PWS president Lisa Henthorne discusses ESG trends ahead of our Nov. 18 operators’ panel, which will focus on how the sustainability focus has impacted produced water management.
Not too many years ago, I’d have had to google ESG if someone asked me what it meant. A lot has changed since then. Environmental, social and governance factors encompass an extremely diverse group of topics. Picking up one producer’s 2020 sustainability report, I skimmed through 130 pages of documentation covering 27 different subjects including water management, health and safety performance, air emissions, diversity and inclusion, community engagement and spill mitigation. Our metrics within these core issues are increasingly monitored and weighed by our stakeholders, and critically, they will dictate access to capital in many parts of the world going forward.
How did we get here? ESG principles have roots in the “triple bottom line” measurements of the 1990s which many engineers used to evaluate competing opportunities and project options. Triple bottom line concepts have been bolstered by research on the correlation between successful companies’ ESG performance and financial performance. Over the past two decades, studies have demonstrated a positive correlation between good ESG performance and profitability. The premise that a company’s environmental and philanthropic commitments detract from its profitability – as put forth by leading economists such as Milton Friedman and widely promoted in the 1960s and 1970s – no longer holds true.
In addition, institutional investors, which account for the majority of global investment funds, are interested in long-term sustainability of their returns rather than the short-term gains on which many individual investors focus. Consequently, institutional investors often see “responsible” and selective investment in companies that have high ESG scorecards as priorities.
What does this mean for produced water managers and the supporting produced water community? In the future, we will increasingly measure ESG performance within our companies and report those metrics to existing and potential investors, our clients and – in some cases – the public. The number of ESG factors we measure will also increase, and we will be graded on our progress.
To get an update on how producers are incorporating ESG into their operating programs, please join PWS on November 18 at 10am CST for a virtual operators’ panel with representatives from Chevron, ConocoPhillips, Occidental, WPX Energy and Cimarex Energy. Panelists will discuss the topic “How has the emphasis on ESG and sustainability influenced your produced water management and operations priorities?” To join us and have your questions answered, please register here.