Oil and gas companies are updating their tools for reporting environmental, health, and safety (EHS), and social issues.
This move is necessary as companies expand their corporate social responsibility (CSR) or sustainability reports.
Philippe Tesler, cofounder of EHS software provider Enablon, estimates that at least one third of oil companies worldwide have outdated nonfinancial reporting systems. He believes all companies will have either revamped or replaced their CSR and EHS management software by 2010.
“Companies who don’t keep up will be less competitive and will not meet customer expectations,” he told OGJ.
Reporting practices have changed dramatically since the late 1990s. For instance, consumers and managers expect real-time information to be available on company web sites.
“A few years ago, customers were satisfied when a company provided some example of good practices,” Tesler said. “Customers now are requiring metrics...hard data and not just some evidence.”
Of a move toward standardized metrics, Tesler said, “The current stage is comparable metrics-how do I compare one company with another one?”
Industry responding
The International Petroleum Industry Environmental Conservation Association and the American Petroleum Institute jointly issued the “Oil and Gas Industry Guidance on Voluntary Sustainability Reporting” in 2005.
It’s intended as a voluntary reference or framework for oil and gas companies interested in reporting their environmental, health and safety, social, and economic performance, the groups said.
The guidance document is part of a bigger initiative toward reporting nonfinancial issues.
In addition, companies are working toward building consensus on what is being measured and how to report it.
A BP PLC global safety spokesman said BP and other major companies plan an October meeting to discuss standardizing metrics on reporting safety statistics, according to news reports.
Total AS Chemical Group already has changed its reporting procedures, said Christiane Vacher, Total Chemical environment coordinator.
Previously, Total compiled spreadsheets from 350 chemical sites worldwide.
“We used several consolidation files, which was not very convenient,” Vacher said. Total Chemical now uses the same environmental reporting software in 29 countries.
“We needed a tool to analyze results according to different axes (legal, business, and geographical), and we also wanted to be able to collect information about greenhouse gas emissions in Europe or worldwide for example,” Vacher said.
Trends
Enablon’s Tesler said sustainability governance is a priority for executives who realize that they must be transparent on environmental and safety issues.
“It’s no longer an issue for midlevel managers or the specialists,” Tesler said. “It’s an issue for the whole company.”
Some European countries have laws regarding sustainability governance practices. In the US, the public demands it, he said.
“It’s a financial issue. You can wait, or you can save money if you manage environmental governance,” Tesler said.
He outlined these trends for the oil and gas industry:
- Compliance used to be unregulated, particularly in the US, but it is becoming more regulated worldwide. In the US, states are passing more environmentally related laws.
- Consumers demand transparency about corporate risks and liabilities, and customers demand environment-friendly products.
- Companies realize good environmental and safety processes lower costs and improve energy efficiency.
- Nongovernmental organizations expect companies to report the sustainability and social practices of their suppliers and contractors.
- Customers and investors expect information in real time online and not just once a year in a printed report.
- The public wants detailed disclosure about what a company is doing. People living by a refinery expect safety information and emissions statistics.
“The next trend that we see coming is that companies disclose their targets,” Tesler said. “They tell customers where they want to go tomorrow. It’s something that companies are very aware of, weaknesses and solutions.”
