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ESG, cleantech, and oil and gas

Breaking down silos for better ESG reporting

The energy sector is going through a period of transformation as Environmental, Social and Governance (ESG) obligations encourage companies to review their business practices and embrace innovative sustainability solutions.

The Canadian oil and gas industry is used to being monitored by regulators, with heavy penalties for breaking the rules, meaning it tracks and measures data and performance, so it’s no surprise that recent research found that 100% of Canada’s top producers report ESG information. However, it’s hard to know if it’s a complete record of the work that’s being undertaken by that company.

To get full ESG credit, companies must make sure the people who are reporting and sharing the ESG story are aware of the operational decisions that are made. It’s important to break down silos between the corporate teams documenting ESG performance and the operations teams, including outsourced service companies. It makes data transparency much less resource intensive.

Service companies that support oil and gas are innovative and solution-focused with many readily available cleantech options. Unfortunately, the technologies already being used don’t always make it into companies’ ESG reports because those doing the reporting often don’t even know the benefits of the services and technologies that have been implemented.

“Stakeholders are looking for companies to stand behind their ESG commitments by not only hiring service companies with similar values but also reporting the impact these vendors and suppliers have on the corporation’s ESG footprint. Unfortunately, many producers are not yet tracking or reporting their supply chain impact as part of their ESG story”, says Shauna Mason, Senior Manager of Investor Relations and Stakeholder Communications at Deloitte. (Shauna is an influential ESG and sustainability leader with 17 years of experience. Her areas of expertise include: ESG reporting, investor relations, public affairs, and corporate governance.)

Two companies helping to improve ESG stories by quantifying results are Amgas and AI for Asset Integrity.

Amgas Services has been creating innovative hydrogen sulfide (H2S) management and water recycling solutions for the oil and gas industry for 30 years. The benefits of these solutions include decreased water use, reduced number of trucks on the road hauling water (by 35-40 trucks), limited exposure to H2S, and reduced chemical consumption by treating only what needs to be treated. Additionally, some solutions are even fully closed loop so that there is no venting, meaning no emissions are released.

H2S has a bad reputation; it’s toxic and deadly in high concentrations, as well as corrosive. When a sour oil or gas development is proposed near a community, there’s often an uproar. But this is because most people don’t know how well the industry safely manages H2S. Publicly available ESG reports can enhance education and assuage concerns.

January Mckee, President of Amgas and Chair of the Board of the Petroleum Services Association of Canada (PSAC), understands these concerns and that’s why her company helps measure and quantify what they’re doing for an oil and gas producer, helping the producer understand and communicate how they are enhancing their ESG impact by telling a more tangible and compelling story.

New, Calgary-based tech start-up AI for Asset Integrity uses its artificial intelligence (AI) software to help achieve operational excellence offering predictive analysis solutions to identify the weakest parts of a company’s infrastructure. A field operator then inspects the infrastructure to confirm the model has accurately identified the weak spot so it can be fixed before an issue arises.

This risk-based approach decreases asset maintenance costs by decreasing the number of inspections and incidents, while also reducing operator driving time, resulting in less production loss, less lost time, and lower emissions -- all contributing to more profits and an improved ESG impact for your company.

Amol Vichare, founder of AI for Asset Integrity, believes that Canada’s oil and gas sector operates better than the rest of the world but isn’t always good at reporting and communicating what they do well. This is where his company’s software can help.

These are only two of the numerous service companies with innovative technologies struggling to get their information to all the different departments within their customers’ corporate headquarters.

The challenge isn’t how the Canadian Oil and Gas industry creates new advancements to bolster their ESG story; the challenge is how they connect what’s already happening within their entire operations ecosystem.

A fully transparent ESG story, including a company’s supply chain that supports the company’s ESG strategy and goals, not only builds a more tangible ESG story for shareholders, but also checks a lot of boxes for all stakeholders, including boosting employee pride and morale. Therefore, it’s important that everyone in the company understands what goes into these metrics and how they’re contributing to the ESG strategy.

The need to connect all ESG metrics is closer than most people in oil and gas realize as BMO just proclaimed in a recent letter to their customers: “We believe the expectation bar is rising for ESG disclosures from small and medium-sized enterprises (SMEs). In the past, investors were generally inclined to give such firms a free pass as far as voluntary ESG disclosures were concerned. This is not the case any longer, in our view”.

A successful ESG strategy starts with breaking down the silos between operations and corporate reporting -- make it part of the corporate culture to show how your company is transforming the energy sector.

This series is specific to the Canadian Oil and Gas Industry and explores how ESG will impact the industry moving forward, how the sector can embrace it, and what reporting tools are available. This is article three of six.

* Please note that I do not have any affiliation with the companies interviewed for the article.

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