Oil and Gas Industry Guidance on Voluntary Sustainability Reporting

1
Oil and Gas Industry Guidance on Voluntary
Sustainability Reporting

• General Presentation

2
Is reporting important?

• the amount of information available today is
  colossal
• .. but even with this internet era media boom
• .. where others find dark corners, there will
  be doubt
• .. so we need to be transparent about any
  relevant issue
• .. and we need to report good and bad
• .. so that we can be a credible source of
  information
• .. in these vast oceans of words and data
• .. because if we dont tell our story
• .. someone else will do it instead
• reporting is about gaining trust that endures,
• companies reputation and license to operate

3
Business Environment - Trust
4
(No Transcript)
5
Global standards for reporting?

• No international mandatory standards exist on
  non-financial reporting
• it took 100 years to establish the financial
  accounting standards
• Some countries have legal requirements for public
  reporting
• eg information or data on health safety,
  environment or employee
• Two international guidelines are of relevance
• Global Reporting Initiative Sustainability
  Reporting Guidelines in 2002 (revision due in
  2006)
• IPIECA API Oil and Gas Industry Guidance on
  Voluntary Sustainability Reporting (April 2005)

6
IPIECA/API Reporting Initiative Key Aims

• IPIECA/API working in partnership with OGP, CAPP,
  PAJ and other associations
• Encourage non-financial corporate reporting
  across the oil and gas industry
• Help companies improve quality and consistency of
  reports
• Understand improve our performance
• Communicate industrys progress on non-financial
  aspects of corporate performance
• Enhance reputation

7
Sustainability Reporting our journey
8
IPIECA / API Reporting Initiative
Assessment Phase 1

• Survey the status of reporting in the oil gas
  industry 32 companies
• Published a Compendium and on-line evergreen
  tool to update the survey for companies to
  reference

9
IPIECA/API Reporting InitiativeReporting
Compendium

• February 2003 Published Compendium of
  Sustainability Reporting Practices and Trends for
  the Oil and Gas Industry
• Report results
• current indicators used
• trends and outlook
• reporting practices

10
Compendium
What indicators are commonly used today for
external reporting?
11
IPIECA / API Reporting Initiative
Guidance Phase 2

• Primary goal through consensus, to develop and
  publish
• Oil and Gas Industry Guidance on Voluntary
  Sustainability Reporting
• Using Environmental, Health, Safety, Social and
  Economic Performance Indicators

12
Business Drivers
Guidance Phase 2

• Tailored to oil and gas industry
• Shares good practices builds consensus
• Enables greater credibility trust
• Improves data consistency comparability
• Enhance benchmarking opportunities
• Demonstrate industry commitment to transparency

13
Reporting Guidance

• Guidance on Voluntary Sustainability Reporting
  launched in April 2005
• Intended to be useful to any oil gas company,
  up or downstream
• 5 reporting principles
• 23 Core and 19 Additional indicators
• We encourage associations to endorse the Guidance
  and companies to use them
• We believe this will benefit company and industry
  reputations

14
Our 5 principles are important!

• Transparency report is clear and
  understandable
• Relevance content is important to your
  audience
• Consistency facts are reported the same way
  every time
• Completeness include all relevant information
  in scope and boundaries
• Accuracy information should be precise
  enough to be used confidently

15
Performance indicators

• 4 sections of the Guidance devoted to performance
  indicators
• Selected from the Compendium and external
  sources, including GRI
• Debated at length to gain consensus
• Companies should select those indicators relevant
  to their activities
• Good practice is to state why, if indicators are
  not relevant

16
Core Indicators

• common to most companies
• applicable to upstream downstream
• of interest to a range of audiences
• nationally or globally significant
• consistent reproducible (mature)

Core indicators can often be applied company
wide, aggregated benchmarked
17
Additional Indicators

• may be relevant to only some companies
• apply to only some activities
• regulatory regimes may vary
• typically local or regional significance
• evolving or under development

Additional indicators are of equal importance to
core indicators but may be difficult to define
consistently or to compare
18
Health Safety Performance Indicators
19
Environmental Performance Indicators
20
Social Responsibility Indicators
21
Economic Performance Indicators
22
IPIECA / API Reporting Initiative
Engagement Phase 3

• Steps in 2005
• Engage companies across our industry and
  encourage use of the guidance
• 4 workshops (Buenos Aires, Houston, Calgary,
  Paris)
• Presentations eg WPC
• Feedback from internal and external stakeholders
• Engage with GRI on next version of their
  Guidelines

23
Industry Sustainability Reporting Initiative

• Plans for 2006/7
• Continue promoting the use of the Reporting
  Guidance across our industry and verify that
  guidance is kept up to date
• Improve internal benchmarking ability and
  external comparability for performance evaluation
• Enhance reporting efficiency single set of
  definitions and protocols
• Produce industry report(s) on key issues

24
In Summary
Aligning with the Oil Gas Industry
Sustainability Reporting guidance will enhance
credibility and comparability across our industry

• Good steps on this journey are
• 1. Pay attention to the reporting principles
• (transparency, relevance, consistency, accuracy
  and completeness)
• 2. Decide which issues are relevant
• (matrix reflecting internal external
  importance)
• 3. Use consistent performance indicators
  
• (especially core indicators)

25
Sustainability reporting website
26
Additional Slides
27
What is IPIECA?

• International Petroleum Industry Environmental
  Conservation Association
• Established in 1974
• Non-lobbying organisation with 27 member
  companies and 12 association members,
  representing over 50 world oil production
• NGO status with UN
• Working Groups on
• Climate Change, Biodiversity, Health, Social
  Responsibility, Oil Spills, Fuelstransportation,
  and Reporting

28
Comparability is important

• benchmarking is increasingly used inside our
  companies to evaluate performance
• investors and other key stakeholders are
  increasingly requesting better comparability in
  reports
• investors are now benchmarking and even ranking
  companies
• Goldman Sachs Environmental Social Index
• Carbon Disclosure Project

29
Guidance Structure

• Introduction
• Section 1 Purpose And Key Considerations
• Section 2 Principles And General Guidance
• Section 3 Environmental Performance Indicators
• Section 4 Health Safety Performance
  Indicators
• Section 5 Social Responsibility Performance
  Indicators
• Section 6 Economic Performance Indicators
• Section 7 Normalization Factors
• Section 8 Glossary
• Section 9 References And Additional Source
  Materials

30
Lagging vs Leading Indicators

• lagging indicators measure outcomes of a
  companys activities
• leading indicators measure progress in taking
  actions to improve the outcomes
• if actions are working, good leading indicators
  should correlate with lagging
• some can be both leading and lagging (e.g. energy
  efficiency, road accidents)
• we need both!

31
Quantitative Indicators

• Many of our indicators require reporting of
  numerical values
• Data can be aggregated
• Can be lagging or leading
• Issue can managed centrally
• Can be tracked over time
• Comparable internally and externally
• Engineers like numbers!

32
Qualitative Indicators

• Many indicators require statements confirming a
  policy or process is in place to manage the issue
• Often need case studies as evidence of
  performance
• Approach may differ by location
• Most are leading indicators
• compliance can be assessed
• Comparability is a challenge!

33
applicability to oil industry