STUDY NO.

197
NOVEMBER 2021

EVOLUTION OF GHG

EMISSIONS DATA

DISCLOSURE IN ESG

REPORTING BY THE CANADIAN

OIL AND GAS INDUSTRY

www.ceri.ca | info@ceri.ca

@ceri_canada

Canadian Energy Research Institute

Evolution of GHG Emissions Data Disclosure in ESG Reporting by the Canadian Oil and Gas Industry xi

Executive Summary
The Canadian oil and gas sector notices a global trend of investors using companies' environmental, social
and governance (ESG) performance and disclosure to guide their investment decisions. Investors have
expressed a desire for more accurate, reliable, complete and quantitative ESG metrics, as well as
recognized standards and frameworks against which to compare and measure companies. The Canadian
Energy Research Institute (CERI) study reviews the evolution of data availability, consistency,
standardization and disclosure for greenhouse gas (GHG) emissions as one of the key environmental
performance indicators used by the Canadian oil and gas industry for sustainability and ESG reporting.

A sample set for the study included 26 oil and gas companies headquartered in Canada and operating
mainly in Western Canada, based on the companies’ 2019 market capitalization, gross revenue and
average daily production. The selected set comprised exploration and production companies, oil sands
companies, and midstream companies. A proper sample set of oil and gas companies established and
operating in other jurisdictions (specifically the United States and Europe) was selected as a comparison
group based on similar criteria. The comparison set included 10 American and 12 European firms
representing top exploration and production and midstream/integrated oil and gas companies. Both
sample sets are not exhaustive of all the oil and gas companies operating in the three selected
jurisdictions.

CERI collected quantitative and qualitative data from the most recently published individual ESG reports
and performance tables for GHG emissions (2017-2019) of oil and gas companies included in the sample
sets. We conducted qualitative analyses and comparisons on the key indicators related to GHG emissions
disclosure and other ESG/sustainability reports metrics using the data collected from the various reports.
CERI executed a quantitative analysis to establish any trends in the GHG emissions data collected.

The study found no strong alignment to any major frameworks within the Canadian oil and gas sector’s
ESG reporting. While Global Reporting Initiative (GRI) remains the most common framework, the
increased usage of the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-
related Financial Disclosures (TCFD) frameworks in the most recent companies reports are apparent. The
GRI is utilized by 81% of the companies from the Canadian dataset compared with 73% of companies using
SASB and 65% of companies using TCFD frameworks. The US oil and gas companies appear to be following
a similar trend in reporting as Canadian companies, with many companies using a combination of GRI,
SASB, and TCFD. However, energy companies based in Europe still appear to be strongly aligned with the
GRI reporting framework (75% of the selected companies). TCFD and especially SASB are utilized
significantly less often (by 42% and 8% of the evaluated companies, correspondingly) compared to the
Canadian companies.

The analysis by CERI showed that the disclosure of GHG emissions metrics becomes more consistent for
the Canadian oil and gas sector and the energy industry in other selected jurisdictions. CERI observed an
increase in the disclosure of Scope 1 and Scope 2 emissions footprint (>90% of the reports), Scope 3
emissions footprint (>25% of the reports) and GHG emissions intensity data by the Canadian companies.

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xii Canadian Energy Research Institute

That includes enhancing the disclosure of intensity data to incorporate specific intensities for Scope 1 and
2 emissions.

Canadian companies have comparable GHG footprint disclosures of Scope 1 emissions as American and
European companies, as shown in Figure E.1, ranging from 80% to 100%. Canadian and European
companies disclose Scope 1 and Scope 1 and 2 emissions footprints in greater than 90% of the reports,
which shows an increasing amount of disclosure since 2017. In contrast, only 60% to 70% of the selected
US companies disclosed total Scope 1 and Scope 2 GHG emissions footprint.

Upstream oil and gas companies are under pressure to report and manage Scope 3 emissions as they
account for most of the GHG emissions and are a significant contributor to climate change. Currently,
the disclosure rate for Scope 3 emissions is about 20% to 30% for Canadian and American companies,
while European companies disclose Scope 3 emissions data in approximately 40% of the reports. Further
work needs to be completed to increase the disclosure of Scope 3 emissions.

Figure E.1: Percentage of select companies reporting Scope 1, 2, and 3 GHG emissions footprint

Canadian, American, and European companies show similar percentages of ESG reports disclosing Scope 1
emission intensities as displayed in Figure E.2. However, the data shows that American and European
companies are less likely to report Scope 2 emissions intensities than Canadian companies.

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Evolution of GHG Emissions Data Disclosure in ESG Reporting by the Canadian Oil and Gas Industry xiii

Figure E.2: Percentage of select companies reporting Scope 1 and Scope 1&2 emissions intensities

There are positive trends for the disclosure of methane emissions data and intensities. The percentage of
Canadian oil and gas companies disclosing methane emission footprint data has increased from 2017
(44%) to 2019 (77%). The US and European companies disclose similar rates of reports containing methane
emissions footprint and intensity metrics, as shown in Figure E.3. However, the data shows that Canadian
companies appear to be lagging when disclosing both methane emissions footprint and methane
emissions intensities.

Figure E.3: Percentage of select companies reporting CH4 footprint and CH4 footprint and intensity

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xiv Canadian Energy Research Institute

The study also reported an increase in companies setting hard GHG emissions reduction targets and net
zero emissions targets, in addition to the government-required reduction measures; however,
improvements in disclosure of emission reduction strategies are needed.

The common issues facing ESG reporting within the Canadian oil and gas sector are the variabilities and
lack of standardization between companies' reporting metrics. The methodologies used by the different
companies in quantifying and reporting GHG emissions in ESG reports also vary within the Canadian
energy industry. In addition, there is also a notable difference in quantification methods used for various
reporting programs, such as Greenhouse Gas Reporting Program (GHGRP) and Carbon Disclosure Project
(CDP). Therefore, the assumption of the quality of data based on these methodologies is challenging to
establish.

Third-party verifications of the GHG data were available in approximately half of Canada's most recently
published ESG reports for the oil and gas industry. In comparison, approximately 80% of ESG reports from
the analyzed US companies dataset, and about 33% of those from the European dataset were verified by
a third party. It would be beneficial for companies to provide additional information on the methods
for GHG emissions quantification and increase the use of third-party verifications for reporting GHG
metrics. That can give investors more certainty in the emissions data and reflect the company’s
compliance and transparency.

Overall, the findings of the CERI study demonstrate the increasing evolution of GHG emissions disclosure
and reporting by the Canadian oil and gas sector for the last few years, as the industry is moving to more
open data, transparency, and public data sets. Further improvements in GHG emissions reporting,
increasing standardization and transparency and addressing inconsistencies in the disclosure can
positively impact ESG scores, enhance oil and gas companies' access to financing, and lower its cost.

November 2021