Oil and Gas 360

Happy 2020!

Over the past six months, EnerCom has been crisscrossing the continent and meeting with oil and gas executives and the investment community to talk about Environmental, Social, and Governance (ESG).

ESG for the Oil and Gas Industry – What You Need to Know for 2020- oil and gas 360

Source: Reuters

There are many definitions of ESG. One such example is;  “Environmental, social and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, auditsinternal controls, and shareholder rights.”*

What EnerCom has consistently found:

  • Conversations about ESG are increasing within the oil and gas industry
  • A growing number of investors are employing varying degrees of ESG valuation metrics
  • Water programs and VOC, methane and CO2 emissions are key issues regarding environment
  • Executive compensation and diversity are important topic in corporate governance

We also found out that IR officers hate filling out multiple, different, ESG forms.

There is growing evidence to support the theory that companies that adopt an effective ESG strategy can gain a competitive advantage in the capital market and maintain their social license to operate.

Based on this evidence, EnerCom recommends the entire oil and gas industry take a more proactive strategy regarding evaluating and communicating ESG risks and opportunities, as the failure to do so could allow the growing ESG movement to be hijacked and transformed into a type of Boycott, Divest and Sanction (BDS) effort against the industry.

This requires a strategy that includes a louder and more harmonious industry choir of voices unapologetically addressing the reality that the current and future development, production and use of hydrocarbons is necessary to meet the food, shelter, and welfare needs of a safe, healthy, growing, modern world.

The global oil and gas industry can do more to make energy production cleaner; resource utilization more sustainable; and minimize the impacts while maximizing the social benefit of the production and use of hydrocarbons.

Toward this effort, ESG strategies to consider for 2020 should focus on addressing issues like flaring; water use and disposal; methane and VOC emissions; carbon capture; clean fuel advancement; and management accountability, compensation and diversity.

In addition to a strategy to address these issues, companies need to have a comprehensive ESG communications plan to report their ESG initiatives and progress that is genuine and honest; intentional; consistent; and broadly messaged through traditional and digital channels.  A good communication plan will also help you create a standardize reporting structure that can help minimize the need to fill out the variety of ESG forms.

About the Editor – Dan Genovese is a Director at the energy consulting firm EnerCom, Inc. with experience in corporate strategy, investor relations, ESG, government relations and policy.  Mr. Genovese has worked in capital markets and has experience in upstream production and downstream energy demand.  Contact: [email protected]

EnerCom, Inc. is an internationally recognized management consulting firm advising companies on Environmental, Social & Governance (ESG), investor relations, corporate strategy/board advisory, marketing, analysis and valuation, media, branding, and visual communications design.

Founded in 1994, EnerCom, Inc. was built with a vision of being a trusted advisor to the global energy industry and energy capital markets. EnerCom’s solutions are client based. Our industry knowledge supports the delivery of our high-quality, value added services. Our clients trust our experience delivering integrated marketing and corporate branding programs.  

We are passionate about the energy industry and our clients, and we work to generate that same excitement with our client’s targeted markets. We provide each client with market and financial analysis, graphic and design support and unmatched industry insight. We use our contacts, experience and know-how to position your company to build brand recognition that drives valuation and returns. For more information, contact: [email protected], or our website enercominc.com.

*Investopedia definition

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