2022 THOUGHT LEADERSHIPAN ESG REPORTING METHODOLOGYTO SUPPORT CCS-RELATEDINVESTMENT

IAN HAVERCROFT
Principal Consultant – Policy, Legal and Regulatory
NABEELA RAJI
Associate – Legal and Regulatory
ALEX ZAPANTISGeneral Manager – Commercial

CONTENTS
1.0 EXECUTIVE SUMMARY

3

2.0 INTRODUCTION

4

3.0 THE ASSESSMENT AND REPORTING OF ESG FACTORS

5

3.1 RATINGS SCHEMES AND METHODOLOGIES

6

3.2 CLIMATE CHANGE RATING AND REPORTING METHODOLOGIES

6

3.3 EMERGING INFLUENCES ON THE ESG SECTOR

13

3.4 DEVELOPMENT AND STANDARDIZATION

20

4.0 ANALYSIS OF CCS WITHIN ESG REPORTING

24

5.0 DEVELOPING A CCS-SPECIFIC REPORTING METHODOLOGY

32

5.1 CONTEXT FOR A REPORTING FRAMEWORK

32

5.2 APPROACH TO DEVELOPING THE METHODOLOGY

32

5.3 CCS-SPECIFIC METHODOLOGY

34

6.0 REFERENCES

2

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

41

1.0 EXECUTIVE
SUMMARY
1.

The Institute’s analysis reveals the extent of therapidly changing ESG reporting landscape andthe challenges faced by those seeking to promote
more comprehensive disclosure in relation to
CCS activities. As noted in this report, leading
reporting frameworks do not necessarily preclude
CCS-specific reporting within their existing scope,
however, in some instances there remains a
disconnect between the level of detail raised
through current reporting methods and that sought
by investors and wider stakeholders.

2.

A developing focus upon the deployment of lowcarbon technologies, further global commitments
to reduce emissions and the transition to a netzero economy, will ultimately see investors pay
increasing interest to technologies such as CCS
and the potential they offer. For organisations with asignificant emissions footprint, there are now further,
important considerations to be addressed whencontemplating the role of CCS under reporting
frameworks.

3.

4.

3

For companies, the focus must remain upon selecting
and subsequently using those reporting frameworks
that are leaders in terms of their approach and therecognition they receive. In recent years, the focus
has shifted towards greater use of a select numberof voluntary reporting frameworks, with the TCFD
perhaps the most recognisable within this category.
The Institute’s interviews confirmed that investors
are focused upon companies’ performance within
particular schemes and, in some instances, arespecifying the reporting frameworks that are to be
used by the organisations they invest in.
The transition to more mandatory forms of reportingpresents a further, important consideration. As
policymakers and regulators worldwide specify
the use of reporting frameworks, the requirements
and nature of the information to be disclosed underthese schemes, varies greatly. While it is hopedthat these measures will ultimately result in fargreater levels of disclosure and improved investor
information, it will be important to ensure that the
information provided by companies meets therequirements of all relevant stakeholders.

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

5.

The type of information and level of detail to beprovided by organisations, within their reporting anddisclosures, is a further critical consideration, in thecontext of this report and the proposed methodology.
Research and the interview responses emphasise
the pressure upon organisations to provide moredetailed information on their approach to emissions
reduction, net zero and the technology choicesthat will support these activities. As investors andfinanciers pursue increasingly detailed information
around companies’ performance in this space, it will
be important for organisations to consider the extent
of their current reporting and how this reflects theirapproach to CCS deployment, emissions reduction,and net zero ambitions.

6. A lack of consistency within the methodologies
behind the various reporting schemes andconsequently the information reported, remains
a significant concern to all parties. Companies
continue to emphasise the challenge of
responding to such a diverse range of schemes
and accompanying metrics, while end-users reportthat few schemes provide the requisite information
for making detailed assessments. While thedevelopment of sector-specific reporting schemes
has addressed these challenges to some extent, amove towards the standardisation of non-financial
reporting is expected to offer a more popular andpractical solution. Ensuring that schemes of thisnature meet the demand for high-quality climate
and CCS-specific reporting, will remain an important
task.
7.

In the context of this dynamic, global outlook,the Institute’s proposed methodology seeks topromote a greater level of granularity to CCSspecific reporting, within the boundaries of thecurrent, leading reporting frameworks. Whether thisapproach is formally incorporated within current
frameworks or not, the methodology reflects thelevel of detail that is now required by investors
and those seeking to promote their CCS-specificactivities.

2.0 INTRODUCTION

4

In recent years, the Global CCS Institute (“the Institute”)
has undertaken a programme of research aimed atconsidering the relationship between CCS and ESG rating
and reporting schemes. Previous work, notably a 2020
Thought Leadership report supported by the UnitedStates Department of Energy (US DOE), has examined
the potential connection between the development andscope of ESG ratings, the impacts of a company’s ESG
performance and ultimately, whether this will influence
future investment in CCS project deployment (GCCSI,
2020). To date, the Institute’s analysis has demonstrated
the relatively low levels of awareness of the technology’s
mitigation potential within the current ESG conversationand the challenges presented to CCS proponents andinvestors by the existing reporting pathways.

To complete this project, the Institute has drawn uponits previous commercial work and research activity inthis space. The project team has undertaken a detailed
programme of research, that included significant
literature reviews and a series of semi-structured
interviews with representatives from key sectors. In
addition to the information generated from interviews
used in the production of the 2020 report, the team also
conducted new interviews with banks, financiers andorganisations with significant carbon dioxide exposure.

This study, which has been supported by the King
Abdullah Petroleum Studies and Research Center(KAPSARC), seeks to build upon the Institute’s
earlier work programme and examine where project
proponents and investors may leverage the benefits of
their CCS-related investments and project operations, inthe context of the wider ESG reporting environment. As
part of this, the research has identified and considered
the potential routes for the reporting of CCS activities,
within current leading ESG schemes and reporting

The ultimate focus of this analysis, however, has been thedevelopment of a CCS-specific reporting methodology,
which is presented in Section 4 of this report. Drawing
upon the results of the Institute’ analysis and interviews,
this methodology seeks to build upon existing reporting
pathways, to enable all relevant parties - operators, endusers of the reported information and those designingand developing reporting schemes – to gain a clearer,holistic understanding of the breadth of CCS-specificinformation that may be reported.

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

regimes. For the avoidance of doubt, references within
this report to CCS activities relate to the application oftechnologies that capture, transport and permanently
store CO2.

3.0 ASSESSMENT
AND REPORTING OFESG FACTORSThe development and scrutiny of ESG-related information
continues to grow apace globally, driven by greater,concerted international and domestic action aroundsustainability. The adoption of the UN’s Sustainable
Development Goals (UN SDGs) and the conclusion of
the Paris Agreement, together with the development
and strengthening of domestic climate policies andsocial and environmental protections; continue to place
greater impetus upon the promotion and considerationof ESG factors. As a result, industry, investors and thewider public now seek far greater levels of disclosure
and performance across a wide variety of ESG-relevant
metrics.
The demand for greater, more comprehensive reportingof ESG-related factors that are deemed material to abusiness’s core activities, together with ever-closer
scrutiny of an organisation’s performance, has emerged
as a critical aspect of commercial behaviour. The
benefit of an ESG-focused strategy, that includes ahigh-degree of transparency, is now readily apparent
to many organisations in offering increased opportunity
and reward. The ability to access lower-cost capital,
reduced regulatory burdens and greater investment
and asset optimization, are just some of the areas which
are likely to benefit those companies with a strong ESG
proposition (McKinsey, 2019; Goldman Sachs, 2018).
Notwithstanding the drive from several more progressive
companies toward the voluntarily adoption of morealtruistic and sustainable practices, the rise of sociallyconscious investment practices, heightened public
scrutiny of ESG issues, and the introduction of regulatory
requirements, have also increasingly driven the uptakeof more widespread reporting. ESG activism on the part

5

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENTof shareholders and investors, as well as substantial
legislative intervention around the scope and quality ofcompany disclosures, are two factors in particular thatare anticipated to drive greater response and activity
from corporations in the coming years (Skadden, 2021;
EY, 2021).
Corporate transparency and the active disclosure of
ESG matters has become a significant consideration
for the finance and investment community. Several
studies, including the Institute’s own interviews withrepresentatives from across the sector, reveal investors
have increasingly focused their interest upon supporting
companies that proactively address ESG issues. One
recent report suggests that in the period 2013 to 2018,
assets under management (AUM) in ESG mutual funds
and exchange-traded funds (ETF) globally, have grownfrom $453B to $760B (BlackRock, 2020). Bloomberg
Intelligence reported in February 2021 that even witha substantially reduced growth level, ESG AUM, “could
climb to more than a third of the projected $140.5 trillion
global total by 2025” (Bloomberg, 2021).
Within the finance sector, several high-profile champions
have also emerged, highlighting an ongoing and futurecommitment to ESG-focused investment. Particularly
active within this sector are the asset managers, withseveral indicating their intention to increase their scrutinyof ESG issues as part of their investment stewardship
activities (Goldman Sachs, 2020). To ensure that thesevaluations and risk assessments portray an organisation
in a favourable manner, companies must increasingly
consider their ESG performance and focus upon
reporting high-quality, relevant information.

3.1 Ratings schemes andmethodologies
The rising significance of ESG issues has been reflectedin the broad range of reporting models that haveemerged in recent years. To date, a significant numberof voluntary and non-voluntary ESG standards initiatives
and ESG ratings models have been developed, by arange of industry organisations, governments, researchbodies and market data providers.
Perhaps the most prominent and non-proprietaryschemes, are those developed by non-governmentalorganisations or found in national reporting regulations
and stock exchange listing requirements. Principal
amongst these frameworks is the model proposed
within the recommendations of the Taskforce on Climate
Related Financial Disclosures (TCFD). Adopted by variousorganisations worldwide, the TCFD’s recommendations
now have over 1000 public and private-sector supporters
and is to be considered as perhaps the benchmark incorporate climate change reporting best practice. Other
standards initiatives, developed by the Principles for
Responsible Investment (PRI), the Carbon Disclosure
Project (CDP), the Sustainability Accounting Standards
Board (SASB), the Global Reporting Initiative (GRI),
and Integrated Reporting (IR) also continue to receive
considerable support from industry and investors
worldwide.
A further, important category of reporting schemes are
the proprietary, commercial models developed andoffered by numerous specialist providers. Primarily
aimed at providing rankings and ratings of companies
and investment funds’ ESG performance, these schemes
have emerged as an important part of the reporting
landscape. While new models continue to be developed,
several well-known market analysts and researchorganisations, including ISS, S&P, Sustainalytics, MSCIand FTSE Russell, all offer well-regarded and widely
utilised ratings products.
Companies will likely find themselves covered,voluntarily and involuntarily, by various ratings schemes.
In several jurisdictions, regulators are now promoting theuse of specific reporting frameworks, particularly whenit comes to reporting on their carbon footprint and theclimate change impact of their operations. In the United
Kingdom, the Financial Conduct Authority (FCA) has
already announced new rules requiring companies witha premium listing to disclose, on a “comply or explain”

6

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

basis, their climate risks in accordance with the TCFD’s
recommendations (SEC, 2021). Similar provisions
have been introduced in New Zealand, where roughly
200 financial entities will be required to start making
disclosures in line with the TCFD’s recommendations
from 2023. Several other governments around the world
are considering their position regarding sustainability
disclosures, with the US Securities and Exchange
Commission now suggesting they too may be willing to
adopt provisions requiring the disclosure of ESG-relatedrisks (SEC, 2022).
Companies are increasingly volunteering to adopt
international ESG reporting standards, with a view toobtaining a competitive advantage, or in response toincreased shareholder and investor pressure (OECD,
2020; PWC, 2021). Shareholder resolutions, on the issueof greater and more detailed disclosure, appear to be on
the rise across many jurisdictions and they are resulting
in considerable pressure upon companies to adopt moredetailed reporting practices (Reali et al, 2021). Several of
the organisations interviewed by the Institute, however,also emphasised their willingness to voluntarily reportagainst multiple voluntary standards, as well as engage
with commercial ratings providers, as part of their efforts
to distinguish themselves from competitors and satisfy
the requests of key investors.
Ultimately, the shift in company and investor
perspectives has led to a fundamental change inapproach to reporting methods. For many organisations
a more conservative model of reporting, typified in theapproach adopted by many large corporations to-date,is rapidly being replaced with one that seeks to proactively address ESG factors through careful reporting
and ratings performance.

3.2 Climate Change rating
and reporting methodologies
Environmental factors have proven critical withinassessments of ESG performance. The environmental
pillar includes consideration of a wide variety of factors,
including amongst others, emissions of CO2 or CO2
equivalents, energy and resource consumption, waste
production and water withdrawal and use. While it isanticipated that all these environmental factors willcontinue to play a significant role in ESG assessments,
climate change in particular, has become synonymouswith considerations within this category.

