The risk management section of the TCFD focuses on the processes a company has in place to ident ify, assess, prioritize and mitigate climate-related risks.
A complete response to the TCFD would include methane-specific discussions under the following areas:
a) Describe the organization’s processes for identifying and assessing climate-related risks
As discussed earlier in this paper, methane emissions pose a variety of potent ial risks to companies.
- Has the company undertaken a formal material ity analysis for methane emission risk? If so, what were the results?
- Of the different categories of methane-related risk, which does the company see as more and less material?
- What processes does the company have in place to continually assess these risks?
- What is the company’s process for tracking and evaluating emerging regulations related to methane?
b) Describe the organization’s processes for managing climate-related risks
- Investors will look to see how a company is managing methane risk both at the corporate level and in its operations. For each category of risk noted previously, the company can discuss how it makes decisions to mitigate, transfer, accept, and/or control those risks. In particular, investors will be eager to understand:
- What methane risk management plans has the company pursued after its risk identification process?
- How does the company use direct measurement to most accurately identify, quantify and prioritize specific sources of methane leaks?
- How is methane mitigation incorporated into the design standards, construction, operation, and maintenance of both new and existing facilities?
- How does the company use leak detection and repair (LDAR) to manage met hane risk? This can include details on the scope, frequency and methodology of an LDAR program, how the scope, frequency and methodology were chosen, and how findings from a program are leveraged into forwardlooking methane management plans.
- How does the company approach methane risk management for non-operated facilities? How does it work with JV partners to ensure risk management standards?
- How does the company approach methane risk management for more oil-heavy assets? Is it different for gas-heavy assets? If so, why?
- What training programs or other resources are in place for employees and/or contractors to enhance prevention, monitoring and/or mitigation of emissions?
c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management
It is important to understand not just how methane fits into a company’s climate risk management, but also how it fits into a company’s general business risk management practices. Since methane emissions present a material business risk, in real economic terms, methane emission risk should be incorporated into a company’s overall risk management processes.
- How are methane emissions included in the company’s overall approach to enterprise risk management (ERM)?
- Has the company evaluated its memberships in trade and industry organizations for alignment with the company’s methane management and overall climate strategies? How does the company consider a trade organization’s position on climate and methane issues when evaluating membership?
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Setting the bar: implementing the TCFD recommendations for oil and gas methane disclosure