Updated Guide Aims To Improve Breadth, Transparency of Sustainability Reporting
The fourth edition of the Sustainability Reporting Guidance for the Oil and Gas Industry increases the number of issue areas from 12 to 21 and includes a greater focus on climate and energy.
IPIECA, the American Petroleum Institute (API), and the International Association of Oil and Gas Producers (IOGP) released a new edition of the Sustainability Reporting Guidance for the Oil and Gas Industry, marking more than 15 years of collaboration between the member companies across the three associations.
“The fourth edition of the Sustainability Reporting Guidance provides oil and gas companies with a clear framework to demonstrate their important role in the energy transition by reporting on how they manage climate and sustainability impacts and opportunities,” IPIECA Executive Director Brian Sullivan said. “IPIECA encourages all oil and gas businesses across the industry to go beyond reporting on financial data and to also disclose their climate, environmental, social, and sustainability activities.”
Updates to the guidance have been applied to six areas of focus: reporting process; governance and business ethics; climate change and energy; environment; safety, health, and security; and social impacts. Notably, IPIECA said, modifications were made to improve reporting of performance indicators related to climate change and energy because these areas are of interest to an investment community increasingly committed to financing innovative, lower-carbon energy paths.
“The US natural gas and oil industry is committed to environmental stewardship, safety, and strong stakeholder relationships,” said Mike Sommers, API’s president and chief executive officer. “Oil and gas companies were among the first businesses to pioneer sustainability reporting. This guidance helps provide detailed reporting on environmental, health, safety, social, and economic performance—critical information that helps to foster collaboration with a wide range of stakeholders focused on creating a significant turning point in meeting the challenge of climate change head on.”
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 composed of experts representing nongovernmental organizations, investors, banks, and expert consultants.
“This guidance is not only a practical tool for reporting, it enables and enhances engagement with stakeholders across society as we collaboratively navigate the energy transition,” said Gordon Ballard, IOGP’s executive director. “Our industry is well aware of the opportunities and challenges that the future holds. Navigating these successfully is in each company’s interest.”
Key Changes for the 2020 Update
- A new modular structure enables faster updates to reflect industry progress on specific topics or important external developments.
- New “key points to address” give practical recommendations on developing a report’s narrative—for example, to address new reporting frameworks (such as the UN Sustainable Development Goals) or legislative change (such as modern slavery requirements in some jurisdictions) or increased investor focus on environment, social, and governance (ESG) topics.
- Twenty-one sustainability issue areas are covered and supported by 43 performance indicators, compared with 12 issues and 34 indicators in the 2015 guidance.
- Each indicator has been updated with two revised tiers of reporting elements, Core and Additional. The guidance retains 52 elements previously categorized at the Common level, while elevating or adding 72 elements to the new Core level that reflect the extensive range of current sustainability issues that are typically material for all companies to report. A further 194 Additional elements have increased the total number of reporting elements by more than 50% for this update, encouraging companies to improve the breadth and transparency of their reporting.
- As well as new indicators covering governance and strategy, risks and opportunities, lower-carbon technology and methane, the major revisions within the climate change and energy module incorporate the most recent IPIECA climate change reporting framework and has been informed by the recommendations of the investor driven Task Force on Climate-Related Financial Disclosures.
- A new module on governance incorporates guidance on business ethics to complement the four modules that cover the reporting process, environment, social and safety, and health and security.