Methane: Companies split on methane disclosure
Investor pressure leads to improvement
A report from Environmental Defense Fund shows that reporting on methane has improved slightly, though unevenly, within the U.S. oil and gas industry.
Disclosure Divide: Revisiting Rising Risk and Methane Reporting in the U.S. Oil and Gas Industry [PDF] examines improvements in methane reporting over the two years since Rising Risk was published.
- Revisiting the companies surveyed in Rising Risk, the authors found that four companies now report quantitative methane targets.
- Five of the seven new companies newly reporting on methane were targets of methane-disclosure shareholder resolutions during the past two years.
- 58% of companies provided some public information on methane emissions.
As a long-term global investor, we recognize that methane emissions are one of the most financially significant environmental risks we face.Brian Rice, Portfolio Manager at CalSTRS
Methane is a highly potent greenhouse gas, responsible for a quarter of the warming we’re experiencing today – and oil and gas operations are the largest industrial source of methane in the U.S. and worldwide. In a dynamic energy landscape, the future role of natural gas is called into question by unchecked methane.
Methane emissions from the oil and gas sector are increasingly viewed as a financially material 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.
The International Energy Agency (IEA) is very clear that the future of the oil and gas industry is dependent on how they manage the methane risk. They say the industry can feasibly reduce up to 75 percent of its current methane emissions.
The report includes recommendations for the advancement of methane disclosure across the oil and gas industry.
- Companies should report on basic methane metrics outlined in Rising Risk [PDF].
- Industry leaders have the opportunity to move beyond the basics to comprehensively report on methane and work to continuously improve.
- Investors are encouraged to build on current momentum and broaden their engagement with companies to close the disclosure divide.
With their Investor's Guide [PDF], EDF and PRI provide constructive tools for investors to engage with oil and gas companies on methane reporting and mitigation, to engage with senior management in constructive dialogue, and to identify concrete actions to improve methane performance.