Setting the Bar: Implementing the TCFD Recommendations for the Oil and Gas Industry, a report by Ceres, EDF, and the Principles for Responsible Investment (PRI), provides actionable guidance for the oil and gas industry, and its investors, to implement the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in regards to methane emissions
TCFD and methane
The TCFD is a leading global effort to support comparable and reliable disclosure of climate-related risks and opportunities. As of September 2018, over 513 organizations have publicly supported the TCFD recommendations. Supporters include investors representing over USD 100 trillion, like Blackrock and Legal & General, and major oil and gas companies, like Equinor and Shell.
TCFD recommends that companies report on material climate-related risks and opportunities. Methane is a climate pollutant over 84 times more potent than carbon dioxide over a 20-year time period. The oil and gas industry is the largest industrial source of these emissions. Methane emissions threaten the potential climate benefit of natural gas, posing a serious reputational risk for the energy source.
What can be done?
With investors increasingly asking for better disclosure around methane emissions, this report is designed to make TCFD implementation easier for investors and companies alike. The paper provides an overview of both the risks and opportunities of methane in addition to recommended disclosures across TCFD’s four-part structure: governance, strategy, risk management and metric and targets.
Setting the Bar presents
- Questions companies can answer for their investors, like “How is responsibility for methane allocated within the company, both at board and management level?,”
- Guidance on how to assess company answers for certain topics such as target-setting, and
- Current examples of oil and gas company reporting that align with TCFD recommendations.
The mission of the TCFD is to “help companies understand what financial markets want from disclosure in order to measure and respond to climate change risks and encourage firms to align their disclosure with investor needs.” As investors shift portfolios towards more sustainable companies, oil and gas companies that incorporate the suggestions made within this report will be in a more advantageous position with investors and industry peers.