A collaboration between the World Petroleum Council and Boston Consulting Group
Since 2017, when the World Petroleum Council (WPC) and BCG first examined attitudes about gender balance in oil and gas, the industry has experienced significant disruption. In addition to the severe effects of the COVID-19 pandemic, the global energy transition and the continued growth of digitization have accelerated both the need for and the pace of change.
The percentage of women working in the oil and gas industry remains unchanged at 22%, the same level reported in 2017. The pandemic and associated oil price shock likely impacted progress, which underscored the need for continued focus, commitment, and action to improve diversity and inclusion (D&I). There are glimmers of hope: the number of D&I policies and programs introduced by companies is up by about 50% since 2017, indicating that even though outcomes stalled, the commitment to act and lay foundations for future progress strengthened throughout the period.
More must be done to achieve gender parity and improve diversity. Significant gaps in policies and programs remain. Less than half of companies link leadership compensation to D&I goals. And only one-third have procedures to ensure “blind” screening of candidates to remove unconscious recruiter biases.
Companies must take urgent action to boost diversity among their employees and make diversity a strategic priority if they are to thrive in a data-driven, low-carbon world. This new world will require innovation, and innovation requires diversity; BCG has found that companies with greater diversity outperform others on both innovation and
While other sectors have realized the importance of purpose-led work, better work-life balance, and equity, many oil and gas companies have only recently begun to commit to this journey in earnest. Our research shows that although the importance of race is increasing in the oil and gas sector’s D&I conversation (based on industry press coverage), gender remains the primary topic.
So far, oil and gas companies have undertaken fairly simple and straightforward D&I initiatives and have met local regulatory and legal requirements. Further progress will require business leaders and managers to take harder steps—questioning unconscious bias far more and making deliberate decisions to boost diversity and inclusion in their hiring choices, policies, and support throughout employees’ career life cycle. Such an effort calls for a more intentional and proactive approach, led from the top, that embeds D&I values in all key business processes, especially HR-related ones. According to our findings, five challenges require especially urgent attention:
There are some positive signs that companies have taken action since 2017 to support diversity:
The industry’s more active approach has yielded positive results in important areas. While women’s overall representation in the industry has remained flat, the share of women in global companies (those with operations in multiple countries) has risen slightly from 24% to 25%, and the proportion of women at global companies entering the industry as university graduates has also increased slightly, from 26% to 28%. In addition, the number of D&I policies and programs implemented by companies (across all types of interventions) has increased, on average, by about 50%—a significant and very positive shift since 2017.
Notably, all of the companies that we surveyed in 2020 offer maternity leave, and more than 95% of them support equal pay, offer paternity leave, and have sexual harassment policies in place (versus 90% of companies offering maternity leave, 67% of companies supporting equal pay, and 56% of companies providing paternity leave in 2017). Now that these critical table stakes (which are often mandated by governments) are widely in place, companies are starting to explore more advanced policies and programs, including childcare support and making diversity a key component of leadership remuneration.
The business case is clear. By creating a more diverse and inclusive culture, oil and gas companies can benefit from greater depth and breadth of perspective and can boost business performance. According to Catalyst, a nonprofit organization, companies with more women on their board of directors outperformed those with the least on three financial measures: return on equity (53% higher), return on sales (42% higher), and return on invested capital (66% higher). Another study shows that companies with top-quartile performance on ethnic and racial diversity enjoyed 35% higher financial returns, and those with top-quartile gender diversity were 15% more likely to have returns above industry
In the course of our research, we’ve identified three essential elements that together form a framework for a successful D&I strategy. (See Exhibit 1.)
They are as follows:
Our research and industry engagement indicate that the following six ways of addressing these ongoing challenges are likely to have the most impact across all career levels:
The first two approaches are especially relevant for the “leadership” level in our framework, while the final four relate to the “operating model” level of the framework.
To support companies in identifying the actions they need to take to drive an increase in diversity outcomes, BCG and the WPC have developed the Diversity and Inclusion Maturity Assessment tool, which rates companies across 12 parameters and gives a score ranging from one to five for each one. The parameters cover factors ranging from CEO commitment to flexible working, and they fit into the five categories contained in the framework above. Using this tool, companies can develop momentum and create more targeted policies and programs to move the needle on D&I. (See “Our Tool for Assessing (and Advancing) D&I Maturity.”)
