The Assessing low-Carbon Transition (ACT) Oil and Gas sector methodology is a product of the ACT initiative, which assesses an organisation’s readiness to transition to a future low-carbon world and aims to drive action by companies to move to a 1.5-degree pathway in terms of their climate strategy, business model, investments, operations, and greenhouse gas emissions management. The ACT initiative, a joint project between ADEME and CDP, has created an overarching framework and sector-specific methodologies, of which the Oil and Gas methodology is one.
The ACT Oil and Gas methodology includes principles, scope, boundaries and performance indicators, as well as performance, narrative and trend scoring explanations. The methodology was developed through research and multi-stakeholder dialogue. ACT builds on the Sectoral Decarbonization Approach (SDA), developed by the Science-Based Targets Initiative (SBTi), to compare a company’s alignment to the low-carbon pathway. (See explanatory note below.)
Together with ACT and CDP, the World Benchmarking Alliance (WBA) has translated this methodology into the Oil and Gas Benchmark 2021. This benchmark assess and rank 100 keystone companies in the oil and gas sector.
This Oil and Gas Benchmark 2021 forms the fourth of a series of rankings and updates within the Climate and Energy Benchmark of the WBA. As well as the Automotive Benchmark 2019 and Automotive Performance Update 2020, the Climate and Energy Benchmark measured and ranked the climate action performance of 50 keystone electric utilities in 2020. It will continue to measure and rank the climate action performance of companies in other high carbon emitting industries within the decarbonisation and energy system, including transport and real estate and construction.
The WBA Oil and Gas Benchmark 2021 is a sector-specific benchmark within the WBA Climate and Energy Benchmark. The Climate and Energy Benchmark will clarify where and how companies can contribute to SDG 13, SDG 7, and the Paris Agreement, and incentivise them to align their strategies and operations with a 1.5-degree pathway. It is part of the decarbonisation and energy transformation identified by the WBA as one of the seven system transformations required to achieve the Sustainable Development Goals (SDGs). From 2022, the Climate and Energy Benchmark will also assess companies on WBA’s core social indicators and their contributions to a just transition.
An assessment of the SDGs and corresponding targets demonstrated that the decarbonisation and energy transition will have an evident impact on SDG 1 (no poverty), SDG 3 (good health and wellbeing), SDG 7 (affordable and clean energy), SDG 9 (industry, innovation and infrastructure), SDG 12 (responsible consumption and production), SDG 13 (climate action) and SDG 17 (partnerships for the goals), amongst others.
All WBA benchmarks build on existing standards and norms and seek to draw on existing frameworks and initiatives. For this reason, the ACT methodologies have been adopted as suitable existing methodologies. The ACT methodologies, used to create the Climate and Energy Benchmark, can act as roadmaps, setting out how high-emitting companies can contribute to the decarbonisation and energy transformation and achieving SDGs 1, 3, 7, 9, 12, 13 and 17 – amongst others – and the Paris Agreement.
Before the Climate and Energy Benchmark began, a mapping exercise identified that the Taskforce on Climate-related Financial Disclosures (TCFD) was strongly aligned with the benchmark (although their objectives and audiences differ slightly). The Climate and Energy Benchmark uses data that the TCFD promotes the publication of, while the benchmark can allow financial actors to better understand transition risk. Both initiatives focus on companies’ governance, metrics and targets, and aspects of risk management practices (such as low-carbon transition plan and climate change scenario analysis). You can read more about the relationship between the WBA Climate and Energy Benchmark, ACT and the TCFD by clicking here.
Industry scope of the benchmark
The WBA Oil and Gas Benchmark 2021 includes companies with activities in the oil and gas sector.
The activities of the O&G Upstream segment included within the ACT scope are the following:
- Oil & Gas Exploration [NACE – 09.10]
- Oil & Gas Production [NACE Rev2 – 06]
- Biomass production (agriculture, forest, …) [NACE A]
Oil and Gas equipment and services activities (engineering, maintenance, etc.) [NACE 09.10] are excluded from the ACT O&G scope of activities because although they play an enabling role they do not hold the final decision on climate impacting investments.
The activities of the O&G Midstream segment included in the ACT scope are listed in Table 2.
Petrochemicals activities [NACE 19.20] are excluded from the ACT O&G scope of activities because they cover processes and products with no final combustion use and have therefore different issues than those relating to the O&G transition. Most petrochemical activities produce “raw materials” (e.g. like plastics) instead of “energy carriers”: only energy related products are part of the scope. Petrochemical activities will be treated in separate ACT and SBT methodologies.
