Last December, the ISSB agreed on updates to the SASB Standards for 77 different industries. These updates on non-climate-related topics and metrics enhance the international applicability of the standards, which play an important role for companies applying IFRS S1.
The updated SASB Standards describe what a company must disclose, the metrics required, as well related technical protocols on how to disclose them.
The goal of the amendments is to take the guesswork out of reporting and allow a more uniform accountability of a company’s response to the current climate crisis.
Below is a sample of some of the specific metrics expected by the SASB for the Oil and Gas Exploration and Production industry for greenhouse gases, air, water, and biodiversity impacts.
Greenhouse gas emission metrics
A company will need to disclose its gross global Scope 1 greenhouse gas (GHG) emissions of the seven GHGs covered under the Kyoto Protocol: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).
The Standards define gross emissions as GHGs emitted into the atmosphere before accounting for offsets, credits, or other similar mechanisms. These include direct emissions of GHGs from stationary or mobile sources. For example, one will have to report metrics from fixed and moveable equipment at well sites, production facilities, refineries, and chemical plants; as well as office buildings, marine vessels transporting products, and tank truck fleets.
These emissions must be disclosed in metric tons of carbon dioxide equivalent (CO2-e) and calculated in accordance with published 100-year time horizon global warming potential (GWP) values.
The report highlights acceptable calculation methodologies that include those that conform to the GHG Protocol as the base reference, but provide additional guidance, such as industry- or region-specific guidance. Examples include the Petroleum industry guidelines for reporting greenhouse gas emissions - 2nd edition, published by Ipieca.
In addition, a company must disclose the amount of direct GHG gas emissions in CO2-e from the following five sources: flared hydrocarbons, other combustion, process emissions, other vented emissions, and fugitive emissions from operations.
Plans to manage Scope 1 GHG emissions, which must have been active or reached completion during the reporting period, should specify whether they are related to, or associated with, emissions limiting or emissions reporting-based programs or regulations (e.g., the EU Emissions Trading Scheme, Quebec Cap-and-Trade System, California Cap-and-Trade Program), including regional, national, international, or sectoral programs.
Air quality metrics
Oil and gas companies must also report on air emissions other than GHG. These include sulfur dioxide (SO2 and SO3), nitrogen dioxide (NO and NO2 but excluding N2O), and VOC emissions.
VOCs are any compound of carbon. Exceptions include carbon monoxide, carbon dioxide, carbonic acid, metallic carbides or carbonates, ammonium carbonate and methane that participates in atmospheric photochemical reactions.
Water management
Because of the potential for water needed for extraction, exploration, and production, companies may be subjected to reduced water availability or increased water use costs, especially in water-stressed areas.
Companies are required to report total water withdrawn, water consumed, and the percentage of each in regions with high baseline water stress.
The final number should be reported in thousands of cubic meters withdrawn from all sources. This includes surface water, groundwater, rainwater, municipal and wastewater, water utilities or other sources.
To reduce operating costs and improve efficiency, the Standards suggest that companies reduce water use and contamination through recycling or other management strategies, and the use of non-toxic fracturing fluids.
Companies are also required to report volume of produced water and flowback generated. Specifically, the percentage discharged, injected, or recycled. In addition, businesses must report the hydrocarbon content in discharged water.
Water discharged directly to the environment or indirectly discharged through a third party, such as a local wastewater treatment plant, must also be included in this metric.
In addition, a company must disclose the percentage of hydraulically fractured wells for which there is public disclosure of all fracturing fluid chemicals used.
And finally, a company must report the percentage of hydraulic fracturing sites where ground or surface water quality deteriorated compared to a baseline.
Biodiversity impact metrics
Ongoing E&P operations could be at risk in the absence of effective environmental management plans for various stages of a project lifecycle because of regulatory penalties, litigation, community protests, and associated costs.
Loss of habitat, oil spills, and leakages are ongoing concerns. As such, the standards require a detailed description of a company's environmental management policies and practices for active sites.
This includes the lifecycle stages to which the plans apply, starting with pre-bid and following all the way through to closure, decommissioning, and restoration.
Ecological and biodiversity impacts, waste generation, noise, emissions to air, discharges to water, natural resource consumption, and hazardous chemical use must be covered. All references and who developed them must also be disclosed.
In the new year
This version, 2023-12, of the Standard is effective beginning or after January 1, 2025. Early adoption is permitted.
If companies use the SASB Standards as part of their implementation of ISSB Standards, they must also consider the relevant ISSB application guidance.
For those using the SASB Standards independently, the SASB Standards Application Guidance establishes guidance applicable to the use of all Industry Standards and is considered part of the Standards.
Go to https://sasb.org/standards/download/ for a full version of the requirements.