Headline progress on women’s representation in the oil and gas industry has stalled at 22% since 2017. In addition, the oil and gas industry continues to underperform other sectors, ranking in the bottom third for gender parity among nine sectors. (See Exhibit 2.) Within the industry, however, we noted some pockets of improvement at the regional level.
Europe has seen the greatest improvement in gender equity since 2017. Women’s representation has risen from 24% to 33%, helped by increased interventions from governments in Germany, the Netherlands, and other countries. (See Exhibit 3.) For example, in Germany, under the Wage Transparency Act, employees can ask their employer to disclose how their pay compares with male or female colleagues, so the act enables workers to discover the average salary of employees of the opposite gender who perform an equivalent job. In most other regions, women’s representation either improved slightly or remained the same. The only region to see a decline in women’s representation is Asia-Pacific.
Approximately 40% of companies in this year’s company survey are multinationals that operate in multiple countries. Companies in this global category in 2020 include the industry’s biggest players and are broadly comparable with those in 2017. Global companies tend to set more D&I goals and policies and to be more active in pursuing these objectives than regional companies. Among global companies, women’s representation increased only very slightly, from 24% to 25%.
The overall decline in representation as women progress from midcareer positions to more senior roles exceeds 50%—a figure consistent with what we observed in 2017.
The data also reveals several other significant developments among global companies, the first two related to the “attract” component in the framework operating model and the third related to the “retain” and “advance” components:
In general, men and women continue to express different views about their company’s efforts to tackle gender imbalances, although the gap is narrowing. Our research identified the following developments:
Among all companies, our research uncovered two major findings about gender balance in different job types:
Experience in technical roles tends to be a prerequisite for senior leadership positions with profit-and-loss responsibility. Both male and female employees in our survey believed that technical aptitude was essential for promotion to a senior level: 71% said that technical expertise was the main criterion for senior-level advancement, and 60% said that being an engineer or having a similar technical education was the primary factor. Without rapid action to improve intake—of early-career hires but also of lateral hires into midcareer roles—and to retain women in these technical roles, it will become even harder to progress toward gender parity in oil and gas leadership in the years to come.
Some leading players are revisiting their job requirements for middle management technical positions. For example, they are taking the view that a diverse individual with an accounting or commercial background and strong leadership and strategic skills may be able to leverage the technical expertise within their team more effectively, allowing that individual to succeed in what was previously seen as an exclusively technical role.
Three major developments impacted oil and gas companies in recent years and created major shifts in the way the industry functions: the energy transition, post-COVID-19 flexible working policies, and an expanding definition of diversity that extends beyond women to create a more inclusive environment for all types of people. Progress on all three fronts is critical if companies are to attract and retain talent, especially as more people make career choices based on their values. Another BCG study found that 57% of respondents to a global survey—and 90% of respondents from underrepresented (diverse) groups—would consider leaving their current job for one at a more inclusive organization if their company didn’t meet baseline D&I criteria. The research estimated the cost of replacing those employees at more than $25 billion a
The energy transition has accelerated since our 2017 survey, impacting oil and gas players worldwide. Several oil and gas companies have responded by expanding into new, greener areas—including renewables, sustainable fuels, and electric vehicle charging networks—and many leading players are rebranding or setting net-zero goals.
Responding to the challenges of the energy transition will require innovation in what has historically been a quite conservative sector. Companies with above-average diversity on their management teams reported innovation revenue that was 19 percentage points higher than that of companies with below-average leadership
Companies that actively and visibly take action to create clean energy businesses can attract a more diverse talent pool. According to the World Petroleum Council 2020 Youth Survey, about one-third of respondents viewed the energy transition as one of the things they like most about their careers. (See Exhibit 8.) Emphasizing a company’s efforts to advance the energy transition will increasingly become a prerequisite for success in recruiting diverse talent.
In oil and gas, as in other sectors, COVID-19 has been an incredibly disruptive force since it emerged. Companies took many different approaches to D&I issues in the midst of the pandemic, but several leading companies recognized the need to maintain or accelerate their D&I policies and programs:
Overall, female employment was more impacted by the pandemic than male employment. According to a BCG survey across all industry sectors, women, on average spend 15 more hours on domestic labor each week than men
However, women who remain in the oil and gas sector seem to feel the impact of COVID-19 on their career only slightly more negatively than male colleagues do. (See Exhibit 9.) Both men and women see flexible work models as a positive development over the past two years. In our employee survey, about 65% of male and female respondents said that they expect to benefit from the new models that have been introduced or expanded as a result of the pandemic.
