ESG Strategy Development and Reporting in the Oil and Gas Industry: Improve Competitive Advantage and Reduce Liability Through Best Practice Reporting Based on Materiality, Data and Transparency | FTI Council
[co-author: Calvin Lee]
Oil and gas companies have good reason to pay attention to the importance of carefully implementing ESG programs and their associated goals, claims and disclosures. While it is now generally expected that most companies will pursue such initiatives, the ESG reporting ecosystem in the United States currently lacks effective and universal non-voluntary standards to guide the consistent disclosure of potentially important information. Therefore, developing and implementing ESG strategy and associated communications can be a risky double-edged sword.
Companies are expected to communicate their initiatives, goals, and potentially significant risks and opportunities – but doing so without formal safeguards often exposes them to multi-stakeholder criticism for (a) not responding to stakeholder demands for stronger transparency on ESG issues, or (b) providing information that is supposed to be useful for the decision, but with further consideration by stakeholders, arguably lacks substance to support ESG representations. Expectations and scrutiny will undoubtedly only increase as more spotlight is put on ESG issues, such as the United Nations Intergovernmental Panel on Climate Change (IPCC) report released on August 9. Although the UN chief calls the current state of the planet a “code red for humanity”, there are reasonable hopes that significant reductions in greenhouse gas emissions could stabilize rising temperatures and avoid a disaster.
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