A growing number of Lower 48 onshore oil and gas producers are publicly disclosing greenhouse gas (GHG) emissions data, according to new research by Haynes and Boone LLP and EnerCom inc.

The trend  may be related to proposed rules by the Securities and Exchange Commission (SEC) that would require publicly traded firms to publish their emissions, researchers said in their latest biannual report on environmental, social and governance (ESG) trends in the sector. 

“Our latest ESG Tracker points to the growing impact of the ESG movement, with 100% of the sampled producers having adopted ESG policies — up from 70% in our first ESG Tracker, published in spring 2021,” said Haynes Boone Corporate Partner Stephen Grant Jr. “Still, the ESG Tracker demonstrates that producers are being deliberative in their adoption of ESG policy and goals. For example, with respect to environmental matters, fewer than 25% of [the] same producers have announced ‘net zero’ emissions commitments.”

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Eighty-three percent of respondents now are publicly disclosing some GHG emissions data, which is up from 53% in the spring 2021 ESG tracker, researchers found. 

They noted that, “Most ESG disclosures continue to be found in corporate sustainability reports and on company websites rather than in SEC filings. If enacted, the SEC’s proposed climate rules will instead require disclosure of ESG information in SEC filings, including around governance and GHG emission data.”

The Haynes Boone and Enercom teams also highlighted that, “More producers are incorporating ESG metrics into executive compensation performance targets because investors want to see that executives are incentivized to make progress toward ESG goals.”

Most producers are disclosing at least some level of both Scope 1 and Scope 2 emissions, researchers found. Scope 1 refers to a producer’s direct emission, while Scope 2 applies to indirect emissions from operations such as a producer’s electricity consumption.

Only a handful, however, are disclosing Scope 3 emissions, i.e. the emissions created from end-user consumption of a company’s products. Disclosure of material Scope 3 emissions would be required under the SEC’s proposed rule change.

Meanwhile, the race to achieve net zero emissions “has slowed as companies appear reluctant to make new commitments given present and anticipated regulatory scrutiny,” the firms said. As of the survey’s publication, fewer than 25% of producers had announced net zero emissions targets, according to researchers. 

The authors noted that, “Institutional investors continue to hold oil and gas equities; however, a slowdown in oil and gas investments may reflect a general consensus that prices have temporarily peaked.”

The added, “The fact that investors are focused on strong balance sheets and more comprehensive ESG disclosures does not appear to have a material impact on share price.”

In a speech on Monday, SEC Commissioner Jaime Lizárraga made the case for the proposed changes.

“To me, the SEC’s disclosure framework is most effective when investors benefit from objective, quantitative metrics that provide the highest degree of comparability,” Lizárraga said, according to a transcript. “I believe the proposed rules are a significant step forward in getting investors this information. I look forward to working to ensure that the final rules are as robust as possible.”

He added, “It’s important to understand that a company’s greenhouse gas emissions – in particular, emissions from sources that are owned or controlled by the company or that are consumed through the generation of purchased energy – is a widely-used metric by investors.”