Pure trading activities [NACE 35.23 (gas) / 35.14 (electricity)] are also excluded from the ACT O&G scope of activities. “Pure trading” activities are defined as buying and selling products without transforming them. These sales are not to end consumers. Indeed, these are short-term activities with limited levers on the low carbon transition as well as few locked-in assets.
The activities of the O&G Downstream segment included in the ACT scope are listed in Table 3.
Company scope of the benchmark
The oil and gas sector’s keystone companies that have activities within the scope of the ACT Oil and Gas methodology are included in this 2021 Benchmark. The ‘keystone company’ is based on the concept and characteristics of keystone actors as defined by Österblom et al in 2015, as those that play a vital role in the industry and have a disproportionate effect on the structure and function of the system in which they operate. Of the global oil and gas companies potentially suitable for inclusion, 100 keystone companies were selected for the Oil and Gas Benchmark 2021 based on the following criteria:
- Companies that dominate global production or service revenues and/or volumes within the oil and gas sector, based on an assessment of barrels of oil produced (where this information was available).
- Companies that control globally relevant segments of production and/or service provision.
- Companies that connect (eco)systems globally through subsidiaries and supply chains.
- Companies that influence global governance processes and institutions.
- Companies that have a global footprint, particularly significant in developing countries.
Like every ACT methodology, the full ACT Oil and Gas methodology assessment generates a rating comprising:
- A performance score – represented as a number from 1 (lowest) to 20 (highest) – presents a broad and modulated view of company performance across key levers for low-carbon transition.
- A narrative score – represented as a letter from A (highest) to E (lowest) – provides a holistic view of a company’s state of alignment with the goals of the Paris Agreement.
- A trend score – represented as “+” for improving, “=” for remaining the same, or “-” for worsening – signals the near-term movement of company alignment with the low-carbon economy.
For the oil and gas companies’ performance assessment, company data is analysed across nine modules: targets, material investment, intangible investment, sold product performance, management, supplier engagement, client engagement, policy engagement, and business model. Each of these modules contains indicators, and each module and indicator has a weight (see figure below) depending on companies’ main activities along the oil and gas value chain. The weights are guided by the principles of value of information, impact of variation, future orientation and data quality sensitivity identified in the ACT framework.
Figure: Performance module weighting for all types of companies in the oil and gas value chain
A company’s module-level scores, and the overall performance score, are presented in each full WBA company scorecard. The texts in the “Leading practices” and “Risks and opportunities” section give an additional commentary on a selection of performance assessment modules.
The narrative assessment is an overall analysis of all available data sources (including sources additional to those used for the performance assessment) to establish a company’s state of alignment with the goals of the Paris Agreement. The narrative assessment considers the performance assessment, as well as further analysis of the company’s reporting based on four criteria: business model and strategy; consistency and credibility; reputation; and risks. The overall narrative score is presented in each WBA company scorecard. The section “Progress towards the Paris Agreement” provides additional commentary on each detailed element of the narrative assessment: commitment, transition planning, present activities, legacy, and consistency.
For the trend assessment, the company is assigned a “+”, “=”, or “-”, depending on whether the analyst deems that the future company will be less, equally or more able to meet the requirements of the low-carbon transition in a re-assessment in the near-term. This is presented in each WBA company scorecard. The section “Trend” provides additional commentary on the trend assessment.
The analyst applying the ACT methodology assesses the data. A score is given per indicator which is used to calculate the performance element of the ACT score. The narrative assessment is then produced according to the narrative score principles by referring to both the information considered for the performance assessment; plus, other verifiable public data on the company such as annual and sustainability reports and news from reliable sources. Finally, the trend score is produced synthesising the forward-looking aspects of the assessment to give a view of the future likely trend in company performance.
To create the overall Oil and Gas 2021 Benchmark ranking, a weighting was applied to each of the performance, narrative, and trend scores as follows:
- The performance score has a 1:1 weighting, i.e., a score of 12 is 12;
- The narrative score is weighted: A=20, B=15, C=10, D=5, E=0; and
- The trend score is weighed: “+”= 2, “=”= 1, “-“= 0.
This overall weighted score resulted in the Oil and Gas 2021 Benchmark ranking. The overall weighted score out of 42 is converted to the total score/100.
Each company’s module-level scores, and its overall performance score, are presented in each WBA company scorecard. Each scorecard also contains a score summary, providing information about the company’s 2021 assessment.
