Chris McClure gave a refresher on the broad basics of ESG topics for the energy industry. While ESG is becoming more and more familiar to the industry at large, it's important to remember these key topics and trends:
SEC proposed rules
In March 2022, the Securities and Exchange Commission (SEC) released 500 pages of proposed rules for climate-related disclosures for public registrants. The proposal included five major types of disclosures that could pertain to public registrant reporting in the future:
- How an entity governs and manages climate-related risks
- Actual or material impacts of climate-related risks on business, strategy, and outlook
- Quantitative measures of greenhouse gas (GHG) emissions
- Climate-related targets and goals, scenario analyses, and transition plans, if applicable
- Footnote disclosures with financial impacts
Energy sector regulations
The energy sector increasingly is affected by the proliferation of major regulations, including but not limited to:
- Climate risk and GHG emissions
- Conflict minerals and extended mineral compliance
- Anti-human trafficking/forced labor
- Global mandatory supply chain due diligence
- Uyghur Forced Labor Prevention Act (UFLPA)
- Chemical compliance
- EU Corporate Sustainability Reporting Directive
Your ESG strategy
Lastly, here's a breakdown of what you could be doing now for your ESG strategy, if you aren't already:
- Governance
Understand your organizational purpose and develop ESG objectives and governance mechanisms to support a strategic framework. Educate your board and management.
- Implementation
Form a cross-functional team with representatives from sustainability, risk, legal, financial reporting, IT, internal audit, and others to properly assess and manage ESG processes and reporting.
- Materiality assessment/stakeholder engagement
Engage with key stakeholders to understand ESG priorities and identify important topics for disclosure that align to your business strategy.
- Data and process management
Evaluate data maturity and reporting processes to identify critical data gaps based on potential key performance indicators and reporting needs.
- Internal audit
Integrate sustainability into the internal audit plan. Evaluate or establish appropriate controls under the framework established by the Committee of Sponsoring Organizations of the Treadway Commission.
- Strategy integration
Integrate ESG objectives into strategic planning and resource allocation and priority ESG topics into enterprise risk management.
Keeping up with ESG standards can be daunting. These are just a few important steps to take, but the required measures may be different depending on your organization's unique needs.
If you're looking to take your ESG strategy to the next level, explore our resource page to learn more. Don't hesitate to reach out to our specialists for tailored insights.
Listen to the full session
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