US Oil and Gas Companies Make ESG Strategies, Slower on Net Zero

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by KnowESG

All US Oil and Gas companies analysed in a recent report are adopting ESG policies, but less than a quarter of those producers have made net-zero commitments.

The findings come from the fourth edition of the Oil and Gas ESG Tracker from Haynes and Boone and EnerCom. The fact that all the companies say they are adopting ESG targets shows the industry is taking steps toward such measures, considering the first report released in the spring of 2021 had the number at 70%.

The report is a summary of a review of the SEC filings and other public information from 30 middle-market onshore oil and gas producers in the US.

Also, 83% of oil and gas producers talk about some of their greenhouse gas emissions in public. That is up from 53% from the first report, which could be at least in part due to proposed SEC emissions disclosures.

The majority of ESG disclosures, however, are found in corporate sustainability reports and on company websites rather than in SEC filings. If the SEC emissions rules, which take on Scope 1, 2, and 3 emissions, are put into effect, companies would have to adjust the way they report their ESG efforts. Overall, most of the oil and gas producers are reporting some element of their Scope 1 and 2 emissions, but few are reporting their Scope 3 emissions, which account for a large portion of the industry’s emission output.

According to Ceres, emissions from petroleum and natural gas consumption accounted for 55% of the US’s greenhouse gas emissions in 2015. Direct emissions from the industry were 4% of the country’s total.

Some of the efforts the oil and gas producers have taken on include 33% using renewable energy in their field operations or implementing emissions reduction technology. Three-quarters of the companies have revealed water data, but 6% of them have water sustainability plans in place.

The fact that fewer than 25% of the companies have made net-zero targets comes in light of some questioning whether or not the oil and gas industry is doing enough to take on emissions concerns. It has been shown that participating in projects such as carbon capture and storage is common in the industry, but that those efforts may not be as clear as they seem and could be benefiting the oil and gas business more than removing emissions.

An earlier report from Sustainable Fitch found that oil and gas companies are struggling with business strategies to address low-carbon transitions. That report says larger companies are better equipped due to more resources to make changes, but that smaller and localised companies will struggle with adding emissions targets into their business strategies.

The Haynes and Boone and EnerCom analysis looks at if the companies have said they are looking to reach net zero between the current year and 2050. All but one of the companies that have made net-zero targets aim to do so by 2035.

To reach ESG targets, the report finds more oil and gas producers are using data and metrics to track their progress. Platforms to help with ESG collection, such as a cloud-based system from OneTrust and a digital management system from PwC and Sphera, are increasingly being used across industries.

According to the analysis, investors and other stakeholders are also getting more companies to share ESG information. About half of the companies shared specific investor requests for ESG information and how the producers answered those requests.

Stakeholders are more and more likely to ask companies to hire leaders with experience in ESG. Approximately two-thirds of the producers also have ESG-dedicated committees. Implementation of ESG goals is also increasingly being added to executive compensation.

Source: Environmental Leader

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