The world is mobilizing toward managing greenhouse gas (GHG) emissions as more jurisdictions set audacious goals and strict timelines to transform their energy system and get closer to low-carbon and zero-carbon supply chains. Over the past decade, the cost of renewable energy declined exponentially due to technological advancements, large-scale deployment, and competitive supply chains. Furthermore, greater support from government policies and higher clean energy goals announced during COP26 are driving global demand, i.e., it is anticipated that by 2030, almost 40% of global demand will be powered by renewables.

The energy sector is under scrutiny by investors and stakeholders to provide greater transparency around their ESG initiatives. Many leading investors have made public statements about the importance of sustainability initiatives and reporting. Addressing ESG issues has become a must as many investors are asking for ESG strategy and reporting and they are not providing capital unless ESG requirements are met.

Many European countries and the EU itself have adopted mandatory ESG reporting requirements. Large energy companies in the US are voluntarily disclosing ESG information using frameworks such as Global Reporting Initiative (GRI), and the Sustainability Accounting Standards Board (SASB).

Although environmental performance will always remain the key focus in the energy sector, the social and governance elements of ESG are increasingly gaining attention. Issues that are increasingly top of mind for stakeholders include diversity and inclusion, protection of human rights (especially with energy companies that operate globally), occupational health and safety, impact on local communities and indigenous relations and linking executive remuneration to ESG performance targets.