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General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for:
Oil & Gas – Refining & Marketing

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GHG Emissions

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.

Air Quality

Air Quality

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

Water 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.

Competitive Behavior

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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