Module-level rankings are available however across: targets, material investment, intangible investment, sold product performance, management, supplier engagement, client engagement, policy engagement, and business model.
Total figures for performance assessments can be subject to rounding differences, but this has not had any overall effect on the ranking.
Data collection process
The Oil and Gas Benchmark assesses the most reliable, latest available, public and verifiable data. Where possible, data points are 5 years historic up to the present – so for some data points, as far back as 2014 – and with future orientated analysis. 2019 was the most recent year for which complete regulatory data was available.
Data was collected in the first instance from CDP’s disclosure platform where possible, as well as other sources such as specialist databases – including GlobalData – and public materials from company websites including sustainability and corporate responsibility reports.
Companies were also invited to directly participate in the data validation process by submitting information during a three–week period, at some point between March and April 2021.
All 100 companies were welcome to provide additional information; 22 of 100 provided additional data either through the data validation process or by other means within the time period.
Disclosing company scores
Scores for each company are available publicly, for all stakeholders:
- For the performance assessment, at indicator, module and overall score level;
- For the narrative assessment, at the overall score level;
- For the trend score, at the overall score level.
Individual company results are presented in the company scorecards. Module-levels rankings are presented in the ‘Ranking’ section of the website.
For all 100 companies, an excel file containing the score summary, module, indicator-level scores and commentary texts for all 100 companies, as well as more about the companies’ data availability and participation in the data validation process, is available here.
Key findings and module-level summary findings are presented in our Insights Report here.
The ACT Oil and Gas methodology was developed according to a robust, credible, and replicable process. It was built based on extensive research and outcomes resulting from multi-stakeholder dialogues.
The ACT Oil and Gas methodology was developed by CDP and ADEME from September 2019 to December 2020 and published in February 2021. ACT methodologies are based on the principles and guidelines of the publicly available ACT Framework. ACT methodologies are based on the principles and guidelines of the publicly available ACT Framework.
The ACT Oil and Gas methodology was developed in consultation with companies and experts in the sector, and pilot companies reported against the methodology and received an ACT pilot assessment and rating privately. Eni, Shell, Cepsa, Total, Equinor, Galp, Woodside, EDF, Butagaz, Primagaz, Rubis and Engie participated in this pilot company road test.
The methodology had input from a Technical Working Group (TWG), Advisory Group, and public consultation from October 2019 to January 2021. You can find out more via the ACT initiative website: https://actinitiative.org/ and about organisations that provided technical support here: https://actinitiative.org/about-us/.
Feedback from the TWG, Advisory Group, and public consultation informed the direction of the methodology and consultation feedback was considered in the final published version of the ACT Oil and Gas sector methodology.
Publication of WBA Oil and Gas Benchmark
In July 2021, the key findings and company scorecards were published online, with the Oil and Gas Benchmark findings officially launched across various events. The WBA company scorecard had previously been made available to each company to inform them of their scores.
Note on pathways
In both the WBA key findings and company scorecards, the term “1.5-degree pathway” is used to refer to the “company benchmark” pathway. The company benchmark pathway is the pathway allocated to an individual company from the sector decarbonisation pathway, built on the Sectoral Decarbonisation Approach (SDA) of the Science-Based Targets Initiative (SBTi).
This 2021 Oil and Gas Benchmark is the first comprehensive assessment of the oil and gas sector using the IEA’s Net-Zero Emissions by 2050 Scenario (NZE), which is aligned with a 50% chance of limiting long-term temperature rise to 1.5 °C degrees without a temperature overshoot.
The term “the [oil and gas] sector’s low-carbon pathway” is used to refer to the sector decarbonisation pathway as a whole.
Reference data to inform the company 1.5-degree decarbonisation pathways came from the IEA Net Zero by 2050 scenario, Net Zero by 2050 – Analysis – IEA .
You can read more about the application of the sector and company benchmarks and other quantitative benchmarks in the ACT Oil and Gas methodology: https://actinitiative.org/
Other technical notes
Methane-only targets are not assessed for alignment under the ACT Oil and Gas methodology due to a lack of an appropriate scenario pathway. You can find further technical notes in our ACT – WBA FAQs.
Where revenues are given in the ‘more about the company’ section at the bottom of each company scorecard, and in the company’s description at the top of the scorecard, the reporting year for this is 2020 unless otherwise stated. In the scorecard texts, where revenue is mentioned for the reporting year, this means 2019.