Relevant Issues (5 of 26)
- GHG Emissions The category addresses direct (Scope 1) greenhouse gas (GHG) emissions that a company generates through its operations. This includes GHG emissions from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes), whether a result of combustion of fuel or non-combusted direct releases during activities such as natural resource extraction, power generation, land use, or biogenic processes. The category further includes management of regulatory risks, environmental compliance, and reputational risks and opportunities, as they related to direct GHG emissions. The seven GHGs covered under the Kyoto Protocol are included within the category—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).
- Air Quality The category addresses management of air quality impacts resulting from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes) as well as industrial emissions. Relevant airborne pollutants include, but are not limited to, oxides of nitrogen (NOx), oxides of sulfur (SOx), volatile organic compounds (VOCs), heavy metals, particulate matter, and chlorofluorocarbons. The category does not include GHG emissions, which are addressed in a separate category.
- Energy Management
- Water & Wastewater Management
- Waste & Hazardous Materials Management
- Ecological Impacts The category addresses management of the company’s impacts on ecosystems and biodiversity through activities including, but not limited to, land use for exploration, natural resource extraction, and cultivation, as well as project development, construction, and siting. The impacts include, but are not limited to, biodiversity loss, habitat destruction, and deforestation at all stages – planning, land acquisition, permitting, development, operations, and site remediation. The category does not cover impacts of climate change on ecosystems and biodiversity.
- Human Rights & Community Relations
- Customer Privacy
- Data Security
- Access & Affordability
- Product Quality & Safety
- Customer Welfare
- Selling Practices & Product Labeling
- Labor Practices
- Employee Health & Safety
- Employee Engagement, Diversity & Inclusion
Business Model & Innovation
- Product Design & Lifecycle Management
- Business Model Resilience
- Supply Chain Management
- Materials Sourcing & Efficiency
- Physical Impacts of Climate Change
Leadership & Governance
- Business Ethics
- Competitive Behavior The category covers social issues associated with existence of monopolies, which may include, but are not limited to, excessive prices, poor quality of service, and inefficiencies. It addresses a company’s management of legal and social expectation around monopolistic and anti-competitive practices, including issues related to bargaining power, collusion, price fixing or manipulation, and protection of patents and intellectual property (IP).
- Management of the Legal & Regulatory Environment
- Critical Incident Risk Management The category addresses the company’s use of management systems and scenario planning to identify, understand, and prevent or minimize the occurrence of low-probability, high-impact accidents and emergencies with significant potential environmental and social externalities. It relates to the culture of safety at a company, its relevant safety management systems and technological controls, the potential human, environmental, and social implications of such events occurring, and the long-term effects to an organization, its workers, and society should these events occur.
- Systemic Risk Management
Disclosure Topics (Industry specific) for:
Oil & Gas – Midstream
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Greenhouse Gas Emissions
The midstream industry generates significant quantities of greenhouse gases and other air emissions from compressor engine exhausts, oil and condensate tank vents, natural gas processing, and fugitive emissions, in addition to emissions from mobile sources. GHG emissions contribute to climate change and create additional regulatory compliance costs and risks for midstream companies due to climate change mitigation policies. At the same time, the management of fugitive emissions of methane, a potent greenhouse gas, has emerged as a major operational, reputational, and regulatory risk. Financial impacts on companies will vary depending on the specific location of operations and the prevailing emissions regulations, and include higher operating or capital expenditures and regulatory or legal penalties. Companies that capture and monetize, or cost-effectively reduce emissions by implementing innovative monitoring and mitigation efforts and fuel efficiency measures could enjoy several benefits. These companies have the opportunity to reduce regulatory risks and to realize operational efficiencies in an environment of increasing regulatory and public concerns about air quality and climate change.
Air emissions from midstream companies include hazardous air pollutants, criteria air pollutants, and volatile organic compounds (VOCs), which can have significant, localized human health and environmental impacts. Of particular concern are sulfur dioxide, nitrogen dioxide, and VOC emissions. The financial impacts on companies from air emissions will vary depending on the specific locations of operations and the prevailing air emissions regulations. Active management of the issue—through technological and process improvements—could allow companies to limit the impact of regulations in an environment of increasing regulatory and public concerns about air quality. Companies could benefit from operational efficiencies that could lead to a lower cost structure over time.
The storage and transport of crude oil, natural gas, and related products through a vast system of maritime transportation vehicles, pipelines, trains, and trucks presents considerable risk to the environment and to local communities. Leaks, accidental discharges, pipeline rights-of-way, and open easements over ecologically sensitive land could impact ecosystems in several ways, including natural habitat loss and changes in species movement. Regulatory agencies, supported by legislation that protects endangered species and ecologically sensitive areas, require plans to mitigate or remediate negative ecological impacts prior to project approval. Together with regulatory compliance costs, these can require significant capital and operational expenditures. As concerns over ecological impacts grow, companies could face the risk that additional areas are designated as protected areas under new or existing laws. Companies that prevent and proactively manage ecological impacts can avoid project delays, remediation, and litigation liabilities, and gain easier access to new projects and sources of revenue.
Companies that own natural gas pipelines and storage facilities face numerous and constantly changing regulations from the Federal Energy Regulatory Commission (FERC) in all aspects of their operations, including rates charged, access offered to pipelines, and siting and construction of new facilities. Pipeline companies enjoy a natural monopoly, and FERC regulations ensure that companies do not abuse this position through unfair pricing, discriminatory service, or by other means. Due to concerns about the impacts of oil and gas market distortions on American consumers and businesses, new market manipulation regulations issued by the Federal Trade Commission or the Commodity Futures Trading Commission could also affect the Midstream industry. Companies could be affected by prospective rate changes, compensation payments, or regulatory penalties for violating regulations governing competitive behavior. Midstream companies face uncertainty in relation to their ability to change the rates charged, which could affect their ability to recover higher costs.
Critical Incident Risk Management
Operational Safety, Emergency Preparedness & Response
Midstream companies operate a vast network of assets that face risks of spills and accidents. Any incident that results in the unintended releases of hydrocarbons could have wide-ranging impacts on the environment, employees, and local communities. As a result of these concerns, new safety regulations related to pipeline and rail operations are emerging. Significant events could create one-time costs from fines and corrective actions and contingent liabilities for remediation or damages in lawsuits. These factors could also erode a company’s social license to operate. In order to avoid or minimize such risks, investigations of past incidents show that it is extremely important to develop a strong safety culture, and establish a thorough and systematic approach to safety and risk management. This includes emergency preparedness and response and operational integrity across the company and in relationships with contractors.
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