As stakeholders, investors and regulators continue demanding ESG disclosures, oil and gas producers are rapidly adopting policies and disclosing more information than ever regarding ESG goals and achievements, according to a new report.

Dallas-based law firm Haynes and Boone and consulting firm EnerCom analyzed financing filings from 30 publicly traded U.S. oil and gas producers and found that 83% of companies have implemented ESG policies such as disclosing greenhouse-gas (GHG) emissions and reporting annual reductions in emissions.

Additionally, the report showed that now more than ever, companies are disclosing ESG highlights, goals and strategies in CEO letters and proxy statements to showcase their commitments. There is also a significant increase in the number of producers disclosing quantitative metrics, demonstrating progress toward implementing ESG goals with more companies are reporting metrics in alignment with Task Force on Climate-related Financial Disclosures and Sustainability Accounting Standards Board standards.

“We found that just between 2020 and 2021 proxy statements, there was a significant increase in ESG-related disclosures,” Jennifer Wisinski, Haynes Boone partner and chair of the firm’s business transactions department, told Hart Energy.

“Between 2020 and 2021, we saw more quantitative metrics disclosed especially on the environmental side including emissions reduction, elimination of flaring as well as water management metrics,” she said.

Oil and gas companies are also incorporating ESG metrics into performance targets because investors want to see that executives are incentivized to make progress toward ESG goals, she added.

“Investors are sending strong messages to the effect that ESG will need to become a part of a company’s culture and solid ESG performance is an expectation and not necessarily a differentiator,” the report noted.

Although there is still a lot of variation in how and what companies report, Wisinski said this will change over time as the U.S. Securities and Exchange Commission (SEC) comes out with mandatory disclosures.

SEC Chairman Gary Gensler recently said that the SEC is considering mandatory quantitative disclosures on GHG emissions. However, it is unclear whether the SEC will require disclosures on Scope 3 emissions or require different metrics based on a company’s industry.

ESG disclosures could contribute to a company’s long-term financial performance and create competitive advantages, including a broader and more stable investor base and lower cost of capital. According to the report. Consequently, oil and gas companies are rapidly forming board committees to focus specifically on ESG with the report showing 100% growth in the number of such committees over the past three months.

Despite more oil and gas companies reporting ESG progress, only few have pledged net-zero goals, according to the report. Only 5 of 30 sample producers have a goal of net-zero emissions but many that report their emissions also commit to further reductions of direct GHG emissions.

Moving forward, the report shows that more companies are expected to quantify ESG accomplishments including board diversity, water usage reductions and community investments. The report also anticipates more oil and gas companies to begin disclosing specific targets and goals.