Our survey also found that company leaders emphatically believe that the changes in working practices are here to stay. “Our plan is to continue with the option of home working—to some degree—once things go back to the new normal” was a common refrain across conversations in all corners of the globe. But while 84% of oil and gas companies provide some form of flexible working, other options are less widely available: 76% of companies in the sector provide unpaid leave, and just 41% allow job sharing. Introducing programs to formalize these new workplace approaches will be important in boosting employee retention and attracting the next generation of diverse talent to the industry.
Our employee survey indicates that caring for a dependent person affects women’s job choices more than men’s, but such responsibilities have a noticeable impact regardless of gender: 30% of women with dependents and 48% of men with dependents would be willing to take on an international assignment, versus 61% and 66% respectively for individuals without dependents. (See Exhibit 10.) The best approach for companies to take is to avoid making assumptions about personal circumstances, and instead to ask and offer opportunities equitably. Although both men and women with dependents may decide to decline assignments that entail relocation, a substantial number of those with dependents (30% of female respondents and 48% of male respondents in our survey) indicated that they would say yes. The bottom line is not to assume what the answer will be, but instead to ask each individual directly.
The oil and gas industry needs to take action on all fronts to embrace diversity in its broadest sense, foster greater inclusion, and build equity. Today, we see a disconnect between companies and their employees about what constitutes diversity and inclusion. Many employees expect a broader dialogue than companies currently provide, particularly on race, abilities, and socioeconomic diversity. (See Exhibit 11.)
In recent years, companies’ conversations about D&I have become more frequent and have slowly expanded to encompass other forms of diversity such as race and ability. The share of press coverage focusing on race in the oil and gas industry increased by 13 percentage points from 2019 to 2020 (on a normalized basis), particularly in light of the Black Lives Matter movement in the US, although gender is still the primary D&I topic. (See Exhibit 12.) Compared with the D&I discussion in sectors such as mining, construction, and even technology, the conversation at oil and gas companies is relatively balanced, although there, too, gender remains the dominant topic.
For example, bp has broadened its D&I agenda to reflect the importance of equity and is prioritizing actions related to people of color. (See “Case Study: bp.”) This effort has included rolling out policies and programs that actively promote its intention in its two biggest markets—the US and the UK—and incorporating diversity, equity, and inclusion as a core part of its strategic framework.
In recent years, the oil and gas industry has taken important steps forward in the area of D&I, including establishing foundational table stakes such as equal pay and maternity leave. But companies also made progress in more advanced areas such as unconscious bias and dedicated resourcing for D&I teams. Nevertheless, companies must go further and drive real change in their D&I performance by continuing to mature programs and policies that are harder to implement but more impactful, such as sponsorship, mentorship, greater leadership accountability for D&I outcomes, and creating a more inclusive working environment across a definition of diversity that extends beyond just gender diversity.
Since our 2017 survey, oil and gas companies have become far more active in introducing D&I policies and programs. They have made significant progress in areas including retention, recruitment, and leadership. (See the Appendix.)
For example, only 20% of companies had D&I policies and programs for recruitment (the “attract” component in our pyramid framework) prior to 2017, but another 31% implemented policies and programs (such as outreach programs and unconscious bias training for recruiters) from 2017 to 2020. And a further 17% have committed to introduce such initiatives in the near future. (See Exhibit 13.)
At the level of individual policies and programs, companies have made important progress in offering maternity and paternity leave and introducing policies that tackle sexual harassment and discrimination—areas that are likely to be subject to government mandates. (See Exhibit 14.) However, company performance in the sector is lagging in some areas where government regulations do not apply. Less than half of oil and gas companies link leadership compensation to the achievement of D&I goals. And only one-third have procedures in place to ensure so-called “blind” screening of candidates to remove recruiters’ unconscious biases.
No cookie-cutter approach to diversity and inclusion works across all organizations, but we have found that the following actions have the most significant impact among companies that seek to improve their D&I performance:
We illustrate each of these action areas with a case study in which a company is making meaningful progress in that area. We highlight their stories to show what advanced D&I maturity can look like and to provide inspiration for other companies that would like to progress on these critical dimensions.
