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ESG has moved from sidelines to strategy — here's what that means for Houston companies

Amy Chronis of Deloitte shares why now's the time to invest in ESG — and the impact this movement is having on Houston. Photo via Getty Images

The Houston business community has embraced environmental, social, and governance investments, with a majority of deals in the past two years valued at $50 million or more, per PitchBook Data, Inc. In 2022, Houston companies invested just more than $1.25 billion in clean technology, climate technology, and impact investing. Nationwide, ESG investments totaled north of $15 billion across 330 deals, according to Deloitte’s latest Road to Next report, released late in 2022.

What might this mean for Houston companies? In our view, it demonstrates that ESG appears to be moving from sideline to strategy and in the process, providing potential wins across multiple fronts for companies. As companies prepare for upcoming SEC regulations around reporting greenhouse gas emissions, much of the work they’re doing is not simply “because we have to.”

Increasingly, businesses are realizing that prioritizing ESG can be good for the bottom line, for the planet and for employees. As they prioritize ESG, they’re involving teams, accepting accountability and often reaping the benefits of ESG reporting, according to Deloitte’s 2022 Sustainability Action Report. The report surveyed 300 legal, accounting, finance, and sustainability leaders from companies with annual revenue of $500 million or more. Here are some ways that ESG activity is becoming part and parcel of corporate life.

Teamwork. Fifty-seven percent of executives surveyed note that their companies have assembled cross-functional ESG teams, and another 42 percent say they plan to. That’s a considerable increase from 2021, when a similar study showed that only 21 percent of respondents had such teams in place.

Accountability. A large majority (89 percent) of executives polled have enhanced internal goal setting and accountability mechanisms to promote readiness. These executives realize that their companies can have both an impact and dependence on the environment and society, and that ESG reporting measures may not just be reporting requirements, or a box to check, but a meaningful way to align strategy with commitments to sustainability and the social good.

Proactive moves. Nearly all (96 percent) of executives surveyed plan to seek external assurance for the next reporting cycle. Among executives in the oil and gas sector, 67 percent say they will continue to obtain assurance and 31 percent will seek it for the first time. Executives are also proactively investing in technology and tools to help them meet reporting needs, with around half saying they are very likely to invest in these tools in the next 12 months. These planned investments indicate that leaders appear confident in the business benefits of ESG.

Reaping the benefits. ESG commitments, it turns out, can be good for business. They are yielding benefits, including attracting and retaining talent, increasing efficiencies and ROI, boosting trust among stakeholders, and enhancing brand reputation. Another, perhaps surprising benefit of enhanced reporting is that it can enable some companies to premium-price their products, a benefit acknowledged by nearly half (49 percent) of respondents.

Facing challenges. Businesses have challenges, especially when something new comes along. While many executives (61 percent and 76 percent, respectively) are prepared to disclose Scope 1 and Scope 2 greenhouse gas emissions, Scope 3 remains a challenge because it involves data from external vendors. As such, only 37 percent of executives surveyed are prepared to disclose Scope 3 details, the top challenges cited being lack of confidence in the data supplied by external vendors as well as lack of data availability.

In just over a year, we’ve seen ESG reporting morph into a powerful tool, one that can inform business strategy. We expect that in the coming years, leaders may see even more benefits from ESG reporting and integrate it even more fully into the way businesses are managed.

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Amy Chronis is the Houston managing partner and vice chair of energy and chemicals at Deloitte. Geoff Tuff is the sustainability leader for ER&I practice at Deloitte. This article originally ran on InnovationMap.

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A View From HETI

Twenty-six Houston-area companies landed on the latest Fortune 500 list. Photo via Getty Images

Houston maintained its No. 3 status this year among U.S. metro areas with the most Fortune 500 headquarters. Fortune magazine tallied 26 Fortune 500 headquarters in the Houston area, behind only the New York City area (62) and the Chicago area (30).

Last year, 23 Houston-area companies landed on the Fortune 500 list. Fortune bases the list on revenue that a public or private company earns during its 2024 budget year.

On the Fortune 500 list for 2025, Spring-based ExxonMobil remained the highest-ranked company based in the Houston area as well as in Texas, sitting at No. 8 nationally. That’s down one spot from its No. 7 perch on the 2024 list. During its 2024 budget year, ExxonMobil reported revenue of $349.6 billion, up from $344.6 billion the previous year.

Here are the rankings and 2024 revenue for the 25 other Houston-area companies that made this year’s Fortune 500:

  • No. 16 Chevron, $202.8 billion
  • No. 28 Phillips 66, $145.5 billion
  • No. 56 Sysco, $78.8 billion
  • No. 75 Conoco Phillips, $56.9 million
  • No. 78 Enterprise Products Partners, $56.2 billion
  • No. 92 Plains GP Holdings, $50 billion
  • No. 143 Hewlett-Packard Enterprise, $30.1 billion
  • No. 153 NRG Energy, $28.1 billion
  • No. 155 Baker Hughes, $27.8 billion
  • No. 159 Occidental Petroleum, $26.9 billion
  • No. 183 EOG Resources, $23.7 billion
  • No. 184 Quanta Services, $23.7 billion
  • No. 194 Halliburton, $23 billion
  • No. 197 Waste Management, $22.1 billion
  • No. 214 Group 1 Automotive, $19.9 billion
  • No. 224 Corebridge Financial, $18.8 billion
  • No. 256 Targa Resources, $16.4 billion
  • No. 275 Cheniere Energy, $15.7 billion
  • No. 289 Kinder Morgan, $15.1 billion
  • No. 345 Westlake Corp., $12.1 billion
  • No. 422 APA, $9.7 billion
  • No. 443 NOV, $8.9 billion
  • No. 450 CenterPoint Energy, $8.6 billion
  • No. 474 Par Pacific Holdings, $8 billion
  • No. 480 KBR Inc., $7.7 billion

Nationally, the top five Fortune 500 companies are:

  • Walmart
  • Amazon
  • UnitedHealth Group
  • Apple
  • CVS Health

“The Fortune 500 is a literal roadmap to the rise and fall of markets, a reliable playbook of the world's most important regions, services, and products, and an indispensable roster of those companies' dynamic leaders,” Anastasia Nyrkovskaya, CEO of Fortune Media, said in a news release.

Among the states, Texas ranks second for the number of Fortune 500 headquarters (54), preceded by California (58) and followed by New York (53).

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