Offshore oil and gas companies should include information on the effects of their operations on the climate in their financial reports to address investors’ concerns, said the Oil and Gas Authority (OGA).
Figures for flaring and venting emissions, alongside scope 1 & 2 emissions, health and safety statistics, fugitive methane emissions, air and water pollution risks, waste management and disposal and carbon intensity, as well as an action plan on how to support a low-carbon economy are expected to be included in the first reports.
Individual operators and licensees should aim to be ready to report, aligned to a common standard, in the first quarter of 2022 alongside their 2021 full year audited financial reports.
The OGA organised an environmental, social and governance (ESG) taskforce after investors, who also face pressure to support low-carbon business, said that there was a gap between investor expectations and what was actually being reported.
The taskforce focused on the ‘environment’ of ESG because of a perceived lack of standardised metrics that are manageable, repeatable, and comparable for industry and investors.
A second stimulus for action was the OGA’s revised Strategy which requires operators and licensees to aim for net zero while maximising economic recovery from the UK continental shelf. bityl.co/5tih
From 2023, reporting these factors will be mandatory.
Many operators already have measures in place, and the OGA will support wider adoption by working with trade associations and groups such as Oil & Gas UK (OGUK) and the Association of British Independent Exploration Companies (BRINDEX).
There will also be regular meetings and teaching sessions to help industry adapt to the new requirements as soon as possible.
The OGA Strategy states that operators and licensees should develop good ESG practices in their plans and daily operations while meeting investor requirements.
EXPECTATIONS
The OGA ESG taskforce agreed on a series of expectations for the future direction companies should take:
- Operators and licensees to disclose climate related data in their financial reports, and/or websites
- Industry to be mindful of the gap between investor expectations and what industry are currently reporting and we will encourage and ensure better disclosure & transparency
- Disclosure should both be quantitative and qualitative with signalled improvements over time
- Senior leadership teams to set the tone at company strategy level
OGA’s director of regulation Tom Wheeler added that the whole industry had to move quickly or risk losing its social licence to operate as well as investors’ support.