Sustainability reporting is both a responsible and expected method for companies to communicate publicly on their environmental and social performance. The oil and gas industry has achieved many notable successes in the field of sustainability but challenges remain and it is becoming increasingly important for individual companies to tell their own stories in a clear, transparent, and straightforward manner. For oil and gas companies, reporting can provide a robust platform for describing how strategic issues are being addressed through long-term plans and current initiatives. Stakeholders can find details of a company’s high level vision and strategy for dealing with sustainability-related impacts, implementing action plans and assessing outcomes. Sustainability reporting within the oil and gas industry has evolved significantly over the past ten years with increasing numbers of companies producing reports, and these reports then being presented in ever more dynamic ways. There is an increasing focus on reporting as a critical engagement process with company stakeholders as well as employees, and organisations are now reporting on many more indicators than in the past, particularly regarding social and economic issues. As a result, the sustainability reporting landscape is continuously evolving as companies find new ways to report on the ways in which they conduct their operations. This paper will examine best practices in the oil and gas industry’s reporting on sustainability and will discuss the following aspects in more detail: - Industry reporting frameworks - Reporting challenges - Emerging trends in reporting
In 1987, the Brundtland Report, "Our Common Future", produced the widely accepted definition of sustainable development as "meeting the needs of the present without compromising the ability of future generations to meet their own needs". But what can sustainability mean for the oil and gas industry, which produces fossil fuel required to meet basic human needs today such as food, fuel and shelter? The oil and gas industry provides a fundamental energy resource while improving health, reducing poverty, and increasing productivity for the global population. Oil and gas are therefore integral to promoting economic growth and will continue to play a major role in meeting the world's energy needs for the foreseeable future. Global energy policies are promoting low-carbon energy technologies, and the use of modern renewables will almost triple by 2035 to about 14% of total supply. However, renewables cannot satisfy global demand growth, so consumption of both oil and gas will also continue to grow.1 Oil and gas companies must therefore continue to discover, produce and supply these energy resources, and it is essential that they do so in a safe, environmentally sound and socially responsible manner. This requires safeguarding the environment; respecting the rights of others; protecting the health, safety and security of workers and the public; meeting increasingly stringent laws and regulations, and yet managing a range of operational, reputational and financial risks. An additional responsibility for companies is the need to communicate openly how they conduct their operations – the vision, decisions and strategies used to pursue resource developments. Sustainability reporting is therefore both a responsible and an expected method for companies to communicate publicly on environmental and social performance. The oil and gas industry has made significant progress on these objectives but challenges remain and individual companies need to tell their own sustainability stories in a clear, transparent, and honest manner. Finally, sustainability reporting also helps to establish a basis for continuous improvement in business processes and risk management. In particular, reporting has value for reputational risk, access to capital, and strengthened customer and employee relationships. For oil and gas companies, reporting can provide a robust platform for describing how strategic issues are being addressed through long-term plans and current initiatives. Stakeholders can now find details of a company's high level vision and strategy for dealing with sustainability-related impacts, implementing action plans and assessing outcomes on company websites and in annual reports.
Oil and gas industry sustainability reporting is continuously progressing, with issue areas that mature and develop at different paces. Recent years have been characterised by an evolution in existing frameworks on voluntary sustainability reporting, the emergence of many new voluntary initiatives and mandatory sustainability reporting requirements in some countries. These varying expectations and different definitions of how and what companies should report have led to reporting challenges for many oil and gas companies.
As public interest in environmental and social issues has grown over the past 20 years, an increasing number of companies have responded by publishing sustainability reports. These reports document company performance on health, safety, environmental, social and governance factors, typically on an annual basis. This trend has been accompanied by a growth in voluntary frameworks, which aim to increase the usefulness of sustainability reports by making them comparable. More recently an increasing number of policy makers, governments and stock exchanges have been embedding sustainability reporting into policy and regulation through mandatory initiatives, with no less than 134 individual policies identified across 45 countries and regions in 2013.1 A significant number of oil and gas companies have been producing sustainability reports for many years, with the number continuing to increase each year. The 2013 KPMG Survey of Corporate Responsibility Reporting found that 72% of oil and gas companies report today, compared to 59 % in 2008.2 For oil and gas companies, sustainability reporting provides a platform for describing how strategic issues—such as climate change and energy—are being addressed through long-term plans and current initiatives. The benefits provided can include those relating to financial risk and opportunity to performance along environmental, social and corporate governance (ESG) dimensions, establishing the license to operate, providing a differentiator from competitors and fostering investor confidence together with trust and employee loyalty.3 Furthermore for some national oil companies, reporting can provide a robust way to demonstrate to the local population that they are effectively managing the country’s oil and gas resources.4 Despite the continued spread of voluntary sustainability reporting since the 1990s, and indeed the more recent growth of mandatory reporting initiatives by governments and stock exchanges, additional reporting initiatives continue to emerge.5 This is because the content of many reports continues to be questioned and financial institutions state that they are not finding the information they need. One observation is that existing reports lack focus; companies are currently trying to satisfy the needs of too many stakeholders in one document; that includes employees, local communities, analysts and socially responsible investors.6 This has resulted in the continued development of reporting frameworks by different organisations with little or no coordination between them.7 Consequently companies across all sectors are increasingly being asked to provide additional information to their annual sustainability reports (or the same information presented in different ways) by growing numbers of external organisations, such as rating agencies and non-governmental organisations (NGOs). Furthermore, many of these voluntary reporting schemes require increasing levels of complex information year on year without clear explanations of why a reasonable investor or analyst would need such information. There is also a gap in the evidence that demonstrates the link between reporting extensive volumes of information on top of what is already provided in traditional sustainability reports and good performance or even performance improvements.8
The oil and gas sector continues to provide essential energy supply for society's economic development. Managing sustainability impacts associated with producing these fuels and other energy products is an important responsibility. This includes addressing the challenges associated with climate change, and operating in remote and sensitive areas of the world. An important practice is sustainability reporting. Clear and consistent reporting helps companies create a solid platform for productive engagement and performance improvement.For oil and gas companies, sustainability reporting provides a platform for describing how strategic issues-such as climate change and energy-are being addressed through long-term plans and current initiatives. As well as building external trust and confidence in a company, the process of reporting involving stakeholder engagement, data collection, analysis, communication and results can provide extensive opportunities for performance improvements.The gathering and analyses of performance data and information can highlight areas of weakness that require management attention on an ongoing basis. The process of measuring and tracking procedures to collect data enable in-depth analysis of company performance and can be used as a decision making tool. Organizational strategy and policy can be adjusted on the basis of results to improve performance. Ultimately sustainability reporting can lead to a status quo of continual improvement and better data management, which can improve business performance, operational efficiency and lead to cost savings. This paper will explore the various ways in which companies can improve HSE performance from the benefits provided by sustainability reporting which can include:-enhanced business value as investor confidence grows in response to evidence that the company is managing important risks and positioning itself to take advantage of emerging opportunities; -improved operations as employees develop a deeper understanding of a company's sustainability values, and performance indicators provide insight to support continuous improvement; -strengthened relationships as local community leaders, civil society representatives, government officials and regulators, and other key stakeholders learn how the company responsibly manages sustainability issues; and -enhanced trust and credibility as customers, suppliers and the wider society understand the company's brand, operations and products.
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