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In a new report released today, Clarity AI, a top sustainability tech platform, has unveiled startling insights into the GHG emissions of the oil and gas industry. The report, titled “The Missing GHG Emissions: How Satellite Data Can Quantify the Real Climate Risk of Oil & Gas Companies,” analyzes the 20 largest oil and gas companies by market capitalization, leveraging data from Climate TRACE, a non-profit coalition dedicated to tracking global GHG emissions.
The findings highlight a critical gap in emissions reporting, particularly concerning Scope 3 emissions from investments. This gap has significant implications for how we assess the carbon footprint of oil and gas companies and, by extension, the portfolios that include them.
Key Insights:
Scope 3 Investment Emissions Largely Unreported
Despite universal reporting of Scope 1 and 2 emissions among publicly traded oil and gas companies in the MSCI All Country World Index, a mere 9{2add217ad2235d262e63a186eb2903fa1b3aade4b9d8db7a510444e5d82aac71} report Scope 3 emissions from their investments. This trend persists even among the top 20 companies, with only one currently disclosing emissions from assets it has an interest in but does not control.
Significant Carbon Footprint Increase When Including “Missing Emissions”
The study reveals that accounting for these unreported investment emissions would increase the carbon footprint of a portfolio invested in these top 20 oil and gas companies by 24{2add217ad2235d262e63a186eb2903fa1b3aade4b9d8db7a510444e5d82aac71}. This substantial difference underscores the importance of comprehensive emissions reporting for accurate sustainability assessments.
Reshuffling of Carbon Intensity Rankings
Incorporating investment emissions into calculations dramatically alters the carbon intensity rankings of the top 20 companies. Seven out of 20 companies would see their positions fall, with one dropping six places from 9th to 15th.
Implications for Industry and Investors
Patricia Pina, Head of Product Research and Innovation at Clarity AI, emphasizes the critical nature of these findings: “While reporting and disclosure remain a foremost priority for organizations throughout the business world, data quality, transparency, and completeness continue to be a noticeable problem area for businesses and regulators alike. This is particularly true within the oil and gas industry as it relates to Scope 3 emissions, whereby reporting and data gaps lead to chronic underreporting of portfolio carbon footprints and provide a distorted view of how companies compare on carbon intensity.”
The report underscores the urgent need for more comprehensive and transparent emissions reporting in the oil and gas sector. As sustainability becomes an increasingly critical factor in investment decisions and corporate strategy, accurate and complete emissions data is essential for making informed decisions and driving meaningful progress towards climate goals.
For sustainability and energy executives, this report serves as a further wake-up call to reassess current reporting practices and consider the full scope of their organizations’ emissions impact. It also highlights the potential of new technologies, such as satellite data analysis, in providing a more accurate picture of global emissions.