We have engaged with a large energy company on its sustainability strategy on a continual basis over multiple years. Our recent discussion confirmed the companyâ€™s transition narrative: It is shifting its portfolio to natural gas and investing in renewable energies where it finds attractive potential returns. In the companyâ€™s view, fossil fuels will still be needed as a reliable source of energy, and gas is a cleaner alternative to coal, emitting 50% to 60% less carbon dioxide (CO2). However, these efforts will not be sufficient to materially limit CO2 emissions, and this exposes the company to potential costs from more stringent climate-related regulation. This is why the company has been allocating resources to carbon capture, utilization and storage (CCUS)â€”a technology that reduces the amount of carbon released into the atmosphereâ€”spending 10% of its annual research and development budget on the effort. To learn more about the companyâ€™s commitment to CCUS, we arranged a follow-up call with its CCUS and climate experts. We learned that CCUS development, broadly, is far behind the levels needed to reach carbon neutrality and limit temperature rises in line with the goals of the Paris Agreement. This situation is unlikely to change in the near future, as CCUS faces numerous challenges, including the fact that the cost of the technology is high and not expected to fall in the foreseeable future. The companyâ€™s significant investment in the technology, even in the face of significant challenges, demonstrates a forward-thinking approach to climate-related risks. Among its peers, the company is a leader in sustainability, addressing the carbon issue seriously and thinking practically about its business implications. That perspective will be key for the industryâ€™s viability.