Relevant Issues (9 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 The category addresses a company’s water use, water consumption, wastewater generation, and other impacts of operations on water resources, which may be influenced by regional differences in the availability and quality of and competition for water resources. More specifically, it addresses management strategies including, but not limited to, water efficiency, intensity, and recycling. Lastly, the category also addresses management of wastewater treatment and discharge, including groundwater and aquifer pollution.
- Waste & Hazardous Materials Management The category addresses environmental issues associated with hazardous and non-hazardous waste generated by companies. It addresses a company’s management of solid wastes in manufacturing, agriculture, and other industrial processes. It covers treatment, handling, storage, disposal, and regulatory compliance. The category does not cover emissions to air or wastewater nor does it cover waste from end-of-life of products, which are addressed in separate categories.
- Ecological Impacts
- Human Rights & Community Relations
- Customer Privacy
- Data Security
- Access & Affordability
- Product Quality & Safety
- Customer Welfare
- Selling Practices & Product Labeling
- Labor Practices
- Employee Health & Safety The category addresses a company’s ability to create and maintain a safe and healthy workplace environment that is free of injuries, fatalities, and illness (both chronic and acute). It is traditionally accomplished through implementing safety management plans, developing training requirements for employees and contractors, and conducting regular audits of their own practices as well as those of their subcontractors. The category further captures how companies ensure physical and mental health of workforce through technology, training, corporate culture, regulatory compliance, monitoring and testing, and personal protective equipment.
- Employee Engagement, Diversity & Inclusion
Business Model & Innovation
- Product Design & Lifecycle Management The category addresses incorporation of environmental, social, and governance (ESG) considerations in characteristics of products and services provided or sold by the company. It includes, but is not limited to, managing the lifecycle impacts of products and services, such as those related to packaging, distribution, use-phase resource intensity, and other environmental and social externalities that may occur during their use-phase or at the end of life. The category captures a company’s ability to address customer and societal demand for more sustainable products and services as well as to meet evolving environmental and social regulation. It does not address direct environmental or social impacts of the company’s operations nor does it address health and safety risks to consumers from product use, which are covered in other categories.
- 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 The category addresses a company’s approach to engaging with regulators in cases where conflicting corporate and public interests may have the potential for long-term adverse direct or indirect environmental and social impacts. The category addresses a company’s level of reliance upon regulatory policy or monetary incentives (such as subsidies and taxes), actions to influence industry policy (such as through lobbying), overall reliance on a favorable regulatory environment for business competitiveness, and ability to comply with relevant regulations. It may relate to the alignment of management and investor views of regulatory engagement and compliance at large.
- 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 – Refining & Marketing
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Greenhouse Gas Emissions
Oil and Gas R&M operations generate significant direct greenhouse gas (GHG) emissions, from a variety of sources. Emissions primarily consist of carbon dioxide and methane from the stationary combustion of fossil fuels for energy consumption. Energy costs are a significant share of refinery operating costs. Greenhouse gases are also released from process emissions, fugitive emissions resulting from leaks, emissions from venting and flaring, and from non-routine events such as equipment maintenance. The energy intensity of production, and therefore the GHG emissions intensity, can vary significantly depending on the type of crude oil feedstock used and refined product specifications. Companies that cost-effectively reduce GHG emissions from their operations can create operational efficiencies. Such reduction can also mitigate the impact on value of increased fuel costs from regulations that seek to limit—or put a put a price on—GHG emissions.
Non-greenhouse gas (GHG) air emissions from Refining & Marketing (R&M) operations include criteria air pollutants, Volatile Organic Compounds (VOCs), and hazardous air pollutants, which can have significant, localized human health and environmental impacts. Specific emissions of concern include sulfur dioxide, nitrogen oxides, hydrogen sulfide, particulate matter, and VOCs. Releases occur from stationary combustion sources, storage vessels, flares, and equipment leaks, and may also occur as a result of accidents. Human health impacts and financial consequences for R&M companies are likely to be exacerbated the closer a facility is to population centers. Active management of the issue—through technological and process improvements—can allow companies to limit the impact of regulations and benefit from operational efficiencies that could lead to a lower cost structure over time.
Water & Wastewater Management
Refineries can use relatively large quantities of water depending on their size and the complexity of the refining process. This exposes them to the risk of reduced water availability, depending on their location, and related costs. Extraction of water from water-stressed regions or water contamination may also create tensions with local communities. Refinery operations often require wastewater treatment and disposal, often via on-site wastewater treatment plants before discharge. Reducing water use and contamination through recycling and other water management strategies may result in operational efficiencies for companies and lower their operating costs. They could also minimize the impacts of regulations, water supply shortages, and community-related disruptions on operations.
