To encourage energy and utility companies to improve their management and disclosure of methane emissions, the PRI has launched a new global collaborative engagement, with 36 investors from 11 countries representing US$4.2 trillion in assets under management.
The engagement follows a two-year PRI-coordinated collaborative engagement on fracking that identified methane emissions as an area where oil and gas companies were failing to appropriately manage and disclose information. It will target 29 companies across all segments of the natural gas value chain from upstream production to downstream utilities.
Methane – the primary component of natural gas and a climate pollutant 84 times more powerful than carbon dioxide over a 20-year period – is responsible for a quarter of the global warming happening today. The oil and gas sector is the largest industrial source of methane emissions globally. Unchecked methane emissions represent operational inefficiency, waste valuable products, invite regulatory scrutiny, and undermine the long-term ability of natural gas to play a role in a transition to a lower-carbon energy economy. Such risks have the potential to negatively impact portfolio returns for investors.
The PRI’s recent Investor guide to methane will inform the new engagement process. The guide provides a simple benchmarking tool to educate investors on what good methane management looks like, and equips investors with questions to constructively engage operators to catalyse improvements in emission measurement, reporting, and reductions.
“To reduce financial, regulatory and reputational risk associated with methane, investors need to understand companies’ relative performance in managing methane risk” said Gemma James, manager, environmental issues at the PRI.
“Engagement on the topic not only identifies where the risk exposure is but establishes opportunities for improved methane management.”
“Methane risk is a potent form of carbon risk, and left unmanaged it can literally leak away shareholder value. This is both an enormous risk and opportunity to improve performance in the oil and gas industry,” said Thibaud Clisson, BNP Paribas Investment Partners.