Northampton, MA –News Direct– Workiva
By Steve Soter
As we move into the second half of 2021, energy companies recognize the growing importance of ESG disclosures and reports. As many adopt <, increase efficiency and integrate renewable or alternative energy into their operations to meet new mandates and regulations in the United States and the European Union, as well as to ensure they attract investment.
The SEC’s recent review of existing climate disclosure requirements and the expected rule proposal on additional mandatory disclosures create a sense of urgency for companies to figure out how to stay in compliance with direct and indirect impact disclosure they have on climate change.
These potential new regulations will help ensure consistency and standardization of climate related reporting to industry. Standardized methodologies and a common level of disclosure will support industry efforts to reduce its impact on climate change. It will also help investors compare climate-related disclosures between oil and gas companies, an effort supported by the American Petroleum Institute’s recent announcement establishing a framework for the industry. And, without a doubt, the recent and high-profile attention to these issues within the industry has only accelerated the need for such standardization and comparable disclosure.
With regulations looming and promises to reduce net carbon emissions, the pressure is greater than ever to keep the industry accountable and ensure ESG disclosures are as accurate as possible. As the energy sector “operationalizes” ESG, the data challenges will be significant. and tell an audit-ready and consistent story, backed by reliable and transparent information.
Evaluate the present to determine the future
As climate change reporting standards continue to evolve, companies should disclose the potential and actual impacts of climate-related risks and opportunities on an organization’s business, strategy and financial planning when this information is material. The recent SEC review made this clear. Moreover, as strategic decisions are increasingly based on climate impact factors, industry players simply cannot ignore ESG issues. It is essential that these companies assess their current position and set realistic targets to reduce their contribution to climate change.
To get started, companies need to set concrete and achievable emission reduction targets to demonstrate their commitment to tackling climate change. To do this, they must not only be aware of their current rate / volume of carbon emissions, but must also develop a data-driven plan, to reduce emissions from reliable and transparent data sources that encourage prioritization. impactful ways to ensure that future business practices do not undermine their ambitions.
In addition to pivoting their business strategy, companies also need to define information governance standards to establish baselines in how they measure their key performance indicators (KPIs). It also provides companies with a consistent and transparent way to measure their progress over time and hold themselves accountable for their emission reduction commitments.
Integrate ESG into the company’s strategy
Apart from complying with applicable regulations, investors want to see that climate change is appropriately considered when a company makes strategic decisions. To demonstrate this, companies must start with reliable, accurate and verifiable data.
Notably, industry giants such as Equinor and, more recently, BP have made great strides in improving monitoring and announced in 2020 that they aim to install methane measurement at all of its major processing sites. oil and gas by 2023 and reduce its methane intensity by 50. percent.
Consistent and frequent collection and reporting of emissions data ensures the accuracy of the data compiled, rather than relying on estimates. This allows teams to keep abreast of internal developments and progress towards industry milestones and benchmarks while reducing the need to go back and manually search through data compilations when it’s time to report. sustainability measures to stakeholders.
Find ways to streamline ESG reporting
The growing attention of investors and industry organizations to ESG data is driving critical operational changes. Oil and gas companies are challenged to manage and track an increasing scale of disparate data as disclosure becomes mandatory.
To address this, companies need to take a defined approach backed by digital compliance tools that simplify process complexity to deliver usable, verifiable and transparent data to stakeholders. This is all the more important as new disclosure and issuance standards come into play.
Reliable reporting systems will help teams communicate across silos, geography and across the enterprise. This enables real-time collaboration, allowing business teams to consistently report the most recent information. Additionally, by automating these processes, businesses can establish continuity between various platforms and data sets, ensuring that reports are consistent and in a compatible format.
Towards a better future for the environment
Oil and gas companies will continue to be monitored to ensure that they not only take proactive steps to reduce their environmental impact, but are also transparent with climate-related disclosures, especially in light of increased regulatory scrutiny.
As ESG measures move up the priority lists for investors and industry regulators, and with new regulations on the horizon, organizations will be forced to be transparent in their reporting; thus allowing potential investors to have a clear understanding of their practices and intentions.
This can only be achieved by using the right solution to collect and aggregate data from different areas of the business to create accurate and verifiable reports to demonstrate progress. Now is the time for oil and gas organizations to take the lead in ensuring that they are aligned with the changing values of investors and society as a whole, thereby cementing their role in a more positive future.
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