Growing evidence that the physical and transition risks
associated with climate change will affect the operations,financial performance and reputation of companies, aswell as society and the planet more broadly, has led toheightened interest in investors and the wider publicin the climate related performance of their investment
portfolios.
Investors’ awareness and concerns relating to thematerial and non-material financial risks posed by theclimate transition has become the driving force behindthe steady increase in organisations’ environmental
pillar reporting and assessment activities. E pillar ratingsand disclosures are now being used by investors tounderstand how a company aims to align with a lowcarbon economy, its low-carbon transition pathways andmaterial climate related financial risks. This trend washighlighted in the 2021 letter to CEOs from the chairman
and CEO of BlackRock, the world’s largest investment
manager, which stated that “no issue ranks higher
than climate change on our clients’ lists of priorities”(BlackRock, 2021).
With global sustainable investments increasing by 15%(to USD 35.5 trillion) from 2018 to the start of 2020
across Europe, the United States, Canada, Australasia,
and Japan, the Institute’s interviews with industry andthe financial sector also highlight how assessments anddisclosure of climate risks and management of risks are
increasingly being required by shareholders, investors
and other stakeholders (GSIA, 2020). Many of theworld’s largest corporations have already taken steps
to address these challenges, with almost 90 per cent of
S&P500 companies now reporting on ESG issues and/or climate-related financial risk (ERM, 2020).

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AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

3.2.1 Climate Change within ESG
Ratings Schemes
Several ESG ratings schemes now provide ratings
and rankings of companies and investment funds’
performance on a variety of climate related metrics.
Sustainalytics, MSCI, Dow Jones, S&P Global and FTSE
are amongst the notable schemes emerging from theliterature and the Institute’s interviews with industry andthe finance sector for this study.
The range of providers and schemes in the climate
space, however, has led to some concerns regarding
homogeneity and consistency. Users of these schemes
continue to emphasise variations in the scope of metrics,
measurement criteria and scoring methodologies,
which ultimately result in widely differing ratings andrankings that offer limited comparability (OECD, 2020).
Differences in methodologies and E scores may, insome instances, be attributed to the underlying rationale
and commercial nature of some schemes, with eachscheme providing relative ratings derived from the risk
adjustment of a particular sector against chosen metrics.
Ultimately, all schemes rely on the extent and qualityof information provided by companies in response todisclosure requirements, which impact how informationis compiled and reflected in the final score or ranking.

3.2.2 Climate change within ESG
reporting standards and frameworks
The work of the Taskforce on Climate Related Financial
Disclosures (TCFD) is considered a pioneering effort
towards establishing both guidance and standards forclimate and emissions related disclosures. Key reporting

standards and frameworks cited in the literature andthe Institute’s interviews include, among others, the
TCFD recommendations, Carbon Disclosure Project(CDP), Sustainability Accounting Standards Board(SASB), Global Reporting Initiative (GRI), and the Climate
Disclosure Standards Board (CDSB).
In addition, stock exchanges have also begun issuing
guidance on E pillar reporting, through their own listing
rules and guidance documents, which, in some instances,
require mandatory compliance with specified global
reporting frameworks such as the TCFD. Examples ofstock exchanges with climate reporting requirements andguidance include the London Stock Exchange’s Climate

Reporting Guidance, the US Securities and Exchange
Commissions’ forthcoming Climate Disclosure Rules,
the Bombay Stock Exchange’s Guidance Document on
ESG Disclosures and the NASDAQ ESG Reporting Guide
2.0 (Global CCS Institute, 2020).
While all reporting frameworks examine how companies
integrate climate risks and opportunities into theirfinancial and non-financial reporting and disclosure,once again, the rationale underpinning each framework
can differ. Divergent objectives are reflected in the scopeand variety of metrics assessing what each framework
considers ‘material’ to a company in the context of theenvironment and climate change.

MATERIALITY OF CLIMATE CHANGE CONSIDERATIONS WITHINESG RATINGS, REPORTING STANDARDS AND FRAMEWORKS
Analysis confirms that investors are increasingly
seeking out companies which proactively address‘material’ ESG risks, relevant to their financial
performance (CERES, 2019; Eccles and Klimenko,
2019). There is no single definition of materiality andwhat constitutes a ‘material’ ESG risk differs between
various ESG schemes and reporting frameworks,
according to the scope and objectives of the schemeor framework in question. However, in considering
the various definitions for the term, it would appear
that materiality broadly refers to issues that are
relevant to or impact a company, typically from afinancial perspective, but also from a stakeholder
perspective. Material issues impacting a company
can arise from a variety of aspects of a company’s
operations such as accounting, reporting, financial,legal, reputational and more recently, environmental
and climate change-related activities.
A study on environmental reporting highlights thatmetrics assessing ‘material’ environmental or climatechange considerations across ratings schemes andreporting standards and frameworks may also be
categorised according to the definitions of financial
or stakeholder materiality (OECD, 2020).
An example of how companies may determine likely
material sustainability issues, on an industry-byindustry basis, is found in the work of SASB (2020).
The SASB ‘Materiality Map’, is designed to assist
organisations in identifying and prioritising ESG
issues in accordance with their industry sector. The
tool is aimed at identifying those issues that are8

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

likely to impact the company’s financial condition oroperating performance and is therefore important toinvestors. GHG emissions are a critical consideration
across many industry sectors within this Map.
Similarly, the outlook of the Taskforce on
Climate-related Financial Disclosures (TCFD)
recommendations on materiality provides for thereporting of climate related metrics that focus
on the financial impact on the company. The
framework provides for standardised disclosures on
aspects such as revenue, expenditure, assets andliabilities and capital financing, alongside qualitative
information on strategies and processes. As noted in
the TCFD Implementation Guide developed by the
CDSB and SASB, the approach of the TCFD stems
from the recognition that “Going green” is not justa matter of “saving the planet”; it is about pursuingeconomic growth and development that is strategic,
resilient, and sustainable”. The underlying basis for
the TCFD’s approach is that “a coordinated global
transition to a low-carbon and climate-resilient
economy is projected to involve significant financial
opportunities” (CDSB and SASB, 2021).
Other voluntary models such as the International
Integrated Reporting Council (IIRC, 2013), and Climate
Change Reporting Framework (CDSB, 2019), also
provide guidance that seek to assist companies inreporting climate change related information of value,or ‘material’ to investors and the wider insurance
community.

3.2.3 The scope of metrics covered by ratings schemes, reporting standards
and frameworks
Despite differences in objectives and definitions of materiality, it is possible to determine a common set of categories
of climate change related metrics, which now appear to represent the baseline for disclosures and assessments ofclimate change related factors impacting a company. Figure 1 below, which was developed by the OECD, provides
an overview of the categories of reporting that can be found across various reporting frameworks and ESG ratings
schemes. The figure also illustrates how from amongst the various categories, there emerges a core set of metrics
that are used by ESG ratings providers (analysed by the OECD) to arrive at E pillar scores.
Figure 1: Categories of reporting amongst corporate reporting frameworks and ESG ratings schemes and thecore set of metric categories used by ESG ratings schemes1 (OECD, 2020).

CORPORATEREPORTING

NASDAQ
Emissions
Energy Mix
Water Usage
Enviromental Operations
Climate Risk
Board Oversight

SASB
Emissions
Energy Management
Water and Waste
Fuel Management
Biodiversity Impact
Air Quality

TCFD

Energy Efficiency
Renewable Investment
Revenue/Expenditure GHG
Risk Adaptation/Mitigation

PROVIDER 3

PROVIDER 2

PROVIDER 1

Emissions and Carbon
Footprint

Emissions and Carbon
Footprint

Emissions and Carbon
Footprint

Resources Use

Resources Use

Resources Use

Energy Output andManagement

Energy Output andManagement

Energy Output andManagement

Water Output andManagement

Water Output andManagement

Water Output andManagement

Renewable Energy
Management

Renewable Energy
Management

Renewable Energy
Management

Waste and other Outputs

Materials Sourcing

Waste and other Outputs

Ecological Impact

Product and Supply Chain

Biodiversity

Sustainable Finance

Systemic Risk
Management

GHG/Carbon Policy

CORE

RATING PROVIDERSGRI

Emissions
Energy Intensity
Fuel Management
Biodiversity and Ecology
Waste Materials

Green Products

Note: Summary based on publically available information and complementary analysis.
Source: Bloomberg, MSCI, Thomson Reuters GRI, SASB, TCFD, and NASDAQ. OECD analysis.
1

Provider 1, 2 and 3 in Figure 1 refers to the ESG ratings providers/schemes analysed by the OECD in its 2020 study.

The reporting of a company’s CO2 footprint is a key aspectof many of the standards and frameworks focused uponclimate change-related reporting. The ratings, standards
and frameworks highlighted previously, for example, allpossess metrics covering the measurement of Scope 1,
2 and 3 GHG emissions.
In addition to CO2 footprint, most rating schemes also
provide ratings based on metrics that take into accountrenewable energy and climate change mitigation
activities. These metrics are not only aimed at considering
emissions and climate change, but also reflect upon
how a company is preparing to deal with the climatetransition and related risks and opportunities in the
future. Metrics of this nature have become key factors
for investors, when seeking to align their portfolios withthe low-carbon transition, as well as achieving specificclimate change objectives.

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AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

In a manner similar to some of the commercial ESG
ratings, reporting standards and frameworks also
incorporate metrics relating to the impact of climate
related risks on financial performance of the company(i.e., climate risk management and climate-related
opportunities), the external impact of the company (i.e.,emissions) and relevant opportunities in the context ofthe climate transition (such as the transition to renewableenergy) (OECD, 2020).
Beyond the reporting of GHG emissions, several
reporting standards and frameworks incorporate abroader range of metrics when compared to the morecommercial ESG ratings schemes. These reporting
schemes and frameworks cater to a wider audienceof potential investors and shareholders and attempt
to provide a more fundamental understanding of theenvironmental performance of a company for the
benefit of these stakeholders. As such, these models

also emphasise and provide guidance on the forwardlooking aspects of climate risks and the transition toa low carbon economy (OECD, 2020). Examples ofconsiderations and metrics in existing standards andframeworks include potential costs associated withcarbon emissions, such as earnings at risk and futurecarbon prices, physical climate related risks, potential
regulation, risk management processes and strategies
to align the business with achieving net zero emissions.
Table 1 highlights a variety of key ratings schemes,
reporting standards and frameworks in widespread use,with a description of their objectives and coverage.

Table 1: Scope and objectives of selected international ESG reporting frameworks and commercial ratings
schemes with climate change indicators and metrics

Voluntary or non-governmental organisations rating and reporting schemes.
INITIATIVEPURPOSE AND OBJECTIVESSCOPE OF CLIMATE INFORMATION

Task Forceon Climaterelated Financial
Disclosures(TCFD)
GlobalThe TCFD was created by the Financial
Stability Board, to enable companies to
identify and disclose relevant information
on climate, energy, waste and water
management in their financial reporting,which would be useful to the wider financeand investment community.

The TCFD recommendations cover four thematic
areas relevant to companies, namely, governance,
strategy, risk management and metrics andtargets. The recommendations touch on 28 climate
related key issues with financial implications
for the company; complementary guidance onmanagement and processes are also provided.
Examples of proposed disclosures include Scope
1, Scope 2, and, if appropriate, Scope 3 GHG
emissions, and the related risks.

Carbon Disclosure
Project (CDP)
Global

A global disclosure system that enables
companies, cities, states and regions tomeasure and manage their environmental
impacts.

Provides for sector-specific questionnaires covering,energy use, renewable energy consumption (notdefined), GHG emissions (Scope 1-3), investments inemissions reductions activities and technology andother information on risk management on climatechange risks and opportunities.

CDP uses data submitted to provide an A-D
rating based on the level of disclosure, theawareness of climate issues, management
methods and progress on acting on climatechange.

10

IPIECA Oil and gas
industry guidanceon voluntarysustainability
reportingGlobalA reference tool for organisations in the oiland gas industry which assists companies
shape the structure and content of theircorporate reporting on sustainability forinternal and external stakeholder audiences.
The guidance supports improved reportingand management of climate-related risks,
but does not directly generate any ESG
scores of the type generated by otherschemes reviewed.

Covers 21 sustainability issues and 43 indicator
categories. The climate change issue categorycomprises metrics covering climate governanceand strategy, climate risks and opportunities, lowercarbon technology and greenhouse Gas emissions,methane emissions, energy use and flared gas.

CDSB Climate
Change Reporting
Framework
GlobalA voluntary reporting framework designed
to elicit material climate-change related
information for investors and financial
markets through mainstream financial
reports.

Provides guidelines across 12 categories forreporting on environmental and climate change
matters. In the climate change context, reporting
categories cover, among others, environmental
policies, strategies, targets, risks and opportunities,
sources of environmental impact, including
greenhouse gas emissions, future outlook on
the basis of the environmental impacts, risks andopportunities.

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENTINITIATIVEPURPOSE AND OBJECTIVESSCOPE OF CLIMATE INFORMATIONUN PRI Reporting
Framework (PRI)
GlobalThe PRI works to understand the investment
implications of ESG factors and to support
its international network of institutional
investor signatories in incorporating thesefactors into their investment and ownershipdecisions. On the basis of their fiduciary
duty to act in the long-term interests ofbeneficiaries, signatories commit to six
Principles of Responsible Investment which
offer guidance on incorporating ESG issues
into investment practice.

