global sustainability reporting practices and trends in the oil and gas industry - a survey

7/17/2019 Global Sustainability Reporting Practices and Trends in the Oil and Gas Industry - A Survey

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Copyright 2004, Society of Petroleum Engineers Inc.

This paper was prepared for presentation at The Seventh SPE International Conference onHealth, Safety, and Environment in Oil and Gas Exploration and Production held in Calgary, Alberta, Canada, 29–31 March 2004.

This paper was selected for presentation by an SPE Program Committee following review ofinformation contained in a proposal submitted by the author(s). Contents of the paper, aspresented, have not been reviewed by the Society of Petroleum Engineers and are subject tocorrection by the author(s). The material, as presented, does not necessarily reflect anyposition of the Society of Petroleum Engineers, its officers, or members. Papers presented atSPE meetings are subject to publication review by Editorial Committees of the Society ofPetroleum Engineers. Electronic reproduction, distribution, or storage of any part of this paperfor commercial purposes without the written consent of the Society of Petroleum Engineers isprohibited. Permission to reproduce in print is restricted to a proposal of not more than 300words; illustrations may not be copied. The proposal must contain conspicuousacknowledgment of where and by whom the paper was presented. Write Librarian, SPE, P.O.Box 833836, Richardson, TX 75083-3836, U.S.A., fax 01-972-952-9435.

IntroductionOil and natural gas companies realize that measuring andreporting sustainability performance is increasingly important

to both internal and external stakeholders. Not only is it an

opportunity to enhance a company’s reputation, it provides

license to operate and access to new opportunities. It alsoclarifies the industry position for external stakeholders.

Oil and gas companies have for many years been carefully

measuring and openly reporting financial performance

according to well prescribed accounting rules. Yet, companiesface significant challenges when they extend the same practice

to reporting sustainability performance:

• There is no industry consensus on what constitutessustainability reporting.

• As companies internalize the concepts of sustainability,

they discover that the measures change.

• While guidelines such as the Global Reporting Initiative(GRI) are emerging, it is not clear that they satisfy the

needs of the oil and gas industry.

In response to this challenge, the American Petroleum Institute

(API) and the International Petroleum Industry EnvironmentalConservation Association (IPIECA) initiated an industry-led

initiative in 2001 to help oil and gas companies and industry

associations improve the quality, scope, completeness andusefulness of reporting sustainability performance as a means

to meet the needs and expectations of key internal and external

stakeholders.

This initiative resulted in a study of sustainability reporting

practices and trends, published in early 2003, and an on-goingeffort to provide an on-line sustainability reporting suppor

tool for the industry. This paper focuses on the results of the

study, summarizes the report entitled Compendium ofSustainability Reporting Practices and Trends, and looks

beyond the report to offer a perspective of future reporting

issues that face the industry.

Survey MethodsThe IPIECA-API led industry task force contracted Battelle to

perform the research, analysis, and report development for thistudy. Battelle surveyed API/IPIECA members worldwide to

develop a benchmark of current EHS and sustainability

performance measurements and reporting practices, trendsand needs. Sixty-five companies were invited to complete an

on-line survey, and a total of 32 companies responded (Table

1).

Table 1 - Companies Responding to Survey

The characteristics of the companies responding included:

• Mostly (69%) integrated oil and gas companies;

• Range from >$25 billion (bn) (12 companies) $10-25bn(4), <10bn (11), and <1bn (4);

• Based in North America (53%), Europe (25%), and AsiaPacific, Latin America, or Africa (22% combined) – noresponses were provided by companies based in the

Middle East or Former Soviet Union;

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Global Sustainability Reporting Practices and Trends in the Oil andGas Industry - A SurveySophie Depraz/IPIECA, Walter C. Retzsch/API, Donald A. Salmond/Battelle,and Bernhard Metzger/Battelle

Participating Companies Alyeska Ocean Energy Amerada Hess PDVSABG PetrobrasBHP Billiton Petro-CanadaBP PetronasBurlington Resources PhillipsChevron Texaco Premier OilCitgo Repsol YPFCNOOC ShellConoco StatoilEngen Petroleum Suncor Energy Inc.ENI SunocoExxonMobil WilliamsMarathon TotalFinaElfMetasource (Woodside) Unocal

Nexen Valero



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How often do you verify results?

