IPIECA, the American Petroleum Institute (API), and the International Association of Oil & Gas Producers (IOGP) today released the new edition of the “Sustainability Reporting Guidance for the Oil and Gas industry.” The report provides oil and gas companies with a framework to demonstrate their role in the energy transition by reporting on how they manage climate and sustainability impacts and opportunities.
Updates to the guidance cover six areas of focus:
- Reporting process
- Governance and business ethics
- Climate change and energy
- Safety, health and security
- Social impacts
Notably, modifications were made to improve reporting of performance indicators related to “climate change and energy,” as these areas are of real interest to an investment community increasingly committed to financing innovative, lower-carbon energy paths.
Climate change and energy
Under this section, the report states that communicating your governance approach allows investors and other stakeholders to build confidence in a company’s capability to be part of the global energy transition and to meet climate change challenges. This includes addressing climate-related risks and opportunities in terms of market positions, policies and strategies, regulatory frameworks, and the influence of scenarios on future energy supply and demand.
Under the subheading of “climate governance and strategy,” the research suggests companies report on the following:
- Describe your approach to governance and management of climate-related risks and opportunities, including board-level accountabilities and processes that allow related issues and impacts to be considered when making strategic business decisions.
- Report the highest-level position in your company that is accountable for policy and strategy on addressing climate-related risks and opportunities.
- Disclose your positions and any related policies that address climate-related risks and opportunities for society and ecosystems.
- Discuss the relationship between future energy supply/demand balances and your climate policy and strategy, including how the transition risk to lower-carbon energy may influence your asset base, business performance and value.
Under the subheading “lower-carbon technology,” the study states that a company’s reporting elements should:
- Describe how you introduce and apply technologies that reduce CO2 emissions, that relate to:
- operations (Scope 1);
- imported electricity and steam (Scope 2); and
- as applicable, consumer use of products (Scope 3).
- As applicable, discuss your approach to supply of lower-carbon and/or alternative energy, including descriptions of relevant operational activities, plans or projects. If relevant, include:
- data on amount and type of energy supplied; and
- management of any associated social or environmental impacts.
The updated guidance represents the work of more than 80 representatives from 28 oil and gas companies from six continents and an independent external stakeholder panel comprised of experts representing NGOs, investors and investor groups, banks and expert consultants.
The full report can be found here.