A growing number of Lower 48 onshore producers are measuring and disclosing their performance on environmental, social and governance (ESG) efforts, according to new research by Haynes and Boone LLP and EnerCom Inc.

The August edition of their Oil & Gas ESG Tracker summarized findings from a review of 30 U.S.-listed middle market onshore oil and gas producers’ Securities and Exchange Commission (SEC) filings, along with other ESG disclosures.

Researchers found that 83% of companies surveyed have announced ESG policies, up from 70% in the inaugural report published in March, noting a trend of restructured companies that have emerged in 2021 with ESG policies and committees.

The latest survey “underscores the extent to which many oil and gas producers are committing resources to ESG and finding ways to tell their ESG stories,” said Haynes Boone partner Jennifer Wisinski. “Companies are putting more flesh on the bones of their ESG policies, disclosing quantitative metrics to demonstrate their progress towards ESG goals.”

The most common metrics relate to emission reductions, water management, flaring reduction, electrification of operations, and use of pipelines/reduced truckloads.

The number of companies with net-zero emissions targets in place grew to five from two, while the number of companies without such a target fell to 25 from 28.

Twenty-one companies said they disclose greenhouse gas (GHG) emissions publicly, up from 16 in the previous edition.

The authors said that new technologies are allowing producers to reduce and monitor GHG emissions through use of light detection and ranging, aka lidar technology, electrification of operations, and increased use of renewable energy in the field.

The share of companies disclosing ESG highlights in CEO letters and proxy statements rose to 56% from 40%, researchers said, while the percentage of companies disclosing ESG strategies in their proxy statements grew to 80% from 50%.

A similar increase was seen in the number of producers disclosing quantitative metrics to track their progress toward achieving ESG goals, from 53% to 73%.

“As stakeholders, investors and regulators continue to pressure companies to increase disclosures and do more to address ESG, companies are more often incorporating ESG principles into their company culture and using those principles to guide growth and distinguish themselves from others,” researchers said. They highlighted that, “More producers are incorporating ESG metrics into performance targets because investors want to see that executives are incentivized to make progress toward ESG goals.”

SEC Chairman Gary Gensler said in July that the commission will consider a “mandatory climate risk disclosure rule proposal” for regulated firms by the end of the year. He explained that under current rules, companies can announce plans to be net-zero, “but not provide any information that stands behind that claim.”

Researchers also noted that ESG “is a cost of capital issue,” explaining that ESG disclosures “may contribute to a company’s long-term financial performance and create competitive advantages” such as a broader and more stable investor base, and deeper stakeholder loyalty.

The Haynes Boone and EnerCom team noted, however, “it is unclear whether the SEC will require disclosures on Scope 3 emissions (relating to the value chain) or require different metrics based on a company’s industry.”

The number of companies with an ESG-dedicated board committee, meanwhile, doubled to 20 from 10 in the previous report.