0 2 4 6 8 10 12 14 16 18

Informal verification

Internal verification

External verification

Number of Responses

Annually Less Frequently Than Annually More Frequently Than Annually

• Most (63%) issue annual public EHS and/or SD reports -

although 25 percent have never reported before; and

• Overwhelmingly (88%) report for both internal

performance improvement and external stakeholder

engagement reasons.

(Compendium, 2003)

Sustainability Reporting PracticesThe study found that most companies (75% of those surveyed)

issue external reports that include measures of environmentaland safety performance. (Figure 1) Twenty companies report

annually on company-wide performance, while a smaller

number report to the public on performance at the business

area, operating unit or operating region level.

Figure 1- External Reporting Frequency

More companies report information internally than externally,

and they do it more frequently (Figure 2). They are also morelikely to disaggregate performance information to show results

at the business area level or lower.

Figure 2- Internal Reporting Frequency

Interestingly, we found that internal reporting of disaggregated

information, while more frequent, was likely to be limited to

environmental performance indicators. For example, 20 of the25 companies reporting social/community investments do so

only at the company level.

The most commonly reported performance measures are

environmental indicators (shown in blue in Figure 3 below),

although most respondents also report health and safety

performance (red) and social/community investment (yellow).

Figure 3-Commonly Reported Performance Measures

A review of the metrics used indicates that the majority are

lagging indicators. Only social/community investment couldarguably be described as a leading indicator.

Figure 4- Verification Practices

Although many companies verify their performance results

only nine respondents indicated that they use external verifiers

on an annual basis.

Sustainability Reporting TrendsThe study found that future reporting practices are likely to

include more metrics and targets focused on sustainable

development. However, oil and gas companies, particularly

larger companies, still find that selecting, defining, andmeasuring sustainability indicators are a challenge

In response to a question about which sustainability metricswould most likely be reported in the future, respondents

indicated that consumption of raw materials and watersustainable development/safety and health expenditures and

investment in renewables are most likely to be reported

externally (Figure 5). Ethics and bribery issues were also

frequently mentioned, but for internal reporting.Also notable is that more companies plan to commit to

performance targets in external reports than do so now

particularly for metrics related to sustainability. Figure 6

shows the relative importance of resource issues in the future.

How often do you report performance internally?

0 5 10 15 20 25

Company Wide

By business area (e.g.,

upstream, etc.)

By some or all operating

units

By operating region (e.g.,

GoM, Latin America, etc.)

Number of Responses

Annually Less frequently t han annually More frequently than annually Not reported

How often do you report performance externally?

0 5 10 15 20 25

Company Wide

By business area (e.g.,

upstream, etc.)

By some or all operating

units

By operating region (e.g.,

GoM, Latin America, etc.)

Number of Responses

Annually Less frequently than annually More frequently than annually Not reported

5 10 15 20

Oil Spills

Fatalities and LTIRSocial/community investment

EHSre lated f ines aid

NOx & SOx emissions

GhG emissions

Total hazardous waste

CO2,CH4, VOC emissio ns

Number of responses (n=32)



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A Look AheadThe Compendium of Sustainability Reporting Practices andTrends notes several key learnings for the industry to take intoconsideration as it moves forward on corporate sustainability

reporting:

• Commitment and Baseline for Progress – The oil and

gas industry has a business case for improving

sustainability reporting and the survey provides an

important baseline from which the industry can steerand measure its progress.

• Importance of SD Reporting to Industry - Research

performed for the Joint Corporate Reporting

Initiative and on-going external engagement by the

industry on this topic indicates that the oil and gas

industry needs to improve reporting of sustainability performance. This is because:

o Stakeholder trust and engagement are

increasingly critical to business success inthe oil and gas industry; and

o A key interest area of stakeholders is in SD

performance, an area in which performanceis difficult to measure.

