At the same time, the pressure on energy companies to reduce emissions, in their own operations and in the products they bring to market, continues unabated. The energy industry already has a unique understanding of how the growing focus on environmental, social and governance issues is impacting investor sentiment and access to capital. Stakeholder expectations are likely to get more stringent in the years ahead, rather than less.
Adding more complexity is the U.S. Securities and Exchange Commission’s proposed climate disclosure rule, which is expected to be finalized in late 2022/early 2023. It is expected to drive more rigor and regulatory scrutiny around emissions data, as we’ve seen many energy companies already communicating voluntarily to meet stakeholder requests. This will require companies to strengthen internal controls and processes around data collection and reporting, as well as work to ensure that data from outside the organization is accurate.
In summary, the new rule will create a steep learning curve and companies will need time to figure it out. That leads to …
Question No. 2: There is tremendous opportunity in developing innovative systems to drive emissions data collection and reporting. How can companies partner with technology firms to find solutions?
Because of the nature of their business, energy companies need substantial information networks that can utilize evolving technologies to track, monitor and analyze vast amounts of enterprise-wide emissions data. In the near term, that means developing and implementing climate data systems similar to those used for financial accounting or customer relationship management.
The good news is that technology companies are already innovating around this issue, utilizing machine learning, artificial intelligence and tokenization of carbon credits on blockchain to provide decentralized systems for emissions data and related transactions. Working together, the energy industry and technology firms can develop new ways to combine and analyze multiple data sets with different layers of granularity, giving companies timely, accurate information needed both for reporting purposes and for improving their emissions performance.
There is precedence for this form of “engineering to engineering” collaboration. In recent years, many companies have worked with technology firms to develop proprietary tools for leveraging data sets to make informed decisions around both exploration and reservoir longevity as well as grid maintenance and transparency. That same type of teamwork can bring much-needed consistency to data gathering and reporting.
Elisabeth Brinton, CVP, Sustainability at Microsoft, affirms this idea of teamwork, “Partnering [to solve this problem] is part of our new future. Because none of us have all the answers, all of us can benefit from learning together. Collaboration is key, across industries, to address these issues, problem solve, and spur new ideas. Partnering together we can drive economic value, create solutions, and innovate together.”