Climate change related indicators are reported
under the Investment and Stewardship Module.
Structured as MCQs, the questions are anchoredto the 11 TCFD recommendations; topics covered
include climate related risks and opportunities, risk
management processes and climate targets andmetrics.

Sustainability
AccountingStandards Board(SASB)
GlobalSASB is a non-profit organisation that assists
companies manage their sustainability
reporting, in a manner that is material toinvestors. The ‘Materiality Map’ helps anorganisation to identify the relevant industryspecific standards, of which there are 77, inorder to identify the minimal set of financiallymaterial sustainability topics and theirassociated metrics for the typical company in
an industry.

Sector-specific standards contain between 10 and
29 environmental metrics per sector. In the context
of climate change, reporting requirements include
greenhouse gas emissions (Scope 1, 2 and 3) andstrategies to manage emissions.

Global Reporting
Initiative (GRI)
GlobalThe GRI helps business and governments
worldwide to understand and communicate
their impact in relation to criticalsustainability issues, including climatechange. Organisations can become “GOLD”
members to demonstrate active support for
GRI.

The GRI Standards comprise global best practicefor reporting on a range of topics relating to theenvironmental, social and economic impact ofcompanies. There are 8 topic-specific standards
relating to the environmental impact of companies;
the topic standards covering climate change
include the energy (GRI 302) and emissions (GRI305) standards.

Asset Owners
Disclosure Project
GlobalThe Asset Owners Disclosure Project rates
and ranks the world’s largest institutional
investors on their response to climaterelated risks and opportunities. The project
publishes investment grade-type ratings andleague tables for the largest pension funds,
insurers and asset managers based on
public data and responses to questionnaires.

Provides a questionnaire centred around the
TCFD framework requiring companies to disclose
information relating to, among others, targets andasset allocation policies for low carbon assets,
investments supporting a low-carbon transition,
including low-carbon assets, climate impact
assets and green finance, climate related targets
to manage climate risks and opportunities andaggregate or specified portfolio emissions intensity.
Value of investment in low-carbon assets, portfolio
emissions intensity account for circa 25% of score.

Transition
Pathway Initiative(TPI)
Global11

A global network of asset owners, supported
by asset managers. The coverage of theinitiative extends to over 45 investors
representing over $14 trillion combined
Assets under Management and Advice.

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

Companies are assessed under 2 frameworks
relating to companies’ governance/managementof their greenhouse gas emissions and risks andopportunities related to the low-carbon transition(Management Quality) and how companies’ carbon
emissions compare with the international targets
and national pledges made as part of the UN
Paris Agreement (Carbon Performance). Individual
indicators and metrics under the two frameworks
correspond with the TCFD’s recommendations.

Commercial ratings schemes
INITIATIVEPURPOSE AND OBJECTIVESSCOPE OF CLIMATE INFORMATIONMSCI ESG ratings
GlobalInvestment grade-type ratings on companies
to help investors understand ESG risks andopportunities and integrate these factors into
their portfolio construction and management
process. Ratings are provided relative toindustry peers

Carbon emissions, product carbon footprint andopportunities in clean tech are 3 of the metrics
covered by the MSCI 35 ESG Key Issues framework.

S&P Global
Ratings
Global

S&P provides credit ratings across a broad
spectrum of organisations, including
corporates, financial institutions, sovereigns
and insurance companies. ESG risks are
considered within these ratings.

Specific energy and climate metrics not listed
but likely to cut across a number of risk drivers
considered

Sustainalytics
GlobalSustainalytics is an independent ratings
agency specialising in ESG ratings.
Companies such as Morningstar, the global
investment research and management
services firm, use Sustainalytics as a source
for ESG ratings.

ESG ratings framework is focused upon 20 material
ESG issues that are underpinned by more than
250 indicators. A specific Carbon Risk Rating isprovided.

Stock exchange listing requirements
INITIATIVEPURPOSE AND OBJECTIVESSCOPE OF CLIMATE INFORMATION

London Stock
Exchange (LSE):
Guide to Climate
ReportingUnited Kingdom

Provides guidance to assist listedcompanies with integrating climate risks andopportunities within operational decisions
and complying with reporting obligations,based on the LSE’s mandatory requirementthat listed companies report in line with the
TCFD recommendations.

Aligned with the TCFD recommendations, theguidance requires companies to disclose aspects
such as their carbon management practices, climate
risks and opportunities and risk management
processes. The Guidance also establishes a climate
governance score for London-listed companies,
which is based on the TPI methodology.

Australia
Securities
Exchange(ASX): Listing
Requirement
4.10.3Australia

Listed companies must prepare and publish
a corporate governance statement which
outlines their governance practices ascompared to the ASX Corporate GovernanceCouncil’s Corporate Governance Principles
and Recommendations (ASX Corporate
Governance Principles).

Requires disclose of any material exposure toenvironmental or social risks and associated risk
management processes. Metrics are not specified.

United States,
NASDAQ ESG
Reporting Guide
2.0 (2019)
United States

ESG reporting is not required as a listing
rule, however, the NASDAQ has developed
written guidance for public and privatecompanies on ESG reporting.

Promotes disclosure, on a “respond or explain’basis and establishes 17 metrics across 10
categories which assess environmental and climate
related performance, including GHG emissions,emissions intensity, energy usage, mix and intensity.
Guidance on the methodology for measuring each
metric is also provided.

The Institute’s review of a range of ESG schemes
and reporting standards revealed that companies
seeking to deploy CCS, to mitigate risks and enable
opportunities for their operations in the context of theclimate transition, may report such measures within
the metrics and disclosure requirements of existing

12

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

schemes and standards. Several of the schemes andframeworks identified, such as the CDP, IPIECA Oiland gas industry sustainability reporting guidance,
GRI, SASB and Corporate Knights Global 100 rankings,
include explicit requirements to report a company’s CCS
related initiatives.

COMPANIES TO PROVIDEEVER-GREATER LEVELS OF
SOPHISTICATION WITHIN THEIRREPORTING AND DISCLOSURES.

3.3 Emerging influences on the ESG sector
The ESG sector continues to prove a dynamic space, with frequent updates to existing reporting and assessment
frameworks and the regular emergence of new products and schemes aimed at providing greater sectoral review
and analysis. The rapid pace of change to the various ESG-related frameworks is also reflected in the knowledge andcomposition of the end-users of this information. A far-broader range of stakeholders are now focused upon ESGrelated performance, challenging companies to provide ever-greater levels of sophistication within their reportingand disclosures.
Notwithstanding the rapid pace of change within the ESG reporting landscape, there are several emerging drivers,
that are likely to prove important for those seeking to invest in or operate CCS projects.

13

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

3.3.1 Mandatory reporting of climaterelated factors
While heightened pressure in the form of financial risk,
shareholder intervention, or the threat of litigation, has
increasingly motivated commercial organisations toadapt their approach to reporting in some instances,
regulatory intervention will likely prove a significant
driver for more robust reporting activities. As highlighted
in the previous section, several jurisdictions around theworld have now proposed or introduced substantive
changes to policy and regulation that will impose moreformal regulatory requirements for ESG disclosuresand investment decisions, as part of broader financial
reporting obligations.
Climate-related performance remains a critical topic
for both industry and investors alike and is one area
where regulators continue to propose greater levelsof disclosure through the introduction of reporting
obligations. Analysis highlights the considerable
progress being made globally, as an increasing numberof countries introduce new regulations and policy
initiatives aimed at increasing and improving climaterelated disclosures. Several recent reports highlightthe progress in Europe, the United States, Asia Pacificand South Africa in particular, as jurisdictions wherecompanies continue to demonstrate greater maturity intheir reporting, by virtue of the proactive stance taken bynational regulators and market authorities (IGCC, 2021;
EY, 2021).
A recent statement from the Group of Seven (G7) financeministers, confirmed that there continues to be support
for “moving towards mandatory climate-related financial
disclosures, that provide consistent and decision-useful
information for market participants” (G7, 2021). The
ministers’ communiqué emphasised the role of domestic
regulatory frameworks in supporting this objective, butalso noted that such disclosure frameworks should bebased upon those recommended by the Task Force on
Climate-related Financial Disclosures (TCFD).
In Australia, statements from key industry regulators theReserve Bank of Australia (RBA), the Australian Securities
and Investment Commission (ASIC) and the Australia
Prudential Regulation Authority (APRA) are illustrativeof this shift. All three of regulators have in recent years
emphasised the inclusion of ESG matters, and climatechange in particular, in directors’ decision-making anddisclosure procedures. While there is now a greater
expectation for a far higher degree of climate-related
disclosure within these traditional reporting frameworks,
some stakeholders are suggesting that the voluntary
disclosure system is now reaching the limits of what it is14

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

capable of delivering. Work is now underway, amongst
some investment groups, to support the development offormal climate risk disclosure frameworks. A recent reportfrom the Investor Group on Climate Change (IGCC), a
leading Australian investor group, has recommended
that a mandatory climate-related risk reporting scheme
be established as soon as is practicable (IGCC, 2021).
In the UK, the government and related industry
regulators have also highlighted the need for companies
and asset owners to provide more detailed climaterelated disclosures. The release of a formal roadmap,
in November 2020, set out the government’s approach
towards an indicative path towards mandatory climaterelated disclosures in the UK, that are aligned with therecommendations of the Taskforce on Climate related
Financial Disclosures (TCFD). As highlighted previously,
this commitment has now been reinforced by the
Financial Conduct Authority’s (FCA) introduction of newrules requiring premium listed companies to disclose
their climate risks in accordance with the TCFD’s
recommendations. It is anticipated that the FCA will
eventually transition these rules from the current “comply
or explain” reporting standard, to require full mandatory
disclosure from a far broader group of companies.
The European Union’s Non-Financial Reporting
Directive (NFRD) introduced reporting rules for specified
large corporations and requires the annual reportingof sustainability-related information. The Commission
also introduced further, non-binding guidelines to assist
with climate-related reporting under this Directive thatsought to align companies’ reporting with the TCFD’s
recommendations. The Commission’s Corporate
Sustainability Reporting Directive (CSRD), which was
adopted in April 2021, will go-beyond the scope of thisexisting framework, however, to introduce far more
extensive reporting requirements for all large companies
and all companies listed on regulated markets. Once inforce, the Directive will require companies to reporting
according to new sustainability standards, that are to
be developed by the European Financial Reporting
Advisory Group (EFRAG). Significantly, the new Directiveemphasises that any new reporting standards “should
be developed in constructive two-way cooperation
with leading international initiatives, and they shouldalign with those initiatives as far as possible” (European
Commission, 2021).
Although commentators had previously noted the limitsof disclosure requirements in the United States, thePresident’s May 2021 executive order on climate-related
financial risk, emphasised the current administration’scommitment to “consistent, clear, intelligible, comparable,
and accurate disclosure” and established a platform forfurther US regulatory intervention (CERES, 2021; WhiteHouse, 2021a). Until recently, this position had not been
supported by the Securities and Exchange Commission(SEC), which had proven hesitant to mandate any form ofsustainability disclosure. These views have appeared toshift, however, with the Commission proposing new ruleamendments in March 2022, aimed at ensuring greater
disclosure of climate-related information (SEC, 2022).
The impact of further widespread mandatory disclosureand reporting obligations will present both challenges
and opportunities for companies and financiers. For
the investment and finance community, which finds
itself increasingly under pressure to take decisions
that reflect a greater focus upon sustainability andclimate change, access to high-quality and readily
comparable information is paramount. Many from this
sector anticipate that regulatory intervention, of thekind proposed and now enacted in several jurisdictions
worldwide, will drive an increase in both the quality
and quantity of information upon which they may baseinvestment decisions (FTSE Russell, 2021; BlackRock2020).
The Institute’s interviews confirmed these views, withseveral representatives from the sector highlighting
their desire for greater access to standardised climatespecific information. In some instances, interviewees
thought that the requirement to use the well-establishedbenchmark reporting and disclosure schemes would
lead to greater consistency and availability of data.
Interviewees identified European regulators as leadersin this space, emphasising the likely positive impactof the recent steps taken to mandate more stringent
climate reporting obligations, for example, through thedevelopment of the Non-Financial Reporting Directive(NFRD).
Corporations with a significant CO2 footprint are likely
to face greater scrutiny under a shift to more mandatory
forms of climate-related reporting and disclosure.
In addition to the more formal obligations to makeincreasingly detailed and broader-ranging disclosuresaround their emissions footprint and mitigation efforts,
many corporations will also be required to consider the
impact of their operations where they operate acrossmultiple jurisdictions.
For many large organisations these reporting practices
will likely prove familiar, with many already reporting
under a wide variety of voluntary and commercial ratings
schemes. In some instances, companies are providing
this information, or more detailed tailored reports, in
response to demands from their shareholders and15

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

investors. One company interviewed by the Institute,suggested that they would be prepared to proactively
adopt newer and more extensive reporting practices,in anticipation of further regulatory developments or toposition themselves as leaders in a particular market.
Notwithstanding these opportunities, the introduction of
mandatory requirements also introduces new risks forcompanies. Recent studies have highlighted that failure
or inability to comply with requirements is likely to provea concern, particularly where new requirements areaccompanied by possible sanctions and/or enforcement(Baker McKenzie, 2021).

