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ESG companies leading the way in the energy industry

Environmental sustainability performance is one of the three pillars of ESG. It measures the energy a company consumes, the waste it generates, and the natural resources it uses.  

Additionally, it maps the consequences for ecosystems and habitats.  

Citizens, governments, regulators, and the media are turning the spotlight on corporations and demanding action.  

Companies in every sector, including power, will need to make concerted efforts to improve their performance across all three ESG measures. 

ESG environment 

Environmental performance measures the energy a company consumes, the waste it generates, the natural resources it uses, and the consequences for ecosystems and habitats.  

Climate change, pollution, net-zero targets, biodiversity, and the use of natural resources are now all part of energy companies’ ESG environmental strategy.  

Mitigating actions taken by energy and power companies include investments in energy efficiency production projects and processes, renewable energy, and clean energy sources.  

An overarching factor is climate change, which is increasing the frequency and force of extreme weather events.  

Climate change and instability also cause uncertainty that, in turn, increases corporate risk and delays investment. 

Environmental performance measures how corporate activity contributes to climate change, pollution, biodiversity, and the depletion of the world’s natural resources.  

ESG social 

Social performance assesses a company’s engagement with its workers, customers, suppliers, and the local community.  

It covers human rights, diversity and inclusion, health and safety, and community impact, all crucial factors for energy and power companies to focus on.  

Inattention to these factors can damage corporate brands and reputations and bring legal and regulatory penalties.  

Implementing a strong social governance and corporate strategy can raise a company’s profile and create a more attractive investment opportunity for energy and power brokers.

ESG-corporate governance

Governance assesses how a company uses policies and controls to inform business decisions, comply with the law, and meet obligations to stakeholders.  

Governance failures (for example, aggressive tax avoidance, corruption, excessive executive pay, or relentless lobbying) cause reputational harm and loss of trust. 

When it comes to the three elements of EST, corporate governance is often the most overlooked.  

According to GlobalData’s ESG Strategy Survey 2021, 57% of ESG executives ranked governance as the least important ESG factor.  

Global energy and power companies cannot afford to overlook the importance of governance in setting and executing an ESG plan. 

Disclosure landscape for ESG energy companies 

Corporate disclosure on ESG issues is more extensive than ever, but it is not uniform.  

Meanwhile, potential energy investors are looking for high-quality ESG datasets to help them make portfolio decisions.  

Over the past decade, there has been a sustained effort to force greater disclosure of climate-related information and persuade companies that disclosure is in their best interest.  

Unfortunately, this has led to multiple disclosure frameworks and fragmented reporting standards. 

The International Financial Reporting Standards (IFRS) Foundation governs how financial reporting is conducted in 166 countries.  

Applying the structure and uniformity of financial reporting has long been hailed as the solution to ESG reporting challenges. 

Thus, the IFRS oversaw the creation of the International Sustainability Standards Board (ISSB), an independent body that was confirmed at COP26 in November 2021.  

The ISSB aims to deliver a comprehensive global baseline of sustainability-related disclosure standards, providing investors and other capital market participants with information about companies’ sustainability-related risks and opportunities.  

To do this, the ISSB will consolidate the Climate Disclosure Standards Board (CDSB), the International Accounting Standards Board (IASB), and the Value Reporting Foundation (VRF), which houses the Integrated Reporting Framework (IRF) and the Sustainability Accounting Standards Board (SASB). 

Several organizations will advise the ISSB by forming a Sustainability Consultative Committee.  

ESG in energy companies 

Environmental, social, and corporate governance has emerged as a major consideration for energy companies, defining how and where they incorporate these issues into business structures.   

The energy industry must address environmental, social, and governance (ESG) issues and challenges with collaborative, proactive steps designed to deliver sustainability goals.  

Working towards social goals, as well as being environmentally aware and proactive, are themes that are globally recognised as part of corporate strategies.  

Mitigating actions include developing a quantifiable and timebound ESG strategy, setting remuneration targets based on this, and ensuring updates and progress reports are provided to stakeholders and staff. 

Big polluters are more attuned to the importance of ESG The consensus around the importance of ESG crosses industries, but it is particularly prominent in specific fields.  

Sectors including oil & gas, and power tend to rank higher than others in the metrics that measure ESG importance, goal setting, and investment.  

These sectors are among the biggest polluters and are more impacted by actions to slow down climate change. 

Social sustainability job insights in the power sector

Global Data monitors live power company job postings mentioning social sustainability or those requiring related skills in the sector.

Jobs postings by power companies mentioning social sustainability in recent months.  

Social sustainability jobs tracker in the power sector looks at the jobs posted, closed and active, in the sector. 

Corporate governance job insights in the power sector  

GlobalData monitors live power company job postings mentioning corporate governance or similar skills in the sector. 

Jobs postings by power companies mentioning corporate governance in recent months.  

Corporate governance jobs tracker in the power sector looks at jobs posted, closed and active, in the sector. 

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