Oil and gas adapts to the challenges of ESG reporting has been saved
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Oil and gas adapts to the challenges of ESG reporting
Industry executives report progress toward sustainability goals
As the global sustainability landscape evolves, the oil and gas (O&G) industry continues to move forward to meet its sustainability goals. How are executives preparing for increased reporting requirements? What challenges still need to be addressed? Gain insight into these questions and more by exploring key findings from Deloitte’s new Sustainability Action Report.
Oil and gas leaders prioritize sustainability goals
As O&G leaders look to incorporate sustainability goals into their operations, many are making important strides forward. Their organizations are building capacity by focusing on cross-functional collaboration, dedicated leadership, and hiring new resources. They recognize potential internal and external benefits to their investments in sustainability reporting, including greater efficiencies, lower risk, and enhanced stakeholder trust. However, many report challenges of poor data quality, especially in preparing and disclosing scope 3 greenhouse gas (GHG) emissions.
In January 2024, 250 O&G executives were surveyed about the progress they’ve made in achieving their sustainability goals and implementing the various regulations. Using a four-point scale from “no progress” to “significant progress,” 27% of O&G respondents report having made “significant progress” toward their sustainability goals, compared to 25% of the 300 public companies with more than $500 million in revenue included in the Sustainability Action Report. Most O&G organizations (60%) report moderate progress.
Explore six key findings to help develop benchmarks for your company
The survey explored various topics including assurance readiness, leadership, data challenges, and more. Gain insights to inform your sustainability strategy from our key findings and the specific differences that emerge in the O&G industry.
To prepare for a potential increase in reporting requirements, 86% of respondents at O&G companies reported creating new roles or responsibilities, leading the four other industries surveyed: technology, media, and telecommunications (TMT); consumer; life sciences and health care (LSHC); and financial services.
As an update to our survey of sustainability leaders in March 2022, our recent findings indicate that many companies may have established and operationalized cross-functional sustainability teams that meet regularly as governance mechanisms. Eighty-six percent of companies surveyed in the O&G sector have a sustainability council or they are establishing one.
Companies across industries report feeling pressure to prepare for regulatory reporting from their board of directors and ESG rating agencies. At the sector level, O&G executives surveyed were more likely to feel pressure from their board of directors, investors, and ESG rating agencies.
Two-thirds (67%) of surveyed O&G companies report that a chief sustainability officer (CSO) is charged with management responsibility for financial disclosure in sustainability reporting.
O&G industry respondents report disclosing scope 2 GHG emissions at a higher rate (59%) than scope 1 GHG emissions (48%).
Many respondents are using more than one standard or framework for ESG disclosures, with the International Sustainability Standards Board (ISSB) /Sustainability Accounting Standards Board (SASB), Global Reporting Initiative, and Task Force on Climate-related Financial Disclosures (TCFD) leading the way.
Survey results indicate O&G companies are most likely to reference multiple standards or frameworks, with ISSB/SASB and TCFD most commonly used. Seventy-five percent of O&G company respondents indicate they are applying the Committee of Sponsoring Organizations of the Treadway Commission's internal control over sustainability reporting guidance.
Planning for climate-related reporting
As the O&G industry works to make progress toward achieving its sustainability goals, organizations have a unique set of considerations and expectations around ESG reporting. Maintaining trust in leadership is likely important to the success of the industry’s approach to sustainability-related matters and the expectations set by various stakeholders.
Whether you have established reliable, robust reporting capabilities, or you are just beginning the journey, it’s important to recognize any challenges and plan for success. How can you get started? Here are some things to consider:
Identify what is expected of your organization.
- Be aware of the regulations you are obligated to follow.
- Take stock of the resources necessary to meet those expectations and obligations.
- Establish policies and procedures in gathering the required data to be disclosed.
- Connect sustainability efforts with value creation.
- Collaborate across the organization to achieve your company’s sustainability goals.
Understanding ESG reporting regulations that apply to an organization and within what time frame is an important step. Then, work to determine the data required for compliance through a data, process, and controls gap assessment. After a company determines the data that needs to be collected, establishes the appropriate processes and controls, and assesses the possible technology needs, it should seek to develop a strategic implementation plan or roadmap. This roadmap should help ensure the completeness and reliability of data collection and governance and the allocation of necessary resources.
Whether your company is looking to understand the global ESG regulatory reporting landscape, assess the impact of regulation on your sustainability strategy, or define an implementation plan, find out how our breadth of knowledge, resources, and experience might further you on your journey.
Elevate your company’s ESG reporting
If you’d like to learn more about how your O&G organization can enhance its ESG reporting to better prepare for new regulatory requirements, let’s set up a conversation.
This article contains general information only and Deloitte is not, by means of this article, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.
Deloitte shall not be responsible for any loss sustained by any person who relies on this article.
2024 Sustainability Action Report
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2024 Sustainability action report | Deloitte US
Our 2024 Sustainability Action Report details progress amidst significant reporting changes.