3.3.2 Net Zero under the ‘E’ Pillar
Global commitments under the Paris Agreement, to limit
global warming to well below 2, preferably to 1.5 degrees
Celsius, have been a defining moment in terms of global
climate ambition and a significant contextual driver forthe transition of the world’s economies towards net-zeroemissions. The 2018 Special Report on 1.5 Degrees,from the Intergovernmental Panel on Climate Change(IPCC), offered a stark and ultimately critical scientificassessment of the likely impact of global warming
beyond 1.5 degrees, which underpinned the need for a
rapid decrease in emissions to net zero by 2060 (IPCC,
2018).
As a direct result of this increased pressure forclimate change action, the world has witnessed a
wealth of commitments to net zero emissions fromboth government and the private sector. While inmany instances, these commitments are based innational policy initiatives, some governments haveenshrined their commitment to net zero within law. The
International Energy Agency’s 2021 Roadmap report
identified 44 countries and the European Union that
had announced net zero emissions targets by April
2021 (IEA, 2021), however, more recent assessments
demonstrate that this number has increased and 18 of
the G20 economies alone, have now adopted net zerocommitments (ZeroTracker, 2021). It is now suggested
that over three quarters of global GDP is covered by net
zero commitments (ZeroTracker, 2021).
For the finance sector, net zero commitments haveheightened the need to align long-term investments withthe reality of a 1.5-degree world and investors and banks
are now placing far greater emphasis upon net zero in theirinvestment and lending strategies. The focus upon net
zero has also proven an important means of reconcilingthe high-level ambition of the Paris Agreement into moretangible assessments upon which portfolio risk can bemeasured (Robins, 2021). The establishment of the NetZero Asset Owner Alliance in 2019, at the UN Secretary
General’s Climate Action Summit, is an example of thisfocus and now 61 institutional investors have formallycommitted to transition their investment portfolios tonet-zero greenhouse gas (GHG) emissions by 2050
(UNEP FI/PRI, 2021).
The role of CCS in achieving net zero is becoming
increasingly clear. While achieving net zero emissions will
require many specific actions, in all sectors, over multiple
decades; CCS is frequently cited as an essential part ofthe lowest cost pathway. The IEA suggests that limiting
global warming to 2°C requires installed CCS capacity
to increase from around 40 Mtpa of CO2 today to over
5,600 Mtpa of CO2 by 2050, which the Institute’s own

16

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

analysis suggests will necessitate between USD$655
billion and USD$1,280 billion of capital investment (IEA,
2021; Rassool, 2021). While investors have previously
expressed skepticism as to the role CCS will play inaddressing climate change, the magnitude of the net
zero challenge and increased policy support for thetechnology is resulting in a more positive outlook formany (Hawker, 2021).
In the context of this report, it is perhaps unsurprising tonote that net zero commitments are now an importantconsideration within an ESG reporting context. How
CCS subsequently fits within an organisation’s approachto net zero, will therefore be a further consideration
for both companies and investors alike when it comesto reporting and disclosure. The Institute’s interviews

with representatives from the finance sector confirmed
the importance of net zero, with several respondents
emphasising their scrutiny of clearly defined net zerotargets, when making investment decisions. The ability ofan organization to ultimately demonstrate how planned
CCS activities will achieve their net zero commitments,
where the technology has been identified within theirreporting and disclosures as a key mitigation response,
will prove critical for many investors.
For companies with a significant CO2 footprint, reportingand disclosures of this nature are not without challenge.
Commentators and responses from the Institute’s
interviews, highlight the risks, both reputational andpotentially legal, where organisations intentionally orunintentionally make disclosures which may overstate
the role of CCS.
With the rise in corporate commitments to achieve net
zero emissions, there has been increasing concern
regarding the consistency of approaches being used bycompanies to achieve their targets. This concern was
also echoed in several of the interviews conducted by
the Institute which revealed that the lack of a common
understanding or a definition of net zero has proved
challenging when setting targets and evaluating net zerostrategies, in light of how each sector’s approach towards
decarbonisation can differ. This has resulted in calls forrobust, measurable and science-based frameworks forsetting net-zero targets which, when implemented, canrealistically deliver emissions reductions in the economy
on a long-term basis. Further, it was also deemednecessary to enable investors and other stakeholders toevaluate the progress and performance of companies
against their net zero targets.
In response to these concerns, various globalorganisations and stakeholders have developed
standards and protocols specifically aimed at providing
guidance on setting corporate net zero targets andassessing progress against targets in recent years.
Notable examples of such schemes include the Net
Zero Asset Owners’ Alliance Target Setting Protocol,
Climate Action 100+ Net Zero Company Benchmark, the
Science Based Targets Initiative’s Corporate Net Zero
Standards and the IIGC Net Zero Standard for Oil andGas.
Table 2 provides an overview of these schemes andstandards, the context and objectives underpinning eachscheme and the types of target-setting requirements,
indicators for assessing progress against targets anddisclosure requirements provided in each standard.
In the context of CCS, several of these initiatives
explicitly require disclosure of CCS related initiatives
and the technology’s contribution towards achieving acompany’s targets.

Table 2: Overview of selected Net-Zero disclosure frameworks and target-setting guidance
STANDARD/SCHEME
Inaugural 2025
Target Setting
ProtocolUN Convened
Net Zero Asset
Owner Alliance

17

DESCRIPTIONPURPOSE AND OBJECTIVE

SCOPE AND COVERAGE

A global alliance of 61
institutional investors
representing $10 trillion assets
in management. By joining
the Alliance, members make apublic commitment to transition
investment portfolios to net
zero emissions by 2050.

By joining the Net Zero Asset
Owners’ Alliance, members
make a public commitment totransition investment portfolios
to net zero emissions by 2050
and report progress achieved
every five years.

The Protocol establishes
a target setting structure
covering 4 broad themes,
namely, engagement, financing
transition, sector and sub
portfolio targets. The targets
cover asset owners’ own
Scope 3 emissions. Examplesof target setting and reporting
requirements covering the 4
themes include action targets
on policy advocacy, report on
progress on climate positive
investments and intensitybased reduction targets foroil and gas, aviation, shipping,heavy and light duty road.

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

The 2025 Target Setting
Protocol is the Alliance’s
recommended approach totarget setting and reporting on
progress towards greenhousegas reductions between the
period 2020-2025.

STANDARD/SCHEMEDESCRIPTIONPURPOSE AND OBJECTIVE

SCOPE AND COVERAGE

Corporate Net
Zero Standard
Science Based
Targets Initiative

A collaboration between the
CDP, the UN Global Compact,
World Resources Institute (WRI)
and the World Wide Fundfor Nature (WWF) promoting
corporate target setting
based in climate scienceand providing independent
assessment and approval ofcompany targets.

Provides a standardised
approach for corporate
net zero targets, including
guidance, criteria andrecommendations to support
companies in setting targets inline with the SBTi.

Provides a definition forcorporate net zero andestablishes 4 key elementsof corporate net zero targets,
namely, near term, longterm science-based targets,
beyond value chain mitigationand neutralisation of residual
emissions. The standard
provides guidance on setting
targets for each of these
aspects and is currently in theprocess of developing sector
specific guidance on target
setting.

Climate Action
100 Net Zero
Company
Benchmark
Climate Action 100

A collaboration between fiveglobal investor groups andinitiative, including the Asia
Investor Group on Climate
Change, Ceres, Investor
Group on Climate Change,
the Institutional Investors
Group on Climate Change(IIGCC) and the Principles for
Responsible Investment (UN
PRI), representing $60 trillion in
assets and over 80% of global
industrial emissions.

Tracks corporate progress
towards developing andimplementing transition plansthat detail how companies
fulfill net zero commitments.
Primarily a disclosure
framework, it is used to assesscompanies against the 3high-level goals of the Climate
Action 100 initiative, which
involves emissions reduction,
governance and disclosure.

Companies are assessedagainst 10 indicators, which
include, among others, net-zero
GHG emissions by 2050 (orsooner) ambition, short-term,
medium-term and long-term
GHG reduction target(s),Decarbonisation strategy,
Capital allocation alignment,
Climate policy engagement and
TCFD disclosure. Each indicatoralso contains sub-indicatorsand metrics against which
companies are assessed.
The Net Zero Company
Benchmark framework alsoestablishes sector strategies
which identify priority actions
that should feature in corporatetransition plans (in particular as
per Indicator 5 of the Climate
Action 100 Net Zero Company
Benchmark: Decarbonisation
strategy) to support investor
engagement.

Net ZeroStandard for Oiland GasInstitutional
Investors Groupon Climate
Change (IIGC)

18

The standard was developed inconjunction with the Transition
Pathway Initiative (TPI) by theInstitutional Investor Group on
Climate Change, a European
membership body with morethan 360 members comprising
pension funds and asset
managers representing over
€49 trillion in assets undermanagement.

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

The Standard has developed
actions and recommendations
to achieve a transition to net
zero emissions for the Oil andGas sector in alignment withthe 10 disclosure indicators
established by the Climate
Action 100 Net Zero Company
Benchmark.

Recommendations for action
include setting a net zeroambition covering energy
related activities, short,medium and long-term targets
to reduce emissions aligned
to the goal of limiting global
warming to 1.5C, disclosureof actions intended to reachnet zero and contribution ofeach action to its medium andlong-term targets, individual
contributions of actions to“net off” gross emissions, thecontribution of green energy
sales towards medium andlong-term targets, whether
their investment strategy is net
zero aligned, forward-looking
CAPEX budgets, for upstream
and exploration operations andinvestment in CCUS or other
CDR measures.

3.3.3 Rising significance of broader
ESG factors
Notwithstanding earlier observations as to theimportance of the environmental factor within ESG rating
schemes, recent analysis suggests that both investors
and companies are reconsidering the ‘social’ or ‘S’factor within their ESG assessments and disclosures.
The principal driver for this shift has undoubtedly been
the COVID-19 pandemic and the emphasis it has placed
upon addressing a range of issues including humanhealth, well-being, and inequality.
The efforts of industry and government to support a
post-COVID recovery are driving a greater examinationof ESG-related issues more generally, but a new focus
upon addressing a wide variety of social factors is a criticalelement of several key programmes. Governments
around the world have introduced post-COVID initiatives
and support packages aimed at bolstering efforts aroundsustainability, many of which also seek to address thesignificant social factors exposed by the pandemic.
Investors and financiers have similarly indicated thatthey too will be increasingly considering companies’ ‘S’factor performance, against issues as diverse as board
representation, working conditions, economic, genderand racial equality (BlackRock, 2020; KPMG, 2021).
A renewed focus upon social factors, has been viewed
by some parties as an opportunity for an era-defining
shift in approach and one that may lead to companies
transitioning from a reactive to a proactive approach
to social issues (Blood, 2021; Neilan et al, 2020). The
results of a 2021 survey of 150 leading financial services
CEOs revealed that 96% of respondents intended to shift
their focus to the social component of ESG, a significant
increase from the 66% of respondents in 2020 (KPMG,
2021). Several commentators have also foreshadowed
greater scrutiny of companies’ performance acrossthe social pillar, which will ultimately be reflected in
the inclusion of social factors to a larger extent, inthe emerging mandatory reporting and disclosure
frameworks (EY, 2020; Grantham Institute et al., 2021).
All three pillars of the ESG acronym are mutuallydependent and this relationship is particularly significant
in the case of climate change and mitigation efforts.
Commentators have highlighted the need therefore,
to ensure that activities aimed at addressing climatechange and achieving net-zero do not inadvertently
lead to negative impacts upon an organisation’s social
performance (PRI, 2021; GRESB, 2020). Governments
have also been cognisant of this relationship, withsocioeconomic and climate considerations carefullybalanced in several of the post-COVID recovery

19

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

packages announced by governments around theworld. President Biden’s executive order on tacklingclimate change, proposes a government-wide approachto the issue, and one that links action on climate with thecreation of well-paying union jobs and the delivery ofenvironmental justice in the United States (White House,2021b).
For organisations developing and operating projects,
or those seeking to invest or finance them, it will also
be important to consider the reporting of any potential‘S’ pillar benefits of CCS operations, notably the widersocial implications of these activities. In the case of a CCS
project, proponents may seek to highlight the potentialsocioeconomic benefits of the project’s development.
Examples of the particular issues to identify may
include a project’s ability to create and sustain newjobs throughout its operational lifecycle, as well as its
capacity to stimulate economic growth through newindustries and innovation spillovers.

