(Credit: Pixabay)All US Oil and Gas companies analyzed 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 summarizes a review of 30 US-based middle-market onshore oil and gas producers’ Securities and Exchange Commission filings and other public disclosures.
Additionally, 83% of the oil and gas producers are publicly disclosing some of their greenhouse gas emissions. That is up from 53% from the first report, which could be at least in part due to proposed SEC emissions disclosures.
However, most of the ESG disclosures are found in corporate sustainability reports and on company websites and not 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, are 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 localized companies will struggle with adding emissions targets into the 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 of the 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, more companies are also disclosing ESG information due to pressure from investors and other stakeholders. Approximately half of the companies revealed specific investor ESG information requests and how the producers responded.
It is becoming more common for stakeholders to request companies have leadership with ESG experience. Approximately two-thirds of the producers also have ESG-dedicated committees. Implementation of ESG goals is also increasingly being added to executive compensation.