• Making Progress on Trends in Reporting – The

survey revealed a number of important trends in

sustainability reporting. For example:

o Consistency in Reporting – The industry

needs consistent definitions and guidelinesfor sustainability performance metrics.

o Reporting at the Local Level - Reporting at

the local (operating unit or country) level is

becoming more prevalent and seen as moreimportant, especially for indicators ofimpact.

o Development of Sustainability Metrics - In

its attempts to improve reporting practices,the industry should pay particular attention

to developing reliable and consistent

methods to define and measure performance

for indicators of resource intensity (water

and energy use) as well as socialaccountability.

o Verification – The industry, as well as

outside stakeholders, have identifiedexternal verification as an issue ofincreasing importance to sustainability.

• Quality vs. Quantity of Metrics and Targets - oil and

gas companies will do well to ensure they havesystems to accurately and reliably set targets for,

measure, and promote performance improvement for

indicators that are meaningful and supportive of their businesses. In making progress on sustainability

performance reporting, companies may make best use

of resources by limiting the number of indicators

used and ensuring that performance in these areas is

tracked accurately and reliably.

In addition to these observations, there are forces at work

today that will change tomorrow’s reporting practices. It wil

be helpful for the industry to consider them as it develops a

strategy for sustainability reporting.

• Bandwidth – Technology has increased the speed and

ease with which massive volumes of information can be

obtained. This is an opportunity and a risk to theindustry. Companies will need to grow their ability to

make the right decisions about which information to

share and how to share it, and will have to make thatdecision with greater speed.

• Consistency – With greater bandwith comes the abilityfor external stakeholders to compare data, and theexpectation that companies will facilitate that comparison

by reporting openly and consistently, not just within an

industry, but from industry to industry.

• Credibility - The current corporate credibility crisis isdriving the need to overcome presumptions of distrust

This places greater pressure on companies to develop

reporting programs that are transparent, accurate, verified

and timely.

Trends in regulation and sustainability practices may, in the

future, change the voluntary nature of reporting and the

reporting boundaries

• Mandate – The European Union, South Africa and

Canada are all moving toward mandatory sustainabilityreporting. NGOs and other stakeholders are pressing theSecurities and Exchange Commission to require

additional disclosure of environmental liabilities.

• Integration - The current corporate or facility boundaries

for monitoring and reporting performance may broadenin the future. Life-cycle concepts, as well as the trend

toward including suppliers and contractors in teaming

arrangements, may influence the breadth of reporting toinclude the entire supply chain.

More speculative, but with some basis in today’s shift in

regulatory philosophy and consumerism, future scenarioscould increase the importance of reporting to a company’ssuccess:

• Reliance - Companies and governments may shift

toward more reliance on self-regulation. With thashift may come a role for reporting as a means of

reducing regulatory burden and cost

• Influence – Just as today’s consumers compare

alternatives using product information, tomorrow’s



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consumer may have more data for more products,

available instantly (see Bandwith). In such an

environment, company performance could be asignificant differentiating factor.

Figure 5- Future Sustainabilit y Reporting Practices

Social Social/Community Investment

Employee Volunteer Time

Diversity (ethnic, gender) Employee Issues

Employee Turnover

Child Labor

Bribery/Business Ethics Cases

Resource Management Energy Consumption/Production Total Water Consumption Raw Material Consumed Land Disturbance/Rehabilitation Investment in Renewables (%) Economic Environmental Expenditures Safety/Health Expenditures Sustainable Development Expenditures Regulatory Sanctions (Penalties) HSE-Related Fines/Penalties Paid

HSE-Related Citations/NOVs Other Metrics ISO 14001 or Other Mgt. System Contractor/Supplier HSE Performance

Metric only Considering Reporting

Externally in the Future

Internally Measured Not

Considering Reporting



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Figure 6 -Ranking of Future Resource Issue Reporting

0 5 1 1 2 2 3 3

Water

Energy

Security

Renewables

Social Accountability (e.g., ethics, bribery, child labor, diversity)

Life-Cycle Assessment

Eco-efficiency

Environmental

Emissions to Air

Biodiversity

Indigenous People

Product Stewardship

Technology Innovation

Effluents to Water

Human Rights (e.g., forced labor, freedom of association)

Safety

Health

Materials

Waste

Training

Facility/Material Losses or Loss Prevention

Animal Testing

Number of Responses

Increasing Sam Decreasing

global sustainability reporting practices and trends in the oil and gas industry - a survey

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