3.3.4 Addressing the challenge of“greenwashing”
Concerns continue to be raised regarding theprevalence of ‘greenwashing’ within the ESG space.
Rising skepticism as to the veracity of ESG-focusedsustainable finance products, has been compoundedby the challenge of companies’ self-reporting their ESGrelated performance. As a result, some investors arestarting to push-back at the concept of voluntary ESG
reporting, calling for greater regulation and proposingthat companies approach their ESG disclosures in thesame manner that they do their financial disclosures(Generation IM, 2021; Bloomberg, 2021).
The
increasing
proliferationofsustainability
commitments, coupled with raised investor andshareholder expectation, means that a company’s
performance will undoubtedly be subject to far greaterlevels of scrutiny in the future. In many jurisdictions, thefocus and content of these ESG-related disclosures
is likely to be governed to a larger extent, by the
introduction of stricter regulations. Companies will needto ensure that their activities align with the expectationof both investors and regulators and provide an accurate
portrayal of both their ESG strategies and performance.
As highlighted previously, a company’s approach
to climate change is of particular interest to bothshareholders and investors. Close scrutiny of anorganisation’s climate strategy and risk disclosures, in linewith recognized international best-practice standards,
has become a major consideration for many of thesestakeholders. The topic of net zero has placed further

pressures upon those companies with explicit targets
and mitigation strategies, to provide detail of progressin implementing and achieving these ambitions. Some
investors have already expressed concern that the “lowquality” of some of these net zero commitments, absent
a high bar for quality and safeguards (Generation IM,2021).
The consequences for organisations employing
greenwashing in their reporting and disclosures,
particularly regarding their climate performance,
are also likely to prove increasingly severe. While atpresent, disclosure and reporting commitments remain
largely voluntary, the risks associated with this approachare principally reputational. The introduction of new
disclosure regulations, however, as well as greaterlevels of investor activism, will undoubtedly change thisposition. The potential for litigation or further sanction,
where companies fail to meet commitments to net zeroor rely upon mitigation pathways that fail to materialise,
may be significant where shareholders and investors
believe they have been misinformed (Baker McKenzie,2021).
In the UK, the release of a new ‘Green Claims Code’from the Competition and Markets Authority (CMA),
suggests that regulators may be increasingly willing toaddress issues of greenwashing (CMA, 2021). Whilethe new code is aimed at informing companies of
their obligations under consumer protection law, when
making environmental claims, it serves as a usefulindicator of both consumer sentiment and regulatory
approach in the future.
In the case of CCS, it will be important to avoid
making claims for the technology, including its impact
upon mitigation and net zero targets, that are notable to be substantiated through an organisation’sreporting and disclosures. Several representativesof the investment and finance sector, interviewed by
the Institute, highlighted the need for both greatertransparency and detail, when companies reported theuse of the technology in meeting their proposed targets.
Interviewees from those organisations with significant
CO2 footprint, however, expressed some reservationin making commitments to mitigation technologies, oraligning their deployment with the achievement of net
zero or emission reduction commitments. The latter,it was felt, could result in exposure to shareholder orinvestor action, as well as potential litigation, in the event
deployment was delayed or halted.

20

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

3.4 Development andstandardization
The standardization or closer alignment of ESG ratings
and reporting schemes, remains a critical issue forcompanies, investors and financiers. Presently, a wide
variety of voluntary and non-voluntary ESG reporting
and ratings models, have been developed by industry
organisations, government, research bodies and market
data providers. The absence of a singular, standardisedmodel of reporting, particularly in relation to areas suchas the environment and climate change, has resulted
in a disparate set of information requirements andmethodologies that prove challenging to navigate andinterpret. Although there are now leading and widelyused examples of both voluntary schemes like the TCFD
Recommendations and the Carbon Disclosure Project,and proprietary schemes developed by providers suchas MSCI and Sustainalytics, their utility may be greatly
improved if there was closer alignment on their approachto specific issues or topics.

3.4.1 The reporting challenge
Many commentators have emphasised the sheer
breadth of voluntary and commercial ESG reporting
models and the difficulty faced by all parties in meeting
their requirements and interpreting the results. Evenamong the voluntary ESG rating schemes, developed by
non-governmental organisations, and found in national
reporting regulations and stock exchange listing
requirements, there is considerable variation as to boththe type of information requested and the data that is
subsequently generated.
The proprietary nature of many of the commercial
ratings schemes and the opacity of their rating
methodologies adds a further level of complexity. The
resulting ratings prove difficult to compare and, in many
instances, remain hard to rely upon exclusively when
undertaking assessments of a company’s performance.
In the example provided in Figure 2 below, the ratings
methodologies of three leading commercial ratings
providers, result in some very significant differences in
the final ratings performance of several large commercialorganisations.

Figure 2: Generation IM assessment of ESG ratings, select companies, by different raters (Generation Investment
Management, 2021)
ESG ratings, select companies, by different raters

ESG ratings, select companies, by different raters

FACEBOOKJP MORGAN CHASEJOHNSON & JOHNSONWELLS FARGOWALMARTFTSE
PFIZERSUSTAINALYTICS
MSCI
0

20

40

60

80

100

Sources: Adapted from Dimson et al, 2020

As highlighted previously, companies will ordinarilyfind themselves voluntarily and involuntarily coveredby wide-range rating and reporting models. Mandatory
reporting obligations, the adoption of voluntaryinternational reporting standards, as well as shareholder
or investor pressure to utilise or adopt a specificframework, will place a significant demand upon acompany’s time and resources. The Institute’s previous
analysis of the ESG reporting landscape confirmed thisview, with several organisations expressing concern as
to the transparency of some assessment frameworks,
their ability to influence or improve their performanceand the ultimate value of the ratings that are generated(Global CCS Institute, 2020). Similar views were sharedby the companies interviewed in the development of
this report, with many emphasising the need to adopt
a standardised, transparent approach, that moreaccurately reflected an organisation’s commitments andactivities.
From an investor or shareholder perspective, the lackof non-standardised information continues to prove afrustration. Recent surveys and interviews conductedby the Institute and others, suggest that far greater andmore detailed disclosure is required by financiers andinvestors, particularly in relation to a company’s approach21

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

to climate-related risks (EY, 2020; BlackRock, 2020).
Several interviewees highlighted the considerable
disparity between the standard of ESG-related
information that is disclosed under current reporting
frameworks, and the quality of data or information
provided under existing financial reporting standards.
A recent OECD study emphasised these challenges,
noting that in many instances ‘E’ scoring would “notbe suitable for investors seeking to better align theirportfolios with low carbon economies” (OECD, 2020).
Notwithstanding financiers’ recognition of the benefitsof a shift towards more widespread use of voluntarystandards, such as those provided in the TCFD’s
recommendations, interviewees also noted that greater
uptake and further improvements will be necessary
to improve the quality and relevance of nonfinancial
disclosures. It is hoped that the recent drive towards
the standardization of models and schemes, currently
underway in several fora, will lead to greater consistency
and utility in the information generated. Interviewees
also emphasised the efforts of national regulators to
introduce mandatory forms of non-financial disclosures,notably in-line with benchmark reporting frameworks,
which some also considered to be an important step
towards standardisation.

3.4.2 Harmonisation efforts
Recognition of the need to improve the quality and utilityof disclosures, particularly in the climate space, hasresulted in the concerted action from both the public
and private sectors in recent years. The 2020 reportof the Group of Thirty, which included a number ofrecommendations aimed at accelerating the transition
to a net zero economy, concluded that although greater
standardization would be strongly influenced by the
consumers of disclosure information, its realisation
would ultimately be driven by international standardsetters (G30, 2020). The sustainability-related reporting
work of the International Financial Reporting Standards(IFRS) Foundation and the International Organization of
Securities Commissions (IOSCO) are demonstrative of
this proposed approach.
The IFRS Foundation is a not-for-profit organisation thatwas set-up with the aim of developing a singular set ofaccounting disclosure standards. The organisation’sInternational Accounting Standards Board (IASB) is
responsible for developing and publishing the IFRS
accounting standards. In 2020, the IFRS Foundation
published a consultation document that exploredthe need for global sustainability-related disclosure
standards and considered the role that the organisation
may play in developing and administering suchstandards. A response to the consultation was publishedin April 2021 and included a draft recommendation to
enable the creation of an International Sustainability
Standards Board (ISSB), which would develop global
sustainability standards (IFRS, 2021a).

At COP 26, the IFRS Foundation formally announced
the creation of the ISSB. The new Board will develop
the IFRS Sustainability Disclosure Standards that will
aim to provide a “comprehensive global baseline” forsustainability disclosures. The ISSB anticipates that the
new standards will be developed in a manner that will
enable them to be mandated and potentially “combinedwith jurisdiction-specific requirements or requirements
aimed at meeting the information needs of broader
stakeholder groups beyond investors” (ISSB, 2021). The
creation of the ISSB and the proposed developmentof baseline sustainability reporting standards, has met
with a positive response from governments around theworld. The UK government made a formal statement
welcoming the establishment and work of the ISSB,
within the auspices of COP 26, which was signed by the
Finance Ministers and Central Bank Governors from 40
jurisdictions (HM Treasury, 2021).
The April 2021 consultation response identified climaterelated reporting as a critical area for future activity andthe IFRS Trustees recommended that the new Board
should prioritise initial efforts in this area. Furthermore, it
was recommended that any new standards should build
upon existing investor-focused reporting initiatives. In
accordance with this recommendation and in light ofincreasing demand from the investment community,
the ISSB is currently developing a climate disclosure
standard.

ANY NEW STANDARDS SHOULD BUILDUPONEXISTING
INVESTOR-FOCUSEDREPORTING INITIATIVES. IN ACCORDANCEWITH THIS RECOMMENDATION AND
IN LIGHT OF INCREASING DEMANDFROM THE INVESTMENT COMMUNITY,
THE ISSB IS CURRENTLY DEVELOPING
A CLIMATE DISCLOSURE STANDARD.

22

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

23

The ISSB notes that, in developing this standard, it
will draw upon the recommendations of the Technical
Readiness Working Group (TRWG). The TRWG,
which comprises members of the Climate DisclosureStandards Board (CDSB), the IASB, the Task Force for
Climate-related Disclosures (TCFD), the Value Reporting
Foundation (VRF) and the World Economic Forum (WEF),
was developed to support the ISSB and draw upon
the work of existing reporting initiatives. In November
2021, the TRWG released prototypes for Climaterelated Disclosures (Climate Prototype) and General
Requirements for Disclosure of Sustainability-related
Financial Information (General Requirements Prototype)for consideration by the ISSB (IFRS, 2021b).

The work of the World Economic Forum (WEF) and theIOSCO has also proven significant in the developmentof sustainability or non-financial disclosure standards. In
2020 the WEF released a set of ‘Stakeholder Capitalism
Metrics” that are aimed at supporting companies’ nonfinancial reporting against various ESG indicators. Ledby the International Business Council, the initiative has
drawn from existing standards, to develop 21 core and34 expanded metrics and disclosures that are alignedwith four key ESG pillars: Principles of Governance,
Planet, People and Prosperity (WEF, 2020). The workof the WEF, including these stakeholder metrics, hasbeen considered by the ISSB in the preparation of theforthcoming disclosure standard.

In March 2022 the ISSB launched a formal consultation
on two proposed standards, which build upon the earlier
prototypes prepared by the TRWG. The two documents
Exposure Draft IFRS S1 General Requirements forDisclosure of Sustainability-related Financial Informationand Exposure Draft IFRS S2 Climate-related Disclosures
will be the subject of a 120-day consultation, with the ISSB
aiming to issue the final standards by the end of 2022.
In addition to the release of these exposure drafts, the
ISSB reiterated its commitment to ensuring that these
new standards continue to build upon existing investorfocused reporting initiatives.

The IOSCO, the global association of national securities
regulatory commissions, also strongly supports the workof the ISSB. The organisation develops, implements,
and promotes internationally recognized and consistent
standards of regulation for the securities sector. In a
keynote speech at COP 26 in November 2021, the Chairof the IOSCO Board acknowledged the significanceof ESG frameworks and the need to address thecurrent inconsistencies within sustainability reporting.
Importantly, the speech acknowledged the role ofthe ISSB in the development of future standards and,subject to detailed technical assessment, the willingness
of IOSCO to endorse the new standards for use by over
130 market regulators (IOSCO, 2021).

