A first-of-its-kind report by Environmental Defense Fund shows that leading oil and gas companies are putting themselves and their investors at financial and reputational risk by failing to adequately disclose meaningful information on emissions of methane.
Methane emissions from the oil and gas sector are increasingly viewed as a financial issue for companies, and by extension, their investors. Every pound of methane allowed to escape represents not only a loss of sellable product, but also undercuts natural gas’ climate benefits as a fuel source. A 2015 study by the Rhodium Group found that the sector loses $30 billion globally each year from leaked or vented methane at oil and gas facilities.
That’s why EDF conducted extensive research to understand what the largest industrial source of methane emissions – the oil and gas industry – is doing to provide transparency on its actions to manage the methane risk.
The report, “Rising Risk: Improving Methane Risk Disclosure in the Oil and Gas Sector,” found that none of the 65 market leaders reviewed in the production and midstream segments disclose targets to reduce methane emissions and less than a third report such emissions via accessible, investor-facing data sources.
Large investors – like the $188.4 billion California State Teachers’ Retirement System, whose CEO authored the report’s foreword – know that transparency and effective management of emissions by operators are crucial to ensuring any climate benefits natural gas offers over other fossil fuels.
Investors clamoring for more insights, data on ESG risks
The analysis comes at a time of increased scrutiny from both investors and regulators on when and how fossil fuel companies are reporting on greenhouse gases and climate risks. Shareholders filed 83 resolutions in 2015 related to carbon accounting and risk management disclosure. Further, investors have been making their voices heard specifically on methane, filing 15 methane-related shareholder proxies from 2014-2016, urging companies to better disclose and manage their methane emissions.
To help investors know what questions to ask of companies – and for companies to know where to focus their transparency efforts – Rising Risk offers practical, forward-looking recommendations to improve methane disclosure, centered around four key methane metrics designed to fit into existing formats and platforms that companies already use to report other environmental performance data.
Recorded webinar on Rising Risk