Strong and visible CEO and executive team commitment to D&I is a prerequisite for change. This is especially true among male employees. A key finding that emerged from our 2017 survey was that if the CEO considered gender balance important, most male employees in the company would, too. The relationship between these factors was even stronger in 2020. In our 2020 survey, 93% of male respondents whose CEO considered the topic very important said that gender diversity was either important or very important to them as well, up from 86% in 2017. (See Exhibit 15.) To provide effective leadership in this area, leaders must consistently and frequently reinforce the strategic importance of D&I, through their actions and their words.
Senior leaders who understand and can articulate the benefits of D&I help set the tone for the whole organization. They can use their leadership position with various business functions to leverage learning and celebrate success stories from different parts of the organization. Senior leaders must be clearly accountable, with performance evaluations and compensation linked to meeting D&I goals. Organizational KPIs should include targets for gender equity in senior management ranks, too. Salym Petroleum offers a strong regional example of a company whose CEO is moving the needle on D&I. (See “Case Study: Salym Petroleum.”)
Companies that want to become more diverse and inclusive organizations must monitor data across the business. By analyzing information about recruitment, retention, and advancement trends, they can spot gaps, set aspirational goals and clear targets, and identify and implement effective policies and programs. Companies should take into account both qualitative and quantitative data. For example, they should conduct interviews and run focus groups of employees from diverse groups, to assess their needs, to call out success stories, and to adapt policies and programs to better address the actual needs of a diverse workforce.
When assessing their current approach, leaders should ask themselves several questions:
ADNOC provides a strong example of a company that has made tracking metrics and setting targets a cornerstone of its D&I strategy. (See “Case Study: ADNOC.”)
Oil and gas companies can take several steps to promote D&I in advancement policies and processes. To minimize unconscious bias, they can adopt “blind” recruitment processes (which remove the candidate’s name and any other identifying factors from applications), have multiple diverse candidates on each slate, actively shape “stretch” roles for diverse candidates to support development pathways, and use more diverse interview panels. Mandatory training can help managers realize the potential operational and financial benefits of greater diversity as a source of competitive advantage. And openly recommitting to diversity and reframing outreach programs to make them more gender-neutral and inclusive of diverse backgrounds can increase companies’ attractiveness to potential hires.
To eradicate bias and boost inclusivity, leaders should ask themselves the following questions:
One company tackling those challenges head-on is Kuwait Petroleum Corporation (KPC). (See “Case Study: KPC.”) For KPC, filling senior roles is about more than just confirming that candidates have a technical background; it is also about ensuring that they have the leadership skills necessary to build consensus, make tough decisions after considering multiple perspectives and sometimes contradictory information, and listen to team members and stakeholders. This makes for a more merit-based and inclusive approach to promotions. It also creates a pathway to senior positions for employees with technical and operations backgrounds as well as for those in business and administration roles, increasing the diversity of experience in the organization’s leadership.
Employee resource groups are a common feature of business organizations today. These voluntary, employee-led groups typically provide support for individuals who share an affinity related to gender, ethnicity, religion, or lifestyle. They can aid in personal or career development, facilitate discussions within the organization, and act as safe spaces. In their more mature form, such groups can help companies achieve their strategic business goals, by acting as advocates for their employers, building bridges with local communities, and participating in shaping in-house D&I policies and programs.
Aera Energy is an example of a company that is leveraging employee resource groups to great effect. (See “Case Study: Aera Energy.”)
Many companies think of D&I as a compliance issue; others believe that taking action on D&I is simply the right thing to do. But companies are starting to understand how it can have a more fundamental impact and improve their ability to innovate and adapt in a rapidly changing world. This ability will be increasingly important as companies embrace digital technologies and transform their businesses in response to the energy transition. Viewing D&I as a strategic business imperative rather than just as a social impact objective will enable companies to take a more customer-centric approach, increase shareholder value, and gain competitive advantage.
To leverage D&I as a strategic business driver, leaders should ask themselves these questions:
Shell is a leading example of a company that has taken this business-driven approach to D&I. (See “Case Study: Shell.”)