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

4.0 ANALYSIS OF
CCS WITHIN ESGREPORTING
As discussed in the earlier sections of this report, bothinvestors and markets are increasingly seeking accessto high quality information on environmental, social andgovernance performance, risk and opportunities. In linewith these expectations, the number of ESG-focused
voluntary reporting standards or ratings systems has
risen sharply, many of which introduce greater rigour totheir assessments.
The Institute has reviewed fifteen of the most prominent
voluntary reporting standards, with a focus on climaterelated risks, to investigate the extent to which CCS is
included within their scope. Twenty broad reporting
requirements were distilled from these fifteen standards,
to address the full range of issues where CCS may be
relevant. These broad reporting requirements werethen grouped under six general themes:
•

•
•
•

Climate Related Risk Management Processes,
Governance and Strategy
Climate Related Risks Considered in Financial
Management or Investment Decisions
Greenhouse Gas Emissions Estimation and Targets
Scope 1 and Scope 2 Emission Reduction Reporting
Scope 3 Emission Reduction Reporting•

Outreach and Collaboration•

The relevance of CCS to each reporting requirement has
been briefly described for each standard, as shown in
the tables below. It should be noted that, in the interestof brevity, only the specific reporting requirements ofeach standard and not supplementary guidance whereavailable, are captured within this analysis.
None of the standards reviewed exclude reporting CCS
across the full range of broad reporting requirements
and themes. If CCS contributes to a reporter’s climate
risk management, investment decisions, greenhouse24

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

gas emissions or targets, initiatives to reduce scope 1,
2 or 3 emissions or outreach and collaboration, thenit may be reported, subject to character-count limits insome cases.
In several instances, standards do not have a specificfocus on a particular sector or industry and are therefore
effectively technology agnostic. This is appropriate asthese standards have been designed for application
to any business. For example, one of the key featuresof the recommendations of the Taskforce for Climate
Related Financial Disclosures is that they are “Adoptableby all organisations” (TCFD, 2017).
Even where CCS-reporting requirements are absent,
standards may refer to specific taxonomies orgreenhouse gas accounting standards that recognise or
make provision for CCS. These include the Greenhouse
Gas Protocol published by the World Resources Institute,which is referenced by the Sustainability AccountingStandards Board and the European Union Taxonomy
for Sustainable Activities that is referenced by the UN
Principles for Responsible Investment. Instances where
CCS may be included in these circumstances, areidentified in green text in the tables below.
Standards or questionnaires that have been developed
for specific industries where CCS has application, suchas the steel, cement, coal, and oil and gas industries,
also include specific CCS reporting requirements. These
include the:••Carbon Disclosure Project questionnaires for the oiland gas, cement, coal and steel sectors,
the IPIECA Oil and Gas Industry Guidance on
Voluntary Sustainability Reporting,
the Climate Action 100 Steel Sector Strategy, and•the IIGC Net Zero Standard for Oil and Gas.

•

CCS-specific reporting requirements, under theseparticular schemes, generally include a descriptionof CCS deployment plans, investments and capital
expenditure on CCS, as well as the anticipatedcontribution of CCS to emissions reductions. Examplesof these requirements are also highlighted in green text
in the tables below.

The principal conclusion to be drawn from the Institute’s
analysis, of a sample of the most prominent voluntary
reporting standards, is that there are no barriers to thereporting of CCS as a component of an organisation’s
climate risk mitigation strategy or activities.

Table 3: Analysis of Climate Related Risk Management Processes, Governance and Strategy

Climate Related Risk Management Processes, Governance & Strategy 2

VOLUNTARYREPORTING
STANDARD

CLIMATE RISKS /OPPORTUNITIESARE IDENTIFIEDDESCRIBE PROCESSESOR GOVERNANCEFOR IDENTIFICATION,ASSESSMENT &MANAGEMENT OF
CLIMATE RISKS/OPPORTUNITIESTaskforce on Climate-Related Financial
Disclosures

CCS may bereported as anopportunity or acontrol to mitigate
climate risks.

CCS may be reported
as an opportunity ora control to mitigate
climate risks.

CCS may bereported as anopportunity or acontrol to mitigate
climate risks.

Carbon Disclosure
Project

CCS may bereported as anopportunity or acontrol to mitigate
climate risks.

CCS may be reported
as an opportunity ora control to mitigate
climate risks.

CCS may bereported as anopportunity or acontrol to mitigate
climate risks.

INTEGRATION OF
CLIMATE RISKS/OPPORTUNITIESINTO RISKMANAGEMENTOR STRATEGYPURPOSE AND
OBJECTIVE

SCOPE
AND
COVERAGE

Contribution of
CCS may be
included in metrics
such as emissions
reduction, capital
deployed to low
carbon activities,
revenues from low
carbon activities.

Oil & Gas, Cement,
Coal, and Steelquestionnaires
required disclosureof any CCUS
operations.
Asset Owners
Disclosure Project

CCS may bereported as anopportunity or acontrol to mitigate
climate risks.

CCS may bereported where
relevant.

IPIECA Oil & Gas
Industry Guidance on
Voluntary Sustainability
ReportingContribution of
CCS may be
included in metrics
such as emissions
reduction, capital
deployed to low
carbon activities,
revenues from low
carbon activities.

Examples ofplanned activities
specifically identify
CCS.

Climate DisclosureStandards Board

CCS may bereported where
relevant.

CCS may be reported
where relevant.

United Nations
Principles for
Responsible
Investment

CCS may bereported where
relevant.

CCS may be reported
where relevant.

Global Reporting
Initiative

CCS may bereported where
relevant.

CCS may bereported where
relevant.
CCS may bereported where
relevant.

Blank cells in the table indicate that no specific reporting requirement was identified in the Voluntary Reporting Standard. Green text indicates an explicit requirementin the Voluntary Reporting Standard to report CCS-related activities

2

25

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENTVOLUNTARYREPORTING
STANDARD

CLIMATE RISKS /OPPORTUNITIESARE IDENTIFIEDDESCRIBE PROCESSESOR GOVERNANCEFOR IDENTIFICATION,ASSESSMENT &MANAGEMENT OF
CLIMATE RISKS/OPPORTUNITIES

Sustainability
Accounting Standards
Board

INTEGRATION OF
CLIMATE RISKS/OPPORTUNITIESINTO RISKMANAGEMENTOR STRATEGYPURPOSE AND
OBJECTIVE

CCS may bereported where
relevant.

MSCI Ratings

CCS may bereported where
relevant but is
not explicitly
included in scoring
methodology.

Sustainalytics

CCS may bereported where
relevant but is
not explicitly
included in scoring
methodology.

SCOPE
AND
COVERAGE

Totalemissionscalculation
allows for
CCS.

Corporate Knights
Climate Action 100
Net Zero Company
BenchmarkContribution of CCS
to decarbonisation
strategy may bereported where
relevant.

Climate Action 100 Steel Sector Strategy
IIGC Net Zero Standard
for Oil & Gas
UN Convened Net Zero
Asset Owner Alliance- 2025 Target Setting
ProtocolTable 4: Analysis of Climate Related Risks Considered in Financial Management or Investment Decisions

Climate Related Risks Considered in Financial Management or Investment Decisions 3
CLIMATERELATEDRISKS OROPPORTUNITIESIMPACT ON
FINANCIALPLANNINGDISCLOSE
EXTENT OF
ALIGNMENT OFINVESTMENT
OR ASSETS
WITH “WELL
BELOW
2°CELSIUS
SCENARIO”

Taskforce on
Climate -Related
Financial
Disclosures

CCS may bereported where
relevant.

CCS may bereported where
relevant.

CarbonDisclosure
Project

Expenditure or
revenue related
to CCS may bereported.

VOLUNTARYREPORTING
STANDARD

Asset Owners
Disclosure
Project

DESCRIPTION
OF METHODSTO DRIVE
EMISSION
REDUCTIONINVESTMENTS

CCS may bereported where
relevant, e.g.,
if there is a
dedicated budget
for CCS.

CCS may bereported where
relevant.

DESCRIPTIONOFINVESTMENT
IN R&D INTO
LOW CARBONPRODUCTS
AND SERVICESUSE OF
INTERNAL
CARBON PRICE- INCLUDINGOBJECTIVESOF USE AND
SCOPE OFEMISSIONSCOVERED BY
THEM

DESCRIPTION
OF CREATION
OR PURCHASEOF CARBON
CREDITS

Questionnaires
for Oil & Gas,
Cement, Coal,and Steel all
require disclosureof investment in
R&D for CCUS.

CCS can bereported where
relevant - e.g., ifinternal carbon
price is usedin CCS project
investment
decisions.

Can report CCS
where the credit
issuing authority
recognises
abatement from
CCS - would
require a method.

DESCRIPTION
OF TARGETS
OR ASSET
ALLOCATIONPOLICY ON
LOW CARBONASSETS

CCS may bereported where
relevant.

Blank cells in the table indicate that no specific reporting requirement was identified in the Voluntary Reporting Standard. Green text indicates an explicit requirementin the Voluntary Reporting Standard to report CCS-related activities.

3

26

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENTVOLUNTARYREPORTING
STANDARD

CLIMATERELATEDRISKS OROPPORTUNITIESIMPACT ON
FINANCIALPLANNINGDISCLOSE
EXTENT OF
ALIGNMENT OFINVESTMENT
OR ASSETS
WITH “WELL
BELOW
2°CELSIUS
SCENARIO”

DESCRIPTION
OF METHODSTO DRIVE
EMISSION
REDUCTIONINVESTMENTS

DESCRIPTIONOFINVESTMENT
IN R&D INTO
LOW CARBONPRODUCTS
AND SERVICESUSE OF
INTERNAL
CARBON PRICE- INCLUDINGOBJECTIVESOF USE AND
SCOPE OFEMISSIONSCOVERED BY
THEM

DESCRIPTION
OF CREATION
OR PURCHASEOF CARBON
CREDITSDESCRIPTION
OF TARGETS
OR ASSET
ALLOCATIONPOLICY ON
LOW CARBONASSETS

IPIECA Oil &Gas Industry
Guidance on
Voluntary
Sustainability
Reporting
ClimateDisclosureStandards Board
United Nations
Principles for
Responsible
Investment

CCS may bereported where
relevant.
CCS may bereported where
relevant.

Global Reporting
Initiative

Sustainability
AccountingStandards Board

MSCI Ratings

CCS may bereported where
relevant.

CCS may
be reported
where relevant.
Percentage
of assetsaligned withEU Taxonomy
or similartaxonomies
is a specificsuggested metric.

CCS may bereported where
relevant.

Investment
in renewableenergy,technology toremove CO2 fromthe atmospherenature-based
removal.

Contribution of
CCS to emission
reductions
investments
may be reported
where relevant.
CCS may bereported where
relevant but is
not explicitly
included in scoring
methodology.

Sustainalytics
Corporate
Knights
Climate Action
100 Net Zero
Company
Benchmark

CCS may
be reported
where relevant
to alignmentof capital
expenditure with
GHG targets.

Climate Action
100 - Steel
Sector Strategy

Describing
plans to Invest
in CCS/CCUS
to align capital
expenditure with
Net-Zero strategy
is recommended.

IIGC Net Zero
Standard for Oil& Gas

Conduct andpublish study
setting out
locations, annual
amount of CO2
expected
to be captured,storage andtransportmechanisms,
carbon pricethat would makethe investment
profitable,
costs, timings
and returns on
investment.

UN Convened
Net Zero Asset
Owner Alliance- 2025 Target
Setting Protocol

27

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

CCS may bereported where
relevant.

Disclose total
capitalised
spending (i.e.,
capex plus any
capitalised R&D)
on CCUS, BECCS
and DAC in themost recent
financial year anda forward-looking
budget (minimum
three years
ahead).

Table 5: Analysis of Greenhouse Gas Emission Estimation and Targets

Greenhouse Gas Emission Estimation and Targets 4
VOLUNTARYREPORTING
STANDARDSCOPE 1, 2 & 3
GREENHOUSE GASEMISSIONS & CLIMATERELATED TARGETS

Taskforce on Climate-Related Financial
Disclosures

Contribution of CCS may be
included in targets.

Carbon Disclosure
Project

Contribution of CCS may be
included in targets.

Asset Owners
Disclosure Project

CCS may be reported where
relevant.

IPIECA Oil & Gas
Industry Guidance on
Voluntary Sustainability
Reporting

Examples of planned activities
specifically identify CCS.
Calculation of emissions
account for CCS.

Climate DisclosureStandards Board

CCS may be reported where
relevant.

United Nations
Principles for
Responsible Investment

Contribution of CCS may be
included in targets.

Global Reporting
Initiative

Reporting of emissions may
account for CCS.

Sustainability
Accounting Standards
Board

Calculation of emissions
according to The Greenhouse
Gas Protocol: A Corporate
Accounting and ReportingStandard (GHG Protocol),Revised Edition, March 2004,
published by the World
Resources Institute. This
standard takes account of
reductions through CCS.
Contribution of CCS to targets
may be reported where
relevant.

CALCULATIONOF AGGREGATEPORTFOLIOEMISSIONS INTENSITYDESCRIPTION IF/
HOW EMISSIONSFROM SALE OF
PRODUCTS/SERVICES
ARE ALLOCATED TO
CUSTOMERSREPORT
EMISSIONSPOTENTIAL OF
PROVEN AND
PROBABLE
RESERVES

Calculation ofemissions allocatedcould account for CCS.
Ideally, the complianceC accounting regime
applicable would also
recognise abatementfrom CCS and include amethod for calculatingthat abatement.
Calculation of emissions
could account for CCS.
Ideally, the complianceC accounting regime
applicable would also
recognise abatementfrom CCS and include amethod for calculatingthat abatement.

CCS may reduce
emissionspotential, butthere is no
specific provision
to require an
estimate ofthat potential
reduction.

MSCI Ratings
Sustainalytics
Corporate Knights

4
Blank cells in the table indicate that no specific reporting requirement was identified in the Voluntary Reporting Standard. Green text indicates an explicit requirementin the Voluntary Reporting Standard to report CCS-related activities.

28

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENTVOLUNTARYREPORTING
STANDARDSCOPE 1, 2 & 3
GREENHOUSE GASEMISSIONS & CLIMATERELATED TARGETS

Climate Action 100
Net Zero Company
BenchmarkContribution of CCS toachieving Net-zero may be
included in targets.

