Factors influencing green M&A in the oil and gas industry

Details

Supervisors

Janssen, Frank ; Daprà, Marco Maria

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

While the demand for oil and gas has never been as high as today, and is projected to keep on increasing until 2030, oil and gas companies are facing growing environmental pressures and the need to align with global climate targets. To do so, many companies are using mergers and acquisitions (M&A) as a strategy to easily acquire new technologies, and shift towards cleaner sources of energy. This paper explores the key factors driving M&A activities contributing to the energy transition of the oil and gas industry, considered as “Green M&A”. The research examines data from the 100 largest oil and gas companies by market capitalization, focusing on M&A transactions between December 2015 and April 2024. Several factors are analysed, including greenhouse gas emissions, reserve size, stock market prices, crude oil and natural gas prices, climate performance of their countries, and the ownership structure, to understand their impact on the proportion of green M&A deals. The findings reveal a significant positive relationship between the climate change performance of the companies’ countries and green M&A activities, indicating that companies in countries with a better climate change situation are more inclined to pursue green M&A transactions. Other factors, such as reserve size, stock market performance, crude oil, and natural gas prices, as well as ownership structure, showed no significant influence on green M&A activities.