Social Responsibility, Environmental Impact, and Reputation. This data-driven, objective methodology identifies those with the highest cumulative scores across the pillars, thereby identifying the energy leaders.
“Leadership is defined by organizations that provide healthy and safe workplaces, cultivate diverse and equal opportunities, are innovative, have geographically diverse supplier and customer networks, and demonstrate an ability to reduce environmental impact,” said Emily Lyons, managing director of the Thomson Reuters Energy Practice Group. “We applaud the leaders on this list as they represent the current vanguard among their peers by outsizing business challenges with the acumen and agility to stay one step ahead of constant change.”
The Thomson Reuters Top 100 Global Energy Leaders, along with snapshots of the top 25 performers across four energy subsectors, showcases the companies around the world that are delivering across a scorecard of critical business success metrics.
Outperforming major indices
The Top 100 Global Energy Leaders collectively outperform a number of major world indices. These include the S&P 500, S&P 500 Energy and MSCI World Energy – Daily indices in year-over-year gross profit by 16.52 percent, 37.93 percent and 1.41 percent, respectively.
They also outperform the MSCI World-Daily and S&P 500 and indices in annual stock-price change by 10.93 percent and 5.55 percent, respectively. And, these leaders had less change in their year-over-year stock price than other energy companies, making them less susceptible to volatile market movements.
“The unique, holistic approach Thomson Reuters is taking to identify energy leadership makes a lot of sense given today’s complex business environment,” said Mark Walsh, national managing director of the US Energy & Resources Industry at Deloitte Consulting LLP. “At Deloitte, we see how energy companies with operational excellence related to financial operations, risk-management strategies, secure and resilient supply chains, workforce health and safety mandates and responsible environmental practices are well positioned for success. Congratulations to the Thomson Reuters 2017 Top 100 Global Energy Leaders.”
See the Reuters.com website and Thomson Reuters Top 100 Global Energy Leaders to review the energy leader lists and download the thought leadership report.