CALCULATIONOF AGGREGATEPORTFOLIOEMISSIONS INTENSITYDESCRIPTION IF/
HOW EMISSIONSFROM SALE OF
PRODUCTS/SERVICES
ARE ALLOCATED TO
CUSTOMERSREPORT
EMISSIONSPOTENTIAL OF
PROVEN AND
PROBABLE
RESERVES

Climate Action 100 Steel Sector Strategy
IIGC Net Zero Standard
for Oil & Gas

Contribution of CCUS, BECCS& DACS to operationalemissions targets required tobe reported.

UN Convened Net Zero
Asset Owner Alliance- 2025 Target Setting
ProtocolSub-portfolio targets, Sector
targets, Engagement targets,financing transition targets
are reported. CCS maycontribute to those targets,
but CDR should not be “overemphasised”.

Table 6: Analysis of Scope 1, 2 Emission Reduction Reporting

Scope 1, 2 Emission Reduction Reporting 5
VOLUNTARY REPORTING STANDARD

DESCRIBE EMISSION REDUCTION INITIATIVES IN PLANNING OR OPERATION

Taskforce on Climate -Related Financial
Disclosures
Carbon Disclosure Project

Oil &Gas Sector Questionnaire requires disclosure of the mass of CO2 sequestered orused for EOR/EGR or ECBM
Emission reduction Initiatives in Oil & Gas, Cement, Coal, and Steel Questionnaires
specifically include CCS:•••

Fugitive emissions reductions initiatives – includes CCUS
Low-carbon energy generation, includes fossil fuel plant with CCS
Non-energy industrial process emissions reductions, includes CCS.

Asset Owners Disclosure Project
IPIECA Oil & Gas Industry Guidance on
Voluntary Sustainability Reporting

CCS and EOR specifically required to be reported amongst suite of technologies applied
to reduce emissions or in plans.

Climate Disclosure Standards Board
United Nations Principles for Responsible
Investment
Global Reporting Initiative

Describe actions to manage flaring and venting - CCS may be reported where relevant.
Net mass of CO2 captured & removed from atmosphere and stored.

Sustainability Accounting Standards Board

Contribution of CCS to emission reductions may be reported where relevant.

MSCI Ratings
Sustainalytics
Corporate Knights
Climate Action 100 Net Zero Company
Benchmark
Climate Action 100 - Steel Sector Strategy

The development of plans to deploy CCS/CCUS & DRI with low carbon hydrogen are
specifically recommended.

IIGC Net Zero Standard for Oil & Gas
UN Convened Net Zero Asset Owner
Alliance - 2025 Target Setting Protocol
Blank cells in the table indicate that no specific reporting requirement was identified in the Voluntary Reporting Standard. Green text indicates an explicit requirementin the Voluntary Reporting Standard to report CCS-related activities.

529

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

Table 7: Analysis of Scope 3 Emission Reduction Reporting

Scope 3 Emission Reduction Reporting 6
VOLUNTARY REPORTING STANDARD

DESCRIPTION OF EXISTING LOW-CARBON GOODS AND SERVICES AND HOW
THEY REDUCE SCOPE 3 EMISSIONS INCLUDING DISCLOSURE OF TAXONOMY OR
METHOD USED TO CLASSIFY THEM AS LOW-CARBON

Taskforce on Climate -Related Financial
Disclosures
Carbon Disclosure Project

Methodologies include:
National Greenhouse and Energy Reporting Scheme (NGERS), EU Emissions Trading
Scheme (EU ETS), IPCC Guidelines for National Greenhouse Gas Inventories 2006.
Taxonomies include:• Low-Carbon Investment (LCI) Registry Taxonomy• Climate Bonds Taxonomy• The EU Taxonomy for environmentally sustainable economic activities.

Asset Owners Disclosure Project
IPIECA Oil & Gas Industry Guidance on
Voluntary Sustainability Reporting
Climate Disclosure Standards Board
United Nations Principles for Responsible
Investment
Global Reporting Initiative
Sustainability Accounting Standards Board
MSCI Ratings
Sustainalytics
Corporate Knights

Under the Clean Revenue KPI, the scheme requires disclosure of• Percentage of your total revenue derived from products and services that are
categorized as “clean” according to the Corporate Knights open-source clean
revenue taxonomy.
• The Clean Revenue Taxonomy recognises and includes CCS technologies.

Climate Action 100 Net Zero Company
BenchmarkContribution of CCS to company “green revenues” may be reported where relevant.

Climate Action 100 - Steel Sector Strategy
IIGC Net Zero Standard for Oil & Gas
UN Convened Net Zero Asset Owner
Alliance - 2025 Target Setting Protocol

6
Blank cells in the table indicate that no specific reporting requirement was identified in the Voluntary Reporting Standard. Green text indicates an explicit requirementin the Voluntary Reporting Standard to report CCS-related activities.

30

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

Table 8: Analysis of Outreach and Collaboration

Outreach and Collaboration 7
VOLUNTARY REPORTING STANDARD

DESCRIPTION OF PUBLIC POLICYENGAGEMENTDESCRIPTION OF CLIMATE-RELATEDCOLLABORATION WITH OTHER CDP
MEMBERS

CCS may be reported where relevant.

Collaboration on CCS projects may bereported.

Taskforce on Climate -Related Financial
Disclosures
Carbon Disclosure Project
Asset Owners Disclosure Project
IPIECA Oil & Gas Industry Guidance on
Voluntary Sustainability Reporting
Climate Disclosure Standards Board

CCS may be reported where relevant.

United Nations Principles for Responsible
Investment
Global Reporting Initiative
Sustainability Accounting Standards
Board
MSCI Ratings
Sustainalytics
Corporate Knights
Climate Action 100 Net Zero Company
Benchmark
Climate Action 100 - Steel Sector Strategy
IIGC Net Zero Standard for Oil & Gas
UN Convened Net Zero Asset Owner
Alliance - 2025 Target Setting Protocol

7
Blank cells in the table indicate that no specific reporting requirement was identified in the Voluntary Reporting Standard. Green text indicates an explicit requirementin the Voluntary Reporting Standard to report CCS-related activities.

31

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

5.0 DEVELOPINGA CCS-SPECIFICREPORTING
METHODOLOGY
The following sections reflect upon the current statusquo and consider how organisations’ reporting of thestatus of CCS may be improved within ESG schemes.

5.1 Context for a reporting
framework
The Institute’s research and formal interviews reveal thatfor many investors, access to high-quality information,that allows them to assess the risks and returns
associated with investment choices, remains a primaryconcern. ESG reporting provides an important meansof supporting this and as such, it seeks to provide a
structured, reliable and efficient framework for describing
non-financial value drivers (or destroyers). Information
disclosed through these various frameworks enables
investors to make their own assessment as to whether
potential investments are aligned with their values andwhether these non-financial value drivers may impact
future financial returns.
Although it has historically focused to a greater extent
upon a more narrative style of reporting, when comparedto financial reporting and its stronger quantitative basis,
ESG-related reporting is in fact serving the same ultimate
objective – providing investors with information to informtheir investment decisions. As investors’ expectations
around ESG performance continue to rise, so too has
the importance of reporting frameworks more broadly.
Investors are now looking for ESG reporting that offers
far-greater levels of consistency and comparability,
and there is an increasing demand for standardisationand verification. In addition to more granular narratives
around plans and strategies to mitigate climate risk, or
realise new business opportunities, investors are now
seeking greater quantitative reporting of ESG risks andperformance.

32

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

Climate change presents a significant, material risk forfirms that have emissions intense value chains, and, inmany instances, investors are now demanding a moredetailed understanding of how that risk is being, or
will be, mitigated. In this context, the general reportingof the potential role of carbon capture and storage in
mitigating a firm’s own emissions, or the emissions of
its customers, and thereby reducing climate-relatedrisks, is no longer sufficient. The Institute’s researchand interviews with financiers and investors concluded
that, while there are positive examples of CCS-specificreporting, a far-greater level of CCS-specific reporting
will be required from project proponents to satisfy theirrequirements. Current reporting frameworks afford abaseline; however, more fulsome qualitative informationand data will be required in many instances.
For many companies with significant emissions exposure,the drive towards greater reporting of climate-relatedrisks and net zero ambitions, has led to an increased
emphasis upon reporting and disclosure. The Institute’s
interviews revealed that companies continue to commit
significant effort and resources to engaging with ratings
agencies and producing climate reporting that is in-linewith the latest standards and investor requirements.
Notwithstanding this, some companies highlighted thelack of a clear pathway for detailed reporting of CCSspecific activity within preferred models and suggested
that information on CCS simply wasn’t sought undersome commercial ratings schemes.

5.2 Approach to developing
the methodology
The institute’s analysis of the fifteen most prominent
voluntary reporting standards, revealed that although
there were no significant barriers to the reporting

of CCS-specific activities, there were few examples
of comprehensive guidance that would support an
operator wishing to do so. An increased push towards thereporting of net-zero targets and organisations’ progress
towards them, the more widespread deployment of low
carbon technologies and rising investor interest, will all
require a greater focus upon supporting CCS-specificdisclosure.

themes that were identified within them:Interviewees and wider research suggest that in addition
to more general reporting related to climate risk, a fitfor-purpose methodology for reporting CCS within an
ESG reporting framework should support an investor’s
understanding of several, more specific factors. The
following, non-exhaustive list, provides examples ofsome of the issues that have been highlighted:•

How to quantify the expected reductions in areporting firm’s emissions that CCS will deliver eachyear over a forward projection period.

•

The materiality of those emission reductions whencompared to the firm’s total CO2 emissions.

•

How CCS contributes to an organisation’s broader
strategy to mitigate climate risk and form a view as
to the strength and materiality of that strategy.

•

The governance of the strategy and the level within
the organisation at which accountability for its
development and implementation resides.

•

Where CCS will contribute to emission reductions in
the firm’s value chain.

•

The firm’s work programs related to CCS,
including quantitative reporting of resourcing andinvestments.

The Institute’s CCS-specific methodology, set out inthe following section, draws upon the existing leading
reporting frameworks, and aligns with the six general

33

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT•

Climate Related Risk Management Processes,
Governance and Strategy•

Climate Related Risks Considered in Financial
Management or Investment Decisions•

Greenhouse Gas Emissions Estimation and Targets•

Scope 1 and Scope 2 Emission Reduction Reporting•

Scope 3 Emission Reduction Reporting•

Outreach and Collaboration

The methodology adopts a non-prescriptive approachand seeks to highlight how critical CCS-specific factors
could be successfully incorporated within current
reporting pathways. The Institute has adopted thisapproach, to reflect the views of those interviewed
and contemporary discussions taking place within the
ESG reporting space. In the case of the former, bothindustry and finance sector representatives highlighted
the significant number of reporting schemes andemphasised their desire to see greater consolidationand standardisation of schemes. Similarly, recent
discussions within the auspices of the WEF, the IOSCO
and the ISSB, as discussed earlier in this report, suggestthat in the move towards closer standardisation, the useof existing pathways would be a preferable approach.
The following methodology allows all relevant parties- operators, end-users of the reported information andthose designing and developing reporting schemes –to gain a clearer, holistic understanding of the breadthof CCS-specific information that could be reported inline with existing frameworks. Enhancement of current
schemes, to recognise the relevance and significanceof this information, would benefit all parties in theirconsideration of CCS specifically.

5.3 CCS-Specific methodology
Climate related risk management processes, governance and strategy
Issues addressed under this reporting theme•

Identification of climate risks and/or opportunities•

Processes or governance for assessing and managing climate risks and/or opportunities•

Integration of risks and/or opportunities into management or strategy•

Metrics used in assessing climate risks and/or opportunities•

Proportion of emissions covered by scheme(s) aimed at reducing emissions

Table 9: CCS-Specific methodology - Climate related risk management processes, governance and strategy
SCOPE

QUALITY

Strategic view as to the role of CCS in the management of climate
risks and/or the opportunities or benefits afforded through CCS
investment and deployment.

•

•
•
•

Governance arrangements that support the strategic ambition for
CCS.

•
•

•

Metrics to be used in the assessment of CCS-specific benefits and/or risks

•

•

•

34

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

Development of a detailed narrative that clearly describes
the relevance of CCS in supporting the organisation’s climate
mitigation objectives, management of climate-related risks andfuture business strategy.
Statements should identify proposed applications of thetechnology, by reference to the organisation’s sector, core
activities and operations.
Provide detail of the CCS-specific objectives of forward-looking
business plans, or any other commercial opportunities that may
include CCS-specific applications.
Organisations should identify the time horizons for CCSspecific activities, with clarity as to both medium and long-term
ambitions for the technology’s deployment.
Description of the organisation’s current internal governancearrangements and approach to the management of climatechange risks and opportunities.
Information to be disclosed may include:•
The Executive and/or Board’s views and approach toaddressing climate change and the role of CCS.
•
Any climate change-related incentives or bonus structuresthat may be available to the Board and/or Executive.
•
Any CCS-specific KPIs used by the organisation in their
management of climate change performance.
Explanation as to how and where CCS will be managed within
the auspices of the organisation’s existing climate change
governance arrangements:•
To include detail of any changes introduced, or to be
introduced, to accommodate CCS-specific interests within
the current governance arrangements.
•
Identification of specific personnel, department(s) ordivision(s) with responsibility for implementing the strategic
ambition for CCS.
•
Provide examples of programmes or initiatives that will
underpin the organisation’s approach to CCS.
Description of the metrics, performance criteria and/or
standards to be used by the organisation when assessing
performance, in relation to its climate mitigation strategies and/or risks.
Explanation of how CCS-specific performance and risks will be
captured within the organisation’s existing metrics, or details of
any new metrics that have been developed to address theseissues.
Examples of CCS-specific metrics to be used may include:•
Target date for installed capture capacity.
•
Total volume of CO2 stored per annum.
•
Volumes of CO2 to be delivered under an offtakeagreement.

