Sustainability - The path is clear . . . or is it?
Updated: Jun 15, 2021
Stakeholders such as investors, customers, community members and employees routinely seek to understand how companies manage their impact on the planet and people. This demand is driving both publicly owned and privately owned companies to develop sustainability programs with reporting frameworks. There are several published sustainability reporting frameworks and standards that organizations voluntarily use to report their company’s sustainability initiatives and metrics. Frameworks provide guidance on what to report on, whereas standards prescriptively tell you what you need to report. Listed below are some of the more well-known frameworks and standards.
International Petroleum Industry Environmental Conservation Association (IPIECA) – established in 1974 in response to the formation of the United Nations Environment Programme (UNEP) and serves as the oil and gas industry channel into UN’s IPCC and UNFCCC.
Global Reporting Initiative (GRI) – launched in 2000 and is the most widely used global standard.
Carbon Disclosure Project (CDP) – founded in 2000 but have since expanded their scope from solely carbon (climate change, forests, and water security).
B Corp – the movement began in 2006 and by 2007, 82 companies were certified as B Corps; a certified B Corp is a business that meets “the highest level of verified social and environmental performance, public transparency and legal accountability to balance profit and purpose.”
Sustainability Accounting Standards Board (SASB), now part of The Value Reporting Foundation – founded in 2011 and includes 77 industry-specific standards spread across 5 sustainability dimensions (environment, social capital, human capital, business model and innovation, and leadership and governance). The official merger of International Integrated Reporting Council (IIRC) and SASB to form the Value Reporting Foundation occurred on June 9, 2021 and is intended to provide a more coherent corporate reporting system.
Task Force on Climate-related Financial Disclosures (TCFD) – established in 2015 at the request of G20 Finance Ministers Central Bank Governors. The first recommendations were released in 2017.
Deciding on a framework and certain elements of a framework comes down to matching organization culture and processes to a framework and/or framework element that provides clear and precise transparency and full employee engagement.
Environmental, Social, and Corporate Governance (ESG): this term was born out of the financial market and is often referred to as sustainable investing. It includes central factors in measuring the sustainability and societal impact of an investment in a company or business and provides an investor a way to evaluate companies in which they want to invest. The Biden Administration has made combatting climate change a central part of his agenda and is taking steps to create ESG disclosure regulations for publicly held companies under the Securities and Exchange Commission (SEC). Currently, corporations in the United States are voluntarily disclosing ESG non-financial information at the request of investors and financial institutions.
O&G GHG Emissions: Today’s path for O&G companies to transition towards lower GHG emissions is unclear. There are currently 20 voluntary initiatives available to the industry, ranging from certifications to commitments, guidelines, and ratings. The latest voluntary emissions reduction initiatives include the IES Trustwell™/Project Canary Responsibly Sourced Gas (RSG) certification and the EIC/GPA Midstream ESG Reporting Template. Some O&G Companies are innovating their way to the top of the leader board. As an example, Berkshire Hathaway Energy Compression Services (BHECS), with their goal of “no methane left behind”, is not waiting for industry to coalesce to a single initiative.
If you would like to learn more, please contact Joel LeBlanc, P.E. at email@example.com or (281) 806-5830.