In an inclusive environment, diverse employees feel comfortable about bringing their whole selves to work and expressing unique viewpoints. Such diverse perspectives are important so that oil and gas companies can start to solve the complex challenges that lie ahead. However, creating an inclusive environment is about cultural change within the organization and is not something that diverse groups can do for themselves. The cultural shift is achieved when everyone in the organization understands and values the benefits of diversity and the workplace becomes a place where diverse teams can thrive. Middle managers can foster positive change by selecting high-potential employees as D&I ambassadors.
In building a more inclusive culture, leaders should ask themselves these questions:
Chevron is a leading example of a company that is taking action on these fronts. (See “Case Study: Chevron.”)
Our Tool for Assessing (and Advancing) D&I Maturity
Before oil and gas companies can create effective D&I strategies, policies, and programs, they need to understand the extent of D&I progress in their businesses and identify areas of weakness. To help them do that, we have created a Diversity and Inclusion Maturity Assessment tool, based on best practices from leading D&I policies and programs across industries. (See Exhibit 16.)
The Diversity and Inclusion Maturity Assessment tool consists of a checklist of 12 parameters across five categories, ranging from leadership to career advancement. Each parameter is defined along a five-step scale, where step 1 represents the bare minimum/table stakes action and step 5 represents the current view of a progressive, forward-leaning action (noting that this space and what is considered progressive will continue to evolve). The steps are typically sequential and additive, and they reflect increasing maturity of D&I approaches when read from left to right. Using this tool, companies can create a baseline for themselves today and identify blind spots and areas for further focused efforts and priorities.
We encourage companies to use the tool to plot their starting point on the basis of current programs, and then set aspirations for the progress they would like to make over the next one, three, and five years. The tool can also facilitate discussions with management and boards about what realizing the full potential of diversity and inclusion looks like if they want to be best in class for attracting and retaining diverse talent—conversations that lead to action.
We look forward to engaging with companies around this tool in the future and actively tracking developments as companies progress over time, through future editions of Untapped Reserves.
Even though they have made important advances in policies and programs, oil and gas companies’ progress with D&I outcomes has stalled, and women’s representation remains unchanged from what it was in our previous survey in 2017. If the industry is to secure and retain the talent needed to respond to the energy transition and other industry changes and challenges, it must maintain a clear focus on improving diversity and inclusion. Companies can do this by focusing on the six priorities for action that we outlined in Chapter 4, and by using our Diversity and Inclusion Maturity Assessment tool to determine their starting point and drive real change across their organizations.
It is especially important for companies to consider interventions that address the challenges that arise at different stages in an individual’s career journey:
Companies have made significant progress since 2017 in implementing many of the easier policies and programs that are now in place. Given the lag between implementation and impact, we expect to see further positive effects and improvements in the next survey.
Moving the dial further on D&I will be harder, however. At the leadership level, it will require a more strategic commitment and a degree of personal accountability. Throughout this report, we have highlighted examples of what “best in class” looks like and explored a progressive view of maturity to help companies continue to push for better D&I outcomes.
As we noted earlier, BCG and the WPC intend to publish an updated Untapped Reserves report every three years, in conjunction with the triennial World Petroleum Congress, as we continue to promote greater diversity, equity, and inclusion in the industry—values that are essential to delivering improved business results and driving positive employee experiences. The message is clear: Now, more than ever, oil and gas companies must make diversity a strategic priority for their organization.
The workforce data that we analyzed for this report came from oil and gas companies that span a broad range of company types and geographies. (See Exhibit 17.) Although the data set in 2020 is not identical to the one we used in 2017, both data sets are representative of the global industry. In addition, because we received more responses to our employee survey from some countries than from others, we weighted all countries equally so that we could make consistent comparisons and draw meaningful conclusions between regions and globally. In 2020, we conducted research on 50 companies with collective revenues of $2 trillion. In addition, we surveyed more than 2,800 industry employees across 60 countries and interviewed more than 50 senior executives and other industry professionals.
In the following charts, we have analyzed performance data from 50 companies across the five categories of D&I policies and programs shown in the framework. The five categories are foundational policies and programs, recruitment (denoted as “attract” in the framework), retention (“retain“), advancement (“advance”), and visible leadership.
Each chart shows the percentage of companies that implemented a given policy or program prior to 2017, did so between 2017 and 2020, or have committed to implementation in the future.