Sustainability reporting in the oil and gas industry:

Environmental, Social & Economic, and Health & Safety performance

Paul Krishna

IPIECA Reporting Task Force Chairman

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IPIECA

• Global association involving both the upstream and downstream oil and gas industry

• Focus on environmental and social issues

• Formed in 1974 as the oil and gas industry’s main channel of communication with the United Nations

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Membership

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Oil and gas industry sustainability reporting

• Oil and gas companies are among the pioneers of sustainability reporting.

• The 2005 Guidance provided the industry-specific framework for reporting on environmental, health, safety, social and economic performance.

• The 2010 Guidance revision occurred over 3 years by hundreds of technical experts, from 26 companies and industry associations.

– Guidance is applicable for national oil companies, independent oil companies, and oil and gas service companies.

– Extensively reviewed and critiqued with an external stakeholder panel.

– Assists new and existing reporters to develop and improve their reporting processes.

What’s new

• Provides significant added guidance on reporting

Addresses two major hurdles – ‘why report’ and ‘how to report’.

Describes the strategic sustainability issues facing industry

Clearer focus on assessing “material” issues for the company

Improved technical indicators and reporting elements for use in reporting sustainability performance.

Greater definition of indicators and reporting protocols

Facilitates benchmarking and data aggregation

Enables greater consistency

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Section 1: Why report?Communicating strategic sustainability issues

• Benefits of Reporting

– Enhanced business value

– Improved operations

– Strengthened relationships

– Enhanced trust and credibility

• Using and Referencing the Guidance

– The guidance is voluntary, there is no minimum criteria

– Companies using the process or content are encouraged to reference the Guidance

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Section 2: How to report?The sustainability reporting process

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• Sustainability issues are considered material to most oil and gas companies.

• Guidance introduces Sustainability:

– Issues (11).

– Indicators (33).

– Reporting elements (Metrics) (190).

• Guidance enables consistent year-to-year reporting

– Based on materiality assessment

– Describe progress

– Put results in context

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Section 3 – What to report?Reporting hierarchy is organized for use and application

Sustainability Issue

Indicators

Reporting Elements(Metric)

Sustainability Reporting Hierarchy

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Section 3 – What to report?Sustainability Issues and their Indicators

E6: Fresh Water

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Section 3 – What to report?Indicator Format and Reporting Element Examples

Name & # of Indicator

Descriptions

Purpose

Scope

Reporting Basis

Definition of Terms

Reporting Elements• Common• Supplemental• Other

References HS3: Occupational injury and illness incidents

SE1: Local community impacts and engagement

Industry endorsements received from:

• African Refiners Association (ARA)

• Canadian Petroleum Products Institute (CPPI)

• The oil companies' European association for environment, health and safety in refining and distribution (CONCAWE)

• Regional Association of Oil and Gas Companies in Latin America and the Caribbean (ARPEL)

• South African Petroleum Industry Association (SAPIA)

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External stakeholder engagement

• Independent external stakeholder panel– Provided insights and feedback on direction and priorities

– Group of experts with solid understanding of sustainability issues affecting the oil and gas industry

– Representative of views of typical report readers:• Environmental and community-oriented NGOs• Business and industry• Investors• Multi-lateral institutions

• Public comment– On-line survey to obtain feedback on Guidance, priority

areas– Second comment period / on-line survey on draft of

revised Guidance

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Engagement with GRI

• Regular interactions to promote synergies – Joint Communication Plan– Periodic updates via meetings and conference calls– Key role of members-in-common– BP, Statoil, Hess, Petrobras, Shell – Sharing of key documents– Recognition of the value of both processes

• Differentiation of the two processes– GRI is multi-sector focused with broad external engagement (multi-

stakeholder, consensus-seeking approach)– IPIECA places higher priority on industry-specific issues and technical

protocols

• Oil and Gas Sector Supplement expected late 2011/early 2012– Will work cooperatively on mapping Guidance to the Oil and Gas

Sector Supplement– Working towards alignment wherever possible

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Next steps...

• IPIECA, API and OGP are now focused on:

– Encouraging the practice of sustainability reporting in the oil and gas industry

– Promoting utilization of the Guidance

– Developing tools for new reporters

– Monitoring developments in the field of sustainability reporting, e.g. Integrated reporting

– Seeking industry endorsements for the Guidance

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