Science Based Targets Initiative no longer accept commitments from fossil fuel companies. How will ESG change in 2022?

March 15, 2022
By CSE

The Science Based Targets initiative (“SBTi”) which is one of the key organizations focused on aligning corporate environmental sustainability action with the global goals of limiting climate change, announced on March 8, 2022 that it is developing “a new methodology for companies in the oil and gas sector to set science-based targets” and to this end it is planning a peer review. It will share further guidance on this later in the year.

 

Fossil fuel companies that had already submitted commitments to SBTi will find their commitments removed from the organization’s list of “Companies Taking Action”.

 

While the precise reason for this cannot be known with certainty, fossil fuels have been the subject of much of the increasing attention for climate action by investors, regulators, and other parties. Oil and gas companies cannot currently join the SBTi because, although companies in this sector can make a commitment to setting science-based targets, their targets cannot yet be officially approved.

 

While many are calling 2021 the year of ESG investing, there’s little debate left about ESG now being core to the energy business.

 

What does 2022 and beyond hold for ESG?

 

Over the last five years, the focus on ESG (Environmental, Social, Governance) has skyrocketed as investors, regulators, and consumers fuel demand for sustainable firms and investments. In 2021, the market saw a $120 billion influx into ESG exchange-traded funds, more than doubling the previous year’s $51.1 billion.

 

With tighter regulations surrounding greenhouse gas emissions, rising demands for renewable and sustainable energy, and increasing concern over social and governance issues, 2022 is projected to see an even greater expansion of ESG related trends and investments.

 

Oil and gas companies are increasingly focusing on new technologies to achieve ESG goals. Businesses in mature industries such as oil and gas, mining and metals, and power generation and chemicals will need to address new business imperatives if they are to build an alternative, sustainable energy landscape while maintaining current operations continuity.

 

The increased focus on ESG transparency from investors and stakeholders has significantly improved the data quality of ESG reporting from oil and gas companies—a trend that will continue in the coming years.

 

Keep up with the latest trends and meet stakeholder demands with active sustainable strategies! Benefit from the opportunity to obtain a strategic understanding of the future sustainable operation and build a stronger foundation to achieve long-term goals. Enrol now in the Certified Sustainability (ESG) Practitioner Program, Advanced Edition 2022, Digital Version, on May 12-13 & 16, to get all the necessary tools for your future success and impactful measurement of ESG performance.

 

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