Pemex Unveils Sustainability Plan, Targets Net-Zero 2050

Mexico’s state-owned oil giant, Pemex, has taken a significant step towards addressing climate risks by unveiling its first-ever Sustainability Plan. The move comes as part of the company’s broader efforts to align with global climate commitments and reduce its carbon footprint. Pemex has now set a target to achieve net-zero emissions for Scope 1 and 2 by 2050, with structured interim goals to ensure steady progress. This announcement marks a crucial shift for the company, which has long been under scrutiny for its environmental impact.

Investor pressure has played a pivotal role in this transformation. Since 2020, Climate Action 100+, an influential investor-led initiative focused on corporate climate accountability, has been engaging with Pemex to push for sustainability commitments. The journey has not been without challenges, as initial investor dialogues faced resistance. However, persistent engagement has led to substantial progress, culminating in key climate commitments from Pemex.

A major milestone came in 2023 when Pemex established a Sustainability Committee at the board level. This was followed by the release of the company’s first Sustainability Plan in 2024, developed in consultation with S&P Global and key investor stakeholders. The plan lays out clear objectives to decarbonize operations, improve transparency, and align with international environmental standards.

One of the core elements of Pemex’s climate strategy is enhanced disclosure. The company has committed to aligning its reporting with the International Sustainability Standards Board (ISSB) and the Task Force on Climate-related Financial Disclosures (TCFD). These globally recognized frameworks aim to improve corporate transparency on climate risks and sustainability efforts. By adopting these standards, Pemex hopes to boost its credibility among investors and improve its benchmark scores in sustainability rankings.

Methane reduction is another focal point of the plan. Pemex has pledged to cut methane emissions by 30% and eliminate routine flaring in exploration and production (E&P) by 2030. Routine flaring—the practice of burning off excess natural gas during oil extraction—has been a significant contributor to greenhouse gas emissions in the oil and gas sector. Pemex’s commitment to phasing out this practice signals a shift towards more responsible environmental management.

The company has also introduced a capital allocation framework designed to ensure that future investments align with its climate goals. This approach is intended to integrate sustainability considerations into Pemex’s long-term financial strategy, making sure that climate-related initiatives receive the necessary funding.

Despite these commitments, investors stress that continued monitoring and further action are necessary. Leading figures in the Climate Action 100+ engagement initiative, including Alejandro Bujanos from Afore SURA, Nicolas Jaquier from Ninety-One, and Marion Plouhinec from Carmignac, have expressed cautious optimism about Pemex’s progress.

“As co-leads of the Climate Action 100+ engagement initiative, we are encouraged by Pemex’s progress. Establishing a Sustainability Committee and releasing its first Sustainability Plan signal a willingness to take action. We will continue to monitor execution and push for further climate commitments,” they stated.

While Pemex’s commitments mark a step in the right direction, challenges remain. The global energy transition is accelerating, and investors will be watching closely to see whether Pemex follows through on its climate pledges. The company’s ability to align with international best practices and Mexico’s broader low-carbon transition will be critical in maintaining investor confidence.

Pemex’s sustainability efforts are also tied to its financial strategy. The company has been in discussions with Goldman Sachs and HSBC regarding a potential $1 billion ESG-linked financing deal. Such financing could provide the capital needed to accelerate climate initiatives and reinforce Pemex’s commitment to sustainability.

The oil and gas industry faces increasing pressure to reduce emissions, and Pemex’s move to establish clear climate targets represents a shift in strategy for the state-owned company. However, meeting these goals will require not just commitment but concrete action. As the world moves towards a net-zero future, Pemex’s ability to implement its Sustainability Plan effectively will determine its role in Mexico’s transition to a low-carbon economy. Investors, regulators, and environmental advocates will be closely monitoring the company’s progress in the coming years.