Governing a Portfolio of Joint Ventures: How Do You Measure Up?

Key findings from our latest benchmarking.

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GettyImages-1197430754-squaredA DECADE AGO, we established a set of objective tests to allow companies to calibrate how well they are governing their portfolios of joint ventures. At the time, many companies were waking up to the materiality, risks, and untapped performance potential of their joint ventures, especially those that the company did not operate or control. Major HSE incidents at Macondo and Samarco – both joint ventures – and a series of high-profile bribery and corruption scandals and partner litigation further elevated the appreciation for risks in joint ventures in ensuing years. To this day, our Standards of JV Portfolio Governance Excellence remain the only tool for companies to independent-ly calibrate themselves against peers on the journey to excellence.1

To take stock, we recently benchmarked 45 large natural resource companies against our Standards. This research included participation from 80% of the world’s largest public and state-owned companies in the oil and gas, chemicals, mining, and renewable energy sectors. To gather inputs and test our findings, we conducted more than 200 interviews over a six-month period, reviewed hundreds of company documents, and previewed our results in individual company sessions and four JV Roundtables we hosted for the oil and gas, chemicals, mining, and renewable energy industries.

Key findings include:

Overall Trends and Who’s On Top

  • The median company scored 3.2 on our 10-point scale, representing a modest increase since 2012
  • Companies that had high scores have higher three-year returns on capital than those that recorded lower scores
  • Two companies emerged as notable leaders – BHP and SABIC
  • The biggest gains were made by state-owned oil and gas companies, while a number of first-generation leaders have stagnated or regressed
What They Are Doing

  • Roughly one-third of companies have an executive-level sponsor for joint venture excellence
  • 65% of executive sponsors and their teams now have some involvement in JV transaction structuring and due diligence – a significant increase in the last decade
  • Companies are slowly, but haltingly, providing more external transparency into their ESG performance in their non-operated ventures, including fatalities and emissions
    What follows is a more detailed discussion of the context, findings, and recommendations from our research.

What follows is a more detailed discussion of the context, findings, and recommendations from our research.


Most leading energy and other natural resource companies hold large and material portfolios of joint ventures (Exhibit 1). In chemicals, mining, and renewable energy, firms like BASF, Dow, SABIC, BHP, Anglo American, Iberdrola, and Ørsted own interests in 20-40 or more controlled and non-controlled joint ventures, including production assets, supporting infrastructure plays such as transport or storage joint ventures, and more broadly-scoped business joint ventures. In oil and gas, the numbers are even higher, especially among majors like Shell, Total, and ExxonMobil which hold portfolios of 100 or more joint ventures that on average account for 75% of upstream production.

Companies are under pressure on a variety of fronts to drive meaningful change in this installed base.

ESG Reporting and Performance Pressures. Investors, governments, local communities, customers, and the public are demanding that companies improve their environmental, social, and governance footprints across their assets. This pressure now extends directly into a company’s joint ventures, including those it does not control. Rockefeller Asset Management and EDF just released a report entitled “The Emission Omission” which argues that there is an “accountability gap” in the labyrinth of non-operated assets run by a company’s production partners because environmental reporting and targets typically only cover a company’s operated assets.2 Other external groups that focus on human rights, openness, governance, diversity, and community engagement, including the Equality and Human Rights Commission and Oxfam, have started to set their sights on joint ventures, and demanding better performance from firms.

Exhibit 1: Number of JVs in Company Portfolios

Number of JVs in Company Portfolio Tr

Ankura ©.

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Restructuring Pressures. Adding fuel to the fire, the current economic downturn and low commodity price environment are forcing companies to restructure their businesses, including their joint ventures, to reduce operating costs and capital spend. And yet joint ventures can be challenging to revamp quickly due to multiple owners with divergent strategies and financial profiles, and a shared voting construct which requires unanimous or supermajority approval for significant changes. Meanwhile, for many of the largest state-owned oil and chemical companies, joint ventures remain the core platform for international growth and a key to generate greater synergies domestically, where assets are often held in siloed joint ventures with different international partners. Our analysis shows the median JV takes 39 months longer to restructure than what would be expected for a wholly-owned business – but that JVs that undergo at least one major restructuring were more than twice as likely (79% vs. 33%) to meet their owners’ strategic and financial objectives compared to JVs that remained largely unchanged.3

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1 This article does not provide any accounting or legal advice or recommendations.

2 Emission Omission: A Shareholder Engagement Guide to Uncovering Climate Risks from Non-Operated Assets in the Oil and Gas Industry, Rockefeller Asset Management and EDF, October 2020.

3 “Your Alliances are Too Stable,” David Ernst and James Bamford, Harvard Business Review, June 2005.