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Oil & Gas Processing Review - 2006
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Voluntary Sustainability Reporting for the Oil and Gas Industry
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Chris Morris
General Secretary, International Petroleum Industry Environmental Conservation Association (IPIECA)
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Originally printed in:
Oil & Gas Processing Review
- 2006
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There was a time when public reporting in the oil and gas industry merely meant informing shareholders and relevant financial regulators about the balance sheet. That time is long over. As the world and its expectations have moved on, so has the oil and gas industry. That is why the International Petroleum Industry Environmental Conservation Association (IPIECA) and the American Petroleum Institute (API) joined forces to produce an industry guide on voluntary sustainability reporting. The guidance was later endorsed by the International Association of Oil & Gas Producers (OGP).
This extensive 69-page document is based, in part, on industry experience in safety and environmental reporting that goes back several decades. Having identified and mastered the disciplines needed to report on these issues, it was a natural step to extend reporting still further to include social topics and broader economic issues – commonly known as the ‘triple bottom line’. There are several sound reasons for this:
- Companies can enhance their value by building investor confidence and demonstrating that they are managing risks and positioning themselves to address emerging opportunities.
- Companies also improve their internal operations by making employees better aware of company performance and using that information to raise standards throughout the organisation.
- Demonstrating a commitment to environmentally and socially responsible performance strengthens relationships with local communities.
- Reporting can also serve as an important accountability mechanism by establishing commitments and creating transparency on the challenges and progress being made.
The issues that corporate reports cover are complex, interconnected and varied. They reflect many basic characteristics of the industry, such as its geographic and cultural diversity, its organisational complexity and the breadth of oil company activities. These activities not only fall within the typical areas of upstream, downstream and chemical operations, but also extend into secondary businesses not typically associated with the industry, such as coal mining, power generation, natural gas transmission, renewable energy systems, speciality chemicals and metals production. Given this diversity, it is hardly surprising that the style and content of reporting has been similarly varied.
The differences in individual company reporting are a sign of the industry’s diversity and, thus, of its strength. However, they also give rise to challenges such as the difficulty of drawing comparisons between companies and assessing the sector’s overall performance on key sustainability issues. A major part of this is the problem of defining and using appropriate performance indicators. The industry – as individual companies and trade associations – has therefore worked together in an effort to bring clarity and consensus on the need for consistent sustainability reporting. The Oil and Gas Industry Guidance on Voluntary Sustainability Reporting provides a globally endorsed framework.
The process began two years ago and involved significant challenges – not least of which was gaining consensus from the 32 companies participating in the project. Involving such a broad cross-section of the industry was crucial to the objective, which was to encourage as many companies as possible to publicise their sustainability efforts and achievements.
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Chris Morris is General Secretary of
the International Petroleum Industry
Environmental Conservation
Association (IPIECA). Before joining
the association five years ago, he
spent 32 years with Texaco, where
he enjoyed managerial and
leadership roles in the international
Upstream, Downstream and Global
Business sectors. Mr Morris began
his career in the Royal Navy and
trained at the Dartmouth Royal
Naval College. He holds a BA
(Hons) in psychology.
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