While diversity, equity, and inclusion (DE&I) is stated as a priority by many global energy companies, the energy sector continues to lag others in terms of representation and has been slow to make progress. These learnings are reinforced in the third version of the Untapped Reserves report, a collaboration between Boston Consulting Group and WPC Energy, which for the last seven years has monitored women’s representation in the global oil and gas industry.

Since 2021, when our last report was released, the average percentage of women working in oil and gas has increased only slightly, from 22% to 23%. Although there have been some signs of incremental progress, such as a moderate increase in women in senior management, many challenges still persist, and impactful DE&I interventions, like flexible work and mentorship, are inconsistently implemented, applied, and utilized.

This year’s report includes meaningful insights about the effectiveness of various DE&I efforts and interventions, along with perceptions of the challenges faced in advancing DE&I. Organizations with high levels of women in senior management typically have unbiased promotion practices, targeted recruitment programs, leadership compensation linked to performance against DE&I targets, and other foundational programs.

This report also is the first in our series to directly assess the medium-term impact of COVID-19 on DE&I in the energy sector. It is abundantly clear that the widespread adoption of flexible, remote, and hybrid working models has benefited women and other underrepresented groups. However, many energy companies are considering rolling back these changes, posing a risk to much of the progress that has been made in recent years.

In addition to the gender representation metrics we have reported on in the past, this year’s report has been expanded to consider other groups. These include underrepresented ethnic and racial groups (UERGs); LGBTQ+ (lesbian, gay, bisexual, transgender, questioning and/or queer) people; people with health conditions or disabilities; veterans who have served in active military, naval, or air service; caregivers of children and adult dependents; and people from economically disadvantaged backgrounds. While DE&I programs and interventions have consistent positive impact, their adoption and utilization varies greatly across these groups.

For leaders in the energy sector, the recommendations in this report offer an opportunity to not only advance diversity, but to improve business resiliency and innovation in this rapidly changing sector.

A Clear Business Case for DE&I

We use the term “Untapped Reserves” to remind readers that, like undeveloped energy sources, women and other underrepresented groups represent an enormous potential resource. Companies within and beyond the energy sector widely recognize that diversity is important for delivering better business results and can be a source of competitive advantage.

Strengthening DE&I leads to a multitude of benefits for companies by harnessing the power of varied perspectives, experiences, and talent. It fosters innovation and creativity by encouraging a diverse range of ideas and approaches, and can better enable companies in this sector to solve complex challenges, such as energy security and the energy transition.

“We are adapting with the energy transition,” says Lauren Morishita, Director of Diversity, Equity, and Inclusion at Enbridge, a Calgary-based North American pipeline and energy company. “As a result, we will need more diverse voices at the table to drive innovation and keep a competitive edge.” Diverse teams are more adept at understanding diverse customer bases, and thus at unlocking customer-centric service opportunities.

DE&I also enhances employee engagement and retention, as individuals are more likely to feel valued and supported. An inclusive work environment contributes to a positive company culture, strengthens the employer brand, and is critical for attracting top talent.

Gender diversity is also linked to higher financial returns. Our analysis of surveyed energy companies found that companies with above-median (21%) representation of women in senior and executive management experienced higher return on equity than companies with below-median representation. These findings, which are consistent with other cross-sector studies,¹ 1 In a study analyzing financial performance of S&P 500 companies from 2005 through 2020, Bank of America found that companies with gender diversity on their board of directors above the global median of 30% achieved 15% higher return on equity (ROE). Companies that exceeded the median (30%) for women in management positions saw a 30% higher ROE. Notes: 1 In a study analyzing financial performance of S&P 500 companies from 2005 through 2020, Bank of America found that companies with gender diversity on their board of directors above the global median of 30% achieved 15% higher return on equity (ROE). Companies that exceeded the median (30%) for women in management positions saw a 30% higher ROE. underscore the business value in championing representation initiatives for energy companies.

The Scope of this Year’s Report

The previous Untapped Reserves reports, released in 2017 and 2021, focused exclusively on gender diversity in oil and gas companies. For the 2023 edition, we have expanded the industry scope to cover the broader energy sector, including power and utilities companies as well as companies focused on new energy. This latter group typically provides technologies related to the energy transition, such as the development and production of low-carbon fuels, renewable energy equipment and systems, and carbon capture, usage, and storage.

Additionally, this year’s report has aimed to measure representation of other diversity groups beyond gender. However, tracking of other underrepresented groups is far more limited within the energy sector. In most countries, regulations often require that companies obtain employees’ consent before collecting and processing their demographic data, with few exceptions. Nonetheless, tracking representation across underrepresented groups and key metrics on outcomes is important to help business leaders understand representation in their organizations, make informed DE&I decisions, and create targeted interventions. See the Enbridge case study for an example of the deep impact that collecting and understanding representation data can have on advancing diversity and inclusion.

Since the last report was released in 2021, the energy sector has undergone significant changes, including disruptions from the COVID-19 pandemic, energy security concerns arising from the war in Ukraine, and an accelerated push for sustainability and renewable energy. These issues are top of mind for executives seeking to broaden DE&I while balancing core business objectives.