As I’ve written previously, investors are increasingly calling on natural gas producers to adopt best practices and fully disclose, measure, and manage the risks of shale gas extraction. Now, just as the EU's Chief Science Advisor has endorsed shale gas development, Europe's Climate Principles Framework Initiative, which includes some of the world's largest banks, has joined the call with new guidelines for energy companies that engage in hydraulic fracturing.
Shale gas exploration and production: Key issues and responsible business practices, Guidance note for financiers calls on energy companies to adopt the use of quantitative data on key performance indicators to show how they are managing and reducing environmental risks and community impacts in hydraulic fracturing operations.
Richard A. Liroff, Ph.D., founder and director of the Investor Environmental Health Network (IEHN), has written this excellent blog describing the guidelines. Liroff writes that the guidelines identify 16 areas of "responsible business practice." Four relate to companies' overall quality of management, accountability and disclosure, and 12 relate to specific operational activities.
Here’s the table of contents:
The guidelines conclude:
Companies involved in shale gas production need to understand the complexity of risks and regulations associated with their operations – which will vary from community to community, and from country to country. In countries with weak governance or where there may be loopholes in regulation, companies need to take care to ensure a globally consistent standard of engagement and disclosure, and ensure involved communities and stakeholders understand and are satisfied with planned activities and practices.
By employing responsible business practices and collaborating with other operators and contractors across supply chains, companies can do their best to mitigate many of the environmental and social risks associated with shale gas production. However, there are clearly a set of macro-challenges – for instance, to do with the implications of shale gas for the global energy mix and climate change – which cannot be simply addressed by any single operator, but which need attention at the highest levels of government, business and civil society, and to which responsible companies should contribute.
Europe’s banks have spoken. Will energy companies listen?