Waste & Hazardous Materials Management
Hazardous Materials Management
As a byproduct of their operations, Refining & Marketing (R&M) companies generate various forms of waste derived from the processing and storage of petroleum products. Many of these substances are hazardous to human health and the environment and may be subject to regulation. Remediation of inactive or decommissioned sites often takes several years to be completed, and companies may accrue liabilities for past operations. Releases of hazardous substances from underground storage tanks (USTs) used by refining facilities and gas stations can affect redevelopment of land for abandoned or closed facilities. Spills and releases during operations can lead to groundwater contamination and other negative impacts. R&M companies that reduce and recycle hazardous waste streams ensure the integrity of their USTs, as well as those that have effective and prompt clean-up and remediation measures in place for normal operations and decommissioned facilities, may enjoy reduced regulatory and litigation risks and associated costs.
Employee Health & Safety
Workforce Health & Safety
Hazards associated with the operations of companies in the Refining & Marketing (R&M) industry may present risks to employee health and safety. Such hazards include the handling and processing of hydrocarbons, frequently at high temperatures and pressures during refining operations. Accidents or inadvertent exposures to chemicals and other hazards such as heat or noise may result in fatalities, severe injuries, or illnesses. Releases of hydrocarbons or other hazardous substances as a result of accidents or leaks can also have negative consequences for neighboring communities. A company’s ability to protect employee health and safety, and to create a culture of safety and well-being among employees at all levels, can help prevent accidents, mitigate costs and operational downtime, and enhance workforce productivity.
Product Design & Lifecycle Management
Product Specifications & Clean Fuel Blends
Human health risks and broad environmental risks such as those associated with climate change have raised concerns about the end use of products such as gasoline from the Refining & Marketing (R&M) industry. In response, some regulatory jurisdictions have implemented product specifications and renewable fuel blends, which pose significant compliance and operational risks for R&M companies. Companies may face long-term reductions in revenue from fossil fuel-based products and services due to GHG mitigation policies such as the renewable fuel mandates or standards, as well as competition from non-fossil fuel products. Companies that purchase credits known as renewable identification numbers (RINs) to meet regulatory requirements for renewable fuels in the U.S. can face regulatory and cost risks. In order to ensure regulatory compliance and position themselves for long-term competitiveness, some companies are investing in or purchasing ethanol and other renewable biofuels. Advanced biofuels and fuel technologies have lower lifecycle impacts than traditional biofuels, and can be used to minimize future regulatory risks and public pressure. Although short-term costs to find commercially viable technologies can be significant, investments in R&D for such technologies could serve to advance R&M companies’ long-term profitability.
Pricing Integrity & Transparency
Regulators such as the U.S. Federal Trade Commission (FTC), and the U.S. Commodity Futures Trading Commission (CFTC) are responsible for overseeing issues related to pricing integrity and transparency, which includes the potential for market manipulation by oil and gas companies, including Refining & Marketing (R&M) companies. Regulatory agencies focusing on refineries may investigate various competitive factors, including utilization and maintenance decisions, product supply decisions, product margins, and capital planning, creating uncertainty regarding future enforcement. The focus of enforcement actions also includes reporting prices to price index publishers, as well as potential price distortions through trading positions in physical transactions, and swaps, futures, and derivatives. Maintaining market integrity and ensuring transparency in product pricing can therefore lower regulatory risks and liabilities for R&M companies and protect consumers from unfair pricing.
Management of the Legal & Regulatory Environment
Management of the Legal & Regulatory Environment
The Oil & Gas – Refining & Marketing industry is subject to numerous sustainability-related regulations and an often rapidly changing regulatory environment. Changes to the legal and regulatory environment may result in material impacts on shareholder value. Companies in the industry regularly participate in the regulatory and legislative process on a wide variety of environmental and societal issues. Such engagement can result from companies seeking to ensure industry views are represented in the development of regulations impacting the industry as well as to represent shareholder interests. At the same time, such engagement to influence environmental laws and regulations may adversely affect companies’ reputations and ultimately impact a company’s social license to operate.
Critical Incident Risk Management
Critical Incident Risk Management
The operations of Refining & Marketing companies are often characterized by a high number of hazards, including the handling of flammable, volatile substances, the use of highly reactive chemicals, and the processing of fluids at high temperature and pressure. Releases of hydrocarbons or other hazardous substances as a result of accidents can have significant consequences for a company’s workforce, as well as external social and environmental consequences. In addition to effective process safety management practices, companies frequently prioritize developing a culture of safety to reduce the probability that accidents and other health and safety incidents will occur. If accidents and other emergencies do occur, companies with a strong safety culture are often able to more effectively detect and respond to such incidents. A culture that engages and empowers employees and contractors to work with management to safeguard their own health, safety, and well-being and prevent accidents is likely to help companies reduce production downtime, mitigate costs, ensure workforce productivity, and maintain their license to operate.
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