Assessing ESG factors in the energy sectorA DLA Piper handbook
A new "stakeholder capitalism" model is emerging and is being discussed in boardrooms and virtual meetings across the US and around the world.
A cornerstone of this new model is ESG – standing for Environmental, Social and Governance – a matrix for assessing the impact of practices of a business on its financial performance and operations. ESG investing, a term that connotes sustainable investing, socially responsible investing, mission-related investing or screening, has become a standard for top-tier institutional and public investors, financial institutions, private lenders and other stakeholders.
Clearly, in this emerging way of doing business, a company’s ability to manage its particular ESG risks (aka, risk mitigation) and take advantage of new market opportunities is driving value for its stakeholders.
The increased emphasis on ESG presents numerous opportunities for the energy industry. Indeed, though the nomenclature is changing, the energy industry has been at the forefront of ESG-related matters for some time and, in fact, this is where some of the greatest ESG gains and best practices have been shaped. For 20 years, renewable energy companies have led in advances of sustainable and environmental technology. Exploration, production and distribution companies are leaders in conserving water, reducing greenhouse gas emissions and chemical exposure, and minimizing land disturbance and traffic and noise impacts.
In this handbook, we offer seven sets of Q&As examining ESG business issues in the energy sector through these lenses:
- ESG policies and procedures
- The impact of ESG metrics on M&A transactions
- ESG issues in energy project finance
- Funds and the energy sector: ESG strategies
- ESG regulatory issues for the energy sector
- ESG employment issues for the energy sector
- ESG issues in energy sector litigation and disputes
We created this handbook for energy companies as a reference tool in discussing and refining their ESG programs. We hope you will find it useful.