Climate related risks considered in financial management or investment
decisionsIssues addressed under this reporting theme•

Impact of climate related risks/opportunities upon financial planning•

Alignment of investments or assets with “well below 2°C scenario”•

Methods to drive emissions reduction investments•

Investment in R&D into low-carbon products and services•

Adoption of an internal carbon price•

Creation and/or purchase of carbon credits•

Targets or asset allocation policy on low carbon assets

Table 10: CCS-Specific methodology - Climate related risks considered in financial management or investment
decisionsSCOPE

QUALITY

Role of CCS in addressing
financial risks and/or
opportunities••

Proportion of R&D investment
dedicated to CCS-specificactivities•••
Consideration of CCS withincarbon crediting schemes••

Description of an organisation’s proposed or operational CCS-specific R&D activities, to include:•
The objectives and scope of the R&D activities, key deliverables and timeline for delivery of the
project(s).
•Details of any external project partners, for example, other commercial organisations, academicor research institutions.
•
Impact and relevance of R&D activities to the organisation’s wider commercial interests in CCS.
Clear statement as to the value and/or percentage of an organisation’s low-carbon R&D budget thatis dedicated to supporting CCS-specific activities.
•
May be expressed in terms of capitalised expenditure on CCS R&D activities within a specified
period.
Indication as to the temporal extent of any CCS-specific R&D support, including the proposed/actual
annual spend upon CCS activities.
Identification of relevant carbon crediting schemes that will support and/ or incentivise existing orplanned CCS activities, to include:•
Overview of the relevant crediting scheme(s) and the application to CCS-specific activities.
•
Details of the current and/or modelled value of CO2 offsets under the scheme and the impact
upon the organisation’s investment.
Provide detail of the legal and regulatory framework that implements the relevant carbon crediting
schemes:•
To include detail of the organisation’s approach to compliance with this framework, including
details of any ongoing programme of third-party verification.

Response to regulatoryintervention•

Indication of how an organisation intends to manage the financial risks associated with climatechange or CCS-specific regulatory intervention, for example:•
The establishment of a carbon tax, trading, or pricing scheme.
•
Implementation or further enhancement of CCS-specific regulatory frameworks.
•
Amendments to international or regional agreements likely to impact the operation of CCS
facilities or more widespread deployment of CCS technologies.

Management of current or
anticipated climate litigation•

Indication of an organisation’s approach to identifying the risks posed by climate litigation to CCSrelated investments and project deployment.
In instances where CCS-specific/relevant litigation is ongoing; organisations may provide details as
to the approach adopted to managing:•
The impact of the case upon project operation and investments.
•
Any negative implications of the litigation that may present as “controversy factors” within
ratings schemes.
Indication as to the extent to which CCS may mitigate climate litigation against the organisation.

•

•

35

Development of a detailed statement describing how CCS-specific investment will:•
Address the financial challenges of an organisation’s material climate-related risks.
•
Lead to specific financial opportunities that would not otherwise be afforded to theorganisation.
Examples of Information to be provided here, may include the impact of CCS upon:•an organisation’s potential for green revenues from the sale of low carbon products andservices.
•
improvements in competitiveness from the provision of these low-carbon products andservices.
•
reducing the organisation’s GHG emissions and exposure to rising carbon prices.

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

Greenhouse gas emissions estimation and targets
Issues addressed under this reporting theme•

Scope 1,2 and 3 GHG and climate targets•

Calculation of aggregate portfolio emissions intensity•

If/how emissions are allocated to customer(s) from sale of goods or services•

Emissions potential of proven or probable reserves

Table 11: CCS-Specific methodology - Greenhouse gas emissions estimation and targets
SCOPE

QUALITY

Treatment of CCS in estimatesof Scope 1, 2 and 3 GHG
emissions•••Contribution of CCS towards
GHG emissions reduction
targets••
Role of CCS in reducing
Scope 3 emissions•••

Contribution of CCS towards
achieving net zero emissions
pledges or target

•
•

•

36

Clearly define the percentage contribution that CCS activities will make towards reducing emissions,when calculating and reporting an organisation’s GHG emissions estimate.
Identify the emissions accounting methodology to be used by the organisation when determining
the emissions reductions achieved through CCS:•
May include national emissions accounting frameworks such as the National Greenhouse andEnergy Reporting Scheme (NGERs), or international models such as the IPCC Guidelines for
National Greenhouse Gas Inventories 2006.
Details of the processes of verification/assurance that are to be used when determining theorganisation’s CCS-specific emissions reductions.
Organisations to specify the anticipated contribution CCS will make towards achieving theiremissions reduction targets (For Scope 1 and 2, emissions).
•
May include detail of specific assessment metrics to be used in determining this contribution,for example the anticipated volume of CO2 stored and relevant dates.
Organisations to detail the impact of their CCS activities in delivering GHG emissions reductions todate (For Scope 1 and 2 emissions).
Description of initiatives to develop and implement CCS technologies to reduce CO2 emissions
relating to value chain emissions.
Contribution or expected contribution of CCS towards reducing emissions including consumer useof products and imported electricity and steam.
Contribution of CCS accounted for within emissions from sale of products/services allocated tocustomers.
Organisations to disclose their intention to use CCS in achieving their net zero emissions pledges ortargets.
An organisation to provide a description of their application of the technology, which may include:•
Full details of the planned CCS activities.
•
The percentage of the organisation’s net zero target to be achieved through these CCSspecific activities.
•
The contribution of these activities towards achieving the company’s timeframe for net zero
emissions targets.
Verification of the percentage contribution of CCS, by an independent third party (e.g., the Science
Based Targets Initiative), towards achieving the organisation’s net zero pledge or target.

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

Scope 1 and 2 emissions reduction reporting
Issues addressed under this reporting theme•

Description of emissions reduction initiatives in planning or operation

Table 12: CCS-Specific methodology - Scope 1 and 2 emissions reduction reportingSCOPEQUALITY

Current contribution of CCS
operations towards reducing
Scope 1 and 2 emissions

•
•
•
•
•
•

Proposed future contributionof CCS operations upon
reducing Scope 1 and 2
emissions

•
•
•

37

A clear statement regarding an organisation’s use of CCS, to reduce operational emissions,
including the technological and storage applications utilised.
Detail of the quantity of CO2 equivalent, expressed in tonnes, that is reduced as a directconsequence of CCS in the reporting year.
Overview of progress/performance of CCS-specific emissions reduction activities since the start ofoperations.
An anticipated timeline for all relevant CCS operations, including the start year of any projects.
A statement of the volume of CO2 captured, exported, stored, or used for CO2-EOR/utilisation.
Detailed overview of any project, to include (but not limited to) the following details:•
Location of the capture plant and storage site•
Annual amount of CO2 currently/anticipated to be captured•
Cumulative CO2 injected and stored (tonnes of CO2)•
Costs (pipeline costs, cost per ton of CO2 over the life of the project)•
Existence of commercial agreements to support commerciality of project (e.g., offtake
contracts)•
Monitoring and verification programme•Statement as to the management of project risks (e.g., long-term liability and insurance)•
Recognition of abatement through crediting schemes, voluntary or statutory carbon markets, orcarbon regulation•
Regulatory requirements for entirety of the project lifecycle•
Current level of community support for project(s)•Estimated return upon investment.
A clear statement regarding an organisation’s intention to utilise CCS to reduce Scope 1 and 2
emissions, including the technological and storage applications utilised.
Details of the anticipated percentage of the organisation’s emissions that will be covered by the
CCS operations, throughout the lifetime of the project.
Project details to the extent that they are available.

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

Scope 3 emissions reduction reporting
Issues addressed under this reporting theme•

Description of existing low-carbon goods and services and how they reduce Scope 3 emissions including
disclosure of taxonomy or method used to classify them as low-carbon

Table 13: CCS-Specific methodology - Scope 3 emissions reduction reportingSCOPEQUALITY

Current contribution of thesale of low-carbon products
and services that utilise CCS
towards reducing Scope 3
emissions

•
•
•
•
•
•
•

Current contribution of CCS
operations towards reducing
Scope 3 emissions

•
•
•
•
•
•

Proposed future contributionof CCS activities towards
reducing Scope 3 emissions

•
•
•

38

Description of how the company classifies existing products and services as low carbon where CCS
is employed.
Disclose the taxonomy or methodology used to classify products and services as low carbon.
Explain the value of ‘Green Revenues’ from the sale of low-carbon goods and services (employing
CCS), in the context of the organisation’s overall sales.
Disclose the use of any scheme used to classify green revenues generated from the sale of low
carbon goods and services that utilise CCS (e.g., the Climate Bonds Initiative, the Corporate Knights
scheme)Provide detail of the quantity of CO2 equivalent reduced from the company’s Scope 3 emissions,due to the sale of low-carbon goods and services that employ CCS, in a particular reporting year
Current engagement in activities, including R&D, to drive investment in low-carbon goods andservices and solutions that employ CCS technologies.
Contribution of CCS accounted for within emissions from sale of products/services allocated tocustomers.
Detailed statement as to the organisation’s use of CCS to reduce Scope 3 emissions, including the
CCS application and storage site.
Detail of the quantity of CO2 equivalent reduced as a direct consequence of CCS in the relevant
reporting year.
Provide information as to the progress/performance of the operations to-date, including theemissions reductions achieved through CCS since the commencement of operations.
A formal timeline including the start date for CCS capture and storage operations.
Provide detail of the quantity of CO2 captured, exported and/or stored.
Detailed overview of any project, to include (but not limited to) the following details:•
Location of the capture plant and storage site•
Annual amount of CO2 currently/anticipated to be captured•
Cumulative CO2 injected and stored (tonnes of CO2)•
Costs (pipeline costs, cost per ton of CO2 over the life of the project)•
Existence of commercial agreements to support commerciality of project (e.g., offtake
contracts)•
Monitoring and verification programme•Statement as to the management of project risks (e.g., long-term liability and insurance)•
Recognition of abatement through crediting schemes, voluntary or statutory carbon markets, orcarbon regulation•
Regulatory requirements for entirety of the project lifecycle•
Current level of community support for project(s)•Estimated return upon investment.
A clear statement regarding an organisation’s intention to utilise CCS to reduce Scope 1 and 2
emissions, including the technological and storage applications utilised.
Details of the anticipated percentage of the organisation’s emissions that will be covered by the
CCS operations, throughout the lifetime of the project.
Project details to the extent that they are available.

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

Outreach and collaboration
Issues addressed under this reporting theme•

Public policy engagement•

Climate related collaboration

Table 14: CCS-Specific methodology - Outreach and collaborationSCOPE

QUALITY

A clearly articulated vision of
the technology’s relevance toan organisation•

Development of a formal statement regarding CCS deployment as relevant to the organisation’s
operations and climate mitigation and/or net zero strategy.
•
To include details of proposed capacity and intended deployment timelines.

Engagement in public policy
discussion surrounding CCS in
relevant jurisdictions•

Examples of an organisation’s activities in supporting the development of CCS-specific policies and/or initiatives, in jurisdictions material to operations:•
To include detail of responses or submissions to government reviews, consultations, or
instances of call for evidence.
Detail of an organisation’s position on CCS-specific issues within these public policy discussions.

•
Involvement in national,
regional, or international CCS
initiatives•••

Support for CCS research•••Communication activities
aimed at supporting CCS
deployment

•
•
•
•

39

Participation in, or memberships of, any CCS-focused organisations; including private or publicsector initiatives, membership-based organisations, or associations.
Examples of engagement within working groups, advisory boards, or wider networks, that support
the operation and activities of these initiatives.
Details of the funding provided for CCS-specific initiatives, or to support the delivery of discrete
projects or programmes of work.
Amount of funding (including in-kind support) provided to academic and/or research organisations,to support CCS-specific research.
Amount of funding provided for internal research programmes on CCS.
Description of the scope of this research, progress to-date, its ultimate outputs, and an indicationof the impact and relevance of these research deliverables in supporting deployment, or theorganisation’s CCS objectives.
Description of activities aimed at assisting the more widespread understanding of the benefits of
CCS deployment, at a national, regional, or international level.
Examples of successful community engagement, knowledge-sharing and outreach practices thathave demonstrated a benefit to an organisation’s CCS-specific activities.
Provision or support for education programmes, within schools, universities, or other fora, aimed at
knowledge-sharing or enhancing the understanding of CCS in a climate change context.
Sponsorship or funding of CCS-specific events, for example corporate or academic conferences.

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT

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41

AN ESG REPORTING METHODOLOGY TO SUPPORT CCS-RELATED INVESTMENT