Vital climate-related information will be included alongside other key metrics in oil and gas operators and licensees’ financial reports, following a successful cross-industry taskforce.
The Oil and Gas Authority (OGA) organised an Environmental, Social and Governance (ESG) taskforce when it became clear from engagement with the investor community - which is itself coming under pressure to play a greater role in supporting low-carbon business - that there was a gap between investor expectations and what was actually being reported.
The taskforce focused on the ‘E’ of ESG and considered environmental reporting, in light 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 support the drive to achieve net zero while also maximising economic recovery from the UK continental shelf. Furthermore, from 2023, reporting on these factors will be mandatory, so the OGA are helping industry to prepare to make the transition.
Many Operators already have such measures in place, and the OGA will support wider adoption by working with trade associations and groups such as OGUK and BRINDEX, and maintain momentum, through further regular meetings and teaching sessions to help industry adapt to the new requirements as soon as possible.
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.
The OGA Strategy is clear that operators and licensees should develop good ESG practices in their plans and daily operations. In doing so, they will also meet investor requirements.
The 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
Tom Wheeler, Director of Regulation, said:
“Some members of the oil and gas industry are already improving ESG reporting, but the industry as a whole must pick up the pace or risk losing not only its social licence to operate, but also the support of the investment community.
“The OGA has revised its Strategy to incorporate supporting the industry in its drive to reach net zero greenhouse gas emissions by 2050, and this reporting initiative is an important stepping-stone in that.”
Mike Tholen, OGUK Director of Sustainability, said:
“Industry well understands the growing importance of ESG reporting and looks forward to working with the OGA to implement a suitable reporting framework for UK operators.
“It will give industry the chance to showcase to investors the work they are already doing and will continue to carry out in areas such as sustainability, renewables, and low-carbon technologies, maintaining the UKCS as an attractive investment proposition as we lead a homegrown energy transition.”
The Taskforce is publishing its recommendations on optimal ESG reporting and has agreed several key indicators which it expects industry to meet, mindful of investor expectations around attracting capital in the future and in particular the mandatory compliance by 2025.
It is recommended that operators and licensees align to a common minimum standard of reporting and concluded that individual operators and licensees should be taking the next few months to consider how they will report against these metrics, and should work to be ready to report in Q1 2022 alongside the publication of their 2021 full year audited financial reports.
Notes To Editors
Link to Taskforce report
Revised OGA Strategy
For further information email firstname.lastname@example.org or call 07785 655620
Organisations represented on the Taskforce are:
Brindex – Robin Allan, Chair
Premier Oil – Toby Garwood, ESG Coordinator
Chryasor – Paul Hatton, Government and Environment Initiatives
Ithaca Energy – Rhona Macinnes, Corporate Affairs Director
Kerogen Capital – Tushar Kumar, MD Kerogen Capital UK
DNB Bank – Wendy Keenan, First Vice President Energy; Mark Munro, Senior Vice President Ocean Industries and Energy
Deutsche Bank – Federica Calvetti, Head of ESG, DCM EMEA
OGUK – Francesca Bell, Business Advisor; Will Webster, Energy Policy Manager
CMS – Judith Aldersey-Williams, Partner
Pinsent Masons – Elizabeth Budd, Partner
Investec – Alex Smith, Equity Analyst, Oil and Gas