Many Oil and Gas Producers Disclose ESG as Pressure Mounts from Investors

Published on: 2 May 2022 07:54 PM
by KnowESG

According to a survey by Haynes and Boone and EnerCom, more oil and gas producers in the United States are publicising their ESG efforts as investor pressure intensifies and as a result of pending SEC requirements.

Only one of the 30 firms surveyed for the Oil and Gas ESG Tracker said their ESG policies were publicly publicised, up from 21 in the spring 2021 edition.

While the particular ESG elements released and where the information is published vary, the analysis concludes that the additional disclosure has addressed investor concerns while also helping justify industry spending.

The top ten institutional investors in the producers evaluated for the research have $71 billion invested in the group, which is more than double what was reported in the summer 2021 report.

According to the survey, due to the increased funding, investors are using varying amounts of ESG valuation criteria and are unsatisfied with the quality of third-party analytics providers, relying on business disclosures.

This has resulted in more precise ESG information being provided on the operations of corporations, and investment in companies that make more ESG disclosures is likely to continue. According to the research, this has led to corporations providing incentives to leaders, such as tying salary to measurable ESG targets.

The SEC's announcement in March that it will begin requiring publicly traded corporations to disclose Scope 1, 2, and 3 emissions and other climate-related regulations has prompted more companies in the industry to report ESG progress. However, the majority of companies are now submitting the data on their websites rather than directly to the Securities and Exchange Commission.

The SEC guidelines will also force corporations to provide disclosures following certain Transparency and Consent Framework principles and SASB reporting criteria, according to the report. CDP estimates that oil and gas production and usage account for half of global greenhouse gas emissions related to energy use, highlighting the importance of tracking direct and indirect emissions in the industry.

According to the report, as more oil and gas corporations boost their disclosures, less than a quarter of them have declared net zero emissions targets. Nearly half of the 24 corporations that have publicly disclosed greenhouse gas emissions do so for Scope 1 and 2, with 8% also releasing Scope 3 emissions.

According to the research, many people aiming toward net-zero targets are doing so through technological advancements, operational efficiency, and carbon offset purchases. In addition to past results, the majority of the disclosures include current ESG goals.

As the importance of ESG reporting expands across industries, tools and technologies to help improve such efforts have tried to keep up. Wolters Kluwer, for example, has released a sustainability management system, while Deloitte is investing $1 billion in a large network to assist corporations in developing plans to accelerate transitions and meet targets, including disclosure and regulatory needs.

According to the oil and gas poll, most respondents are encouraged to stay on top of ESG disclosures because they are concerned about the possibility of negative perception and operational impact if ESG implications are not addressed.

Source: Environment + Energy Leader