Relevant Issues (8 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
- 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 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 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
- Business Model Resilience
- Supply Chain Management
- Materials Sourcing & Efficiency
- Physical Impacts of Climate Change
Leadership & Governance
- Business Ethics The category addresses the company’s approach to managing risks and opportunities surrounding ethical conduct of business, including fraud, corruption, bribery and facilitation payments, fiduciary responsibilities, and other behavior that may have an ethical component. This includes sensitivity to business norms and standards as they shift over time, jurisdiction, and culture. It addresses the company’s ability to provide services that satisfy the highest professional and ethical standards of the industry, which means to avoid conflicts of interest, misrepresentation, bias, and negligence through training employees adequately and implementing policies and procedures to ensure employees provide services free from bias and error.
- Competitive Behavior
- 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 – Services
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Emissions Reduction Services & Fuels Management
While direct greenhouse gas (GHG) emissions and associated regulatory risks are relatively low for oil and gas services providers relative to other industries, emissions from the operations of their customers—the oil and gas exploration and production (E&P) companies—can be significant. Emissions include GHGs that can contribute to climate change as well as other air pollutants that can have significant localized human health and environmental impacts. Increasing regulation and high costs of fuels associated with these emissions present substantial risk to E&P companies. This is driving companies to seek ways to lower their emissions, including converting pumps and engines to run on natural gas instead of diesel fuel. Oil and gas services companies compete for contracts with E&P companies partly on the basis of providing cutting-edge, efficient technologies that can help customers reduce costs and improve process efficiencies. Services companies can gain a competitive advantage and protect their revenues and market share by providing customers with services and equipment that reduce the emissions and fuel consumption of E&P activities, and by capturing saleable gas that may otherwise be flared or escape through leaks.
Water & Wastewater Management
Water Management Services
Oil and gas development often requires large quantities of water, exposing producers to the risk of reduced water availability, regulations limiting usage, or related cost increases, particularly in water-stressed regions. Producers also face risks and costs associated with wastewater disposal. As such, companies that provide these oil and gas producers with services have developed technologies and processes such as closed-loop water recycling systems to reduce customers’ water consumption and disposal costs. These offerings provide service companies the potential to gain market share and increase revenues, as management of drilling and wastewater can be a significant competitive factor for their customers.
Waste & Hazardous Materials Management
Oil and Gas - Services companies produce oilfield chemicals as well as drilling and hydraulic fracturing fluids based on demand from Exploration & Production (E&P) companies. While the risk of leaks from a properly drilled and completed well is low, contamination of local water resources can result from contact with hydraulic fracturing fluids and produced water, and may arise from issues related to well integrity. Concerns about certain chemicals used in hydraulic fracturing fluids have led to fracturing bans, regulation, and legislative proposals to mandate disclosure of chemicals used in some regions, both in the U.S. and abroad. The exact chemical composition of hydraulic fracturing fluids is often proprietary information, and companies compete to create the most effective formulas. In the U.S., some companies are voluntarily disclosing information about the hydraulic fracturing chemicals they use through an industry registry, FracFocus. Due to public and regulatory attention to the potential hazards of drilling fluids, companies that are able to manage issues related to well development and integrity, the production and use of produce effective non-hazardous fracking fluids, and the reduction of the volumes of drilling fluids used per well, may increase their market share and revenues and lower the risk that regulations affect demand for their products.
Ecological Impact Management
Oil and gas exploration and development activities, and associated services and support activities, can have significant impacts on biodiversity and ecosystems, particularly when companies operate in ecologically sensitive areas or are characterized by highly resource-intensive operations. These can occur through disposal of drilling and associated wastes, well decommissioning, land use, and fuel spills. Producers face regulatory risks from legislation and permitting to protect ecosystems in the U.S. and abroad, and from regulations specifically related to well decommissioning or underground waste injection. Oil and gas services companies that are able to offer cost-effective and efficient production and decommissioning technologies that mitigate impacts on biodiversity by reducing land use, drilling wastes, and spills can lower associated risks for their customers and gain a competitive advantage.
Employee Health & Safety
Workforce Health & Safety
Workers in the industry face significant health and safety risks due to the harsh working environments and hazards of handling oil and gas. In addition to acute impacts resulting from accidents, workers may develop chronic health conditions, including those caused by silica or dust inhalation, as well as mental health problems. A significant proportion of the workforce at oil and gas drilling sites consists of temporary workers and employees of oil and gas services companies. Health impacts on, and the safety performance of, such workers can affect Services companies directly by influencing worker productivity and costs. Services companies compete on the basis of their reputation and ability to perform activities on a consistently safe basis. Customers evaluate instances of accidents, spills, injuries, and fatalities when considering awarding contracts to services companies.
Business Ethics & Payments Transparency
With operations across the globe, oil and gas services companies interact with many government and local officials, either directly or through agents, in order to secure contracts with state-owned oil companies and multinational corporations. Bribery and corruption are common in some regions, and in others, to the transparency of payments to governments may be a significant issue. The emergence of several anti-corruption, anti-bribery, and payments-transparency laws and initiatives create regulatory mechanisms to reduce certain risks. Violations of these could lead to significant one-time costs or higher ongoing compliance costs, whereas successful compliance with such regulations could provide risk mitigation opportunities and avoid adverse outcomes. Oil and gas services companies are under pressure to ensure that their governance structures and practices can address corruption, willful or unintentional participation in illegal or unethical payments and gifts to government officials or private persons, or the risk of otherwise unfairly influencing these individuals, especially in areas of heightened risk.
Management of the Legal & Regulatory Environment
Management of the Legal & Regulatory Environment
The 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, and may do so directly or through representation by an industry association. 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 with stakeholders and ultimately impact the company’s social license to operate. Companies that are able to balance these viewpoints may be better positioned to respond to medium- to long-term regulatory developments.
Critical Incident Risk Management
Critical Incident Risk Management
Services companies are subject to significant risks associated with low-probability, high-consequence events associated with oil and gas exploration, development, and production activities. Such events may result in multiple fatalities, significant property damage, or a significant adverse impact to the environment. Services companies may be affected indirectly through the impacts that safety incidents or emergencies can have on their Exploration & Production (E&P) customers. Additionally, significant incidents can have wide-ranging negative social and environmental consequences, for which both E&P and service companies may be held liable. Services companies compete on the basis of their reputation and ability to perform activities on a consistently safe basis. In addition to implementing effective process safety management practices, companies frequently prioritize developing a strong culture of safety in order 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 and E&P companies in order to safeguard their own health, safety, and well-being and to prevent accidents is likely to help services companies reduce risks to financial value.
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