Linking Sustainable Development Goals and Climate Action in the Oil and Gas Value Chain

This study develops and tests a value‐chain framework to examine how climate‐related Sustainable Development Goal (SDG) commitments translate into governance actions, capability enhancements, and measurable reductions in total greenhouse gas emissions. We create a climate‐related SDG index encompassing SDGs 7, 8, 9, 12, and 13 and analyze data from 302 publicly listed oil and gas firms spanning 2019–2024 using fixed‐effects models and cluster‐bootstrap mediation techniques. Increases in the index are associated with more robust emissions policies and strengthened environmental partnerships, as well as advancements in environmental innovation and operational management. Mediation analysis uncovers offsetting channels: while innovation is linked to a decrease in year‐over‐year emissions, short‐term operational activities are associated with slight increases, leading to modest net effects in the short term. A heterogeneity analysis reveals differences across the value chain and geographic regions concerning partnerships, policy, and emission reduction. Based on these insights, we offer practical guidance for companies and policymakers—linking governance and capabilities—so that SDG commitments can effectively translate into emissions reductions.