The Resources sector: 6 priorities for 2024

Co-authored by David Rabley

183% increase in the rate of change. That astounding jump set the stage for what business leaders around the world stepped into this year, facing unprecedented disruption. Accenture’s recent  Pulse of Change Index  found the rate of change affecting businesses has risen by a remarkable 183% since 2019, with technology now the number one disruptor.

As with other industries, workforce skilling and talent acquisition challenges will persist in the Resources sector (comprised of the chemicals, oil and gas, natural resources and utilities industries), as will the focus on achieving sustainable long-term growth and the drive to integrate new technologies like generative AI into their operations. The sector is also dealing with the implications from continued geopolitical instability and calls from climate activists that they take more action (while some shareholders call for less).

The broader macro environment for the Resources sector will have downstream implications for the year. On the energy front, most governments have or are now phasing out the last of their pandemic-time stimulus measures and cost-of-living relief-programs (e.g., energy subsidies) introduced during the peak of the most recent inflation cycle.¹ Oil prices dropped at the end of last year as market concerns shifted from supply risks to the global economy and weakening oil demand.²

Going forward, upside and downside pressures to prices are largely balanced, with concerns over slowing global demand growth weighing on prices.³ And as utilities remain central to the energy transition, they are increasingly the catalyst for other industries, delivering services to enable and accelerate decarbonization.⁴ In the natural resources building space, lower input costs and increasing steel prices are likely to raise margins; however, downside risks of geopolitical tensions and energy shortages remain.⁵

Managing change the right way

In this environment, Resources companies must tread carefully. Investments must be calibrated and balanced to manage multiple disruptions simultaneously. Their business strategy must be bold enough to drive growth, but also pragmatic to ensure resilience in the enterprise. It’s a delicate balancing act that leaves little room for error but is needed to leverage opportunities for reinvention. Resources executives should focus their 2024 strategies on six things. 

1. Reskill the workforce for the AI age. As artificial intelligence continues to advance at lightning speed, the need to ensure the AI IQ of their organization, including the C-suite, is high. Forty-three percent of companies in the Resources sector say they have growing demand for hard skills related to Gen AI (and almost equal amount say the same for soft skills demand); couple that with the significant talent demands due to the energy transition, and we see an increasing gap with the required skills to meet the future needs of the business.⁶

While CXOs overall indicate however that only a third of their workforce is prepared to work with intelligent technologies, only 5% of organizations are actively reskilling their workforce at scale.⁷ Formal training programs for all employee levels, gamified workflows, and culture and change management programs are all urgently needed. In addition, establishing Centers of Excellence and Responsible AI governance practices will help to drive the safe, ethical adoption of AI. At a minimum, leaders should begin identifying front-office and back-office workflows that will be affected. That will provide insights into how talent needs will change—and how the operating model and training programs should evolve to accommodate them.

2. Shift your thinking on growth opportunities. Companies are driving to ever-higher growth targets. Last year, only 19% of Resources sector companies expected year-over-year in the 6-10% range; more than 3x (58%) as many of them are expecting that growth in 2026.⁸ To help achieve that goal, leaders must continue looking to use and/or deliver new energy sources competitively. They should also continue looking to develop infrastructures and digital products and services that they can commercialize.

One oil & gas company was in the process of improving its operational performance when it realized its peers would also likely benefit from its newly developed innovative software solutions. Commercializing those solutions not only accelerates the time to payback, but also increases the scale of the solution. Leaders will benefit from rethinking their long-term roadmap to prepare for a more heterogeneous energy system—one that diversifies a small number of products with a mix of products with widely varying returns, including with a green premium to increasingly fund more sustainable manufacturing practices. Such a shift will impact how they allocate capital, focus their R&D activities, and deploy their workforce.

3. Prioritize and strengthen the digital core—especially in a way that will enable AI enhancements to address key business challenges. Across the sector, digital-powered capital projects, digital delivery, AI-enabled core operations and resilient systems all rely on the digital core. An effective data foundation and cloud-first infrastructure are two key foundational elements to a strong digital core.⁹

To leverage Gen AI, Resources companies acknowledge the need to make changes in their data strategy, core processes and IT estate.¹⁰ Focusing on their data strategy requires them to define data needs based on business capabilities and continually enhance that data; this is coupled with creating an accessible data foundation. More broadly, leaders should assess their technology objectively to close gaps and create a tech backbone specifically built for the AI future, in part through companies’ improved management of their huge volumes of data in different formats.

For example, after examining its digital capabilities, one Asian oil company deployed generative AI and cognitive search to create a new knowledge base that makes information discoverable with minimal effort, automates the knowledge-gathering process for different roles across the organization, and helps reduce accidents. The power of AI is yet to be fully realized and leaders focused on building powerful, cloud-enabled digital cores are taking a critical step to lead the pack with this era-defining capability.

4. Harness new tools and tech to boost supply chain resilience. This persistent imperative remains at the forefront of strategic agendas this year, creating continued challenges and opportunities. Now, however, leaders have new tools to move the needle. Specifically, Resources companies should consider linking their supply chain capabilities with AI-based market sensing tools and generative AI-based tools for querying contracts. They can, for example, move from publicly available first-order information (e.g., logistics prices for various sources of transportation) to multi-modal data (e.g., satellite imagery, market intelligence, etc.) that predicts where pricing may head and enable shorter planning cycles.

We’re already seeing some service companies incorporate short-term weather events into their staging and planning processes. And operators are also beginning to use AI to model short- and long-term supply chain impacts and conduct detailed contract performance analyses. 2024 will mark a year when other Resources companies will do the same.

5. Reinvent cost management. Managing costs while boosting productivity is particularly challenging for Resources companies today due to long-cycle investments, challenges that lead to price increases in commodity or regulated markets, persistent inflation, and higher interest rates and geopolitical risks.

Businesses need to move past short-term financial improvements to create sustainable, long-term value. They can accomplish this by reinventing their cost management and productivity initiatives. Previously, companies considered their headcount and non-headcount costs separately. Now, through a holistic lens, they can look at them together to gain a clearer picture of where they can enhance performance. Similarly, cost management approaches of the past focused only on optimizing costs of current activity. Today, leaders are paying equal attention to the value they can unlock by optimizing the work that needs to be done—a shift that ensures savings really stick.

In 2024, Resources companies should increasingly move away from strictly identifying incremental cost improvements in favor of an approach that begins with “the art of the possible” and helps them set their sights on reinvention and the pursuit of a new performance frontier, their next-generation capabilities that drive success and competitive advantage. Central to this is also the value created by generative AI, which is key to unlock the productivity needed to facilitate the energy transition. And when it comes to generative AI and productivity in Resources, companies should think well beyond just workforce implications. Generative AI will significantly impact productivity through dynamic capital management; capital projects efficiencies; asset, production and trading optimization; customer experience; and energy efficiency optimization.

6. Accelerate decarbonization through proactive collaboration across the industrial value chain. While investments and innovations have the potential to lower decarbonization costs, the scale and speed of these endeavors are insufficient to achieve net-zero goals. Why? The current siloed approach has resulted in leaders concentrating solely on their respective organizations rather than actively engaging with the broader value chain. Consequently, this has led to an investment stalemate, where each party awaits the initiative from others. Successfully achieving net-zero goals requires a unified effort. This begins with cooperation between heavy industry and oil, gas and power and their customers down the supply chain.

These six actions define the priorities for 2024. Companies that pursue them will not only boost their resilience amid rapid change, but also position themselves to capture immediate new opportunities that can be the source of even greater improvements and value in the years ahead.

Contributors: Aleek Datta, Serge Lhoste, Marco Ribas and Miguel Torreira.

¹ Macro Foresight December 2023 year-end brief and January 2024 trends brief
² Macro Foresight December 2023 year-end brief
³ Ibid
⁴ Ibid
⁵ Macro Foresight January 2024 trends brief
⁶ Accenture, Reinvention in the age of generative AI research, 2024.
⁷ Accenture, Work, workforce, workers: Reinvented in the age of generative AI, 2024.
⁸ Accenture Reinvention in the age of generative AI research, 2024.
⁹ Accenture, Reinvention in the age of generative AI, 2024.
¹⁰ Accenture, Reinvention in the age of generative AI research, 2024