Australian Worldwide Exploration (AWE) is an Australian oil and gas exploration and production company with operations in Australia, New Zealand, Indonesia, Yemen and the US. The oil and gas industry is a major contributor to the Australian economy through exports, GDP, employment, government revenue and investments in infrastructure and research and development.
This is AWE’s fourth sustainability report and it clearly states AWE’s commitment to be "open and transparent with all stakeholders, ensuring adequate disclosure on all the key issues raised by stakeholders". However, a list of stakeholders is not presented and critical information such as an overview of the company’s operations, the material issues for AWE and the sector or number of employees is nowhere to be found. The report is 12 pages in total, which is a refreshing change from the industry’s trend towards excessively lengthy sustainability reports. The report briefly covers safety, environment, community and staff issues, which are fundamental elements of the company’s sustainability performance. However, without adequate disclosure on the company’s scale of operations, key stakeholders and material impacts it is difficult for the reader to attain a clear understanding of the sustainability context in which the organization operates or contextualize data on production, greenhouse gas emissions and safety. These omissions also limit the capacity for report readers to compare AWE with similar organisations.
AWE has set out to be "open and transparent with all stakeholders, ensuring adequate disclosure on all the key issues raised by stakeholders". Glaringly, this report does not disclose who those stakeholders are, how they were identified or what the key issues are for these stakeholders. The greatest weakness of this report is that is does not speak clearly to its intended readership, if indeed it knows who they are.
Safety appears to be a core focus for AWE. Although the report is structured around four main topics – Safety, Environment, Community, and Our Team – the majority of disclosure relates to safety , while community and employee engagement are covered in much less detail. The only environmental performance data provided is greenhouse gas emissions data for each site. Environment data should be expanded to outline the material issues and risks, and explain AWE’s performance to readers. Greenhouse gas emissions have decreased 42% since 2010 and this is mostly explained by a large reduction in flaring at operations in New Zealand. However AWE does not discuss flaring in any detail, such as the environmental impacts or changes in flaring intensity, which would be appropriate for a report in this sector. Four years of safety performance trend data is reported and demonstrates injuries and incidents are decreasing, yet there is no description of how this has been achieved. In the future, AWE should aim to include more discussion of how safety issues are managed and what initiatives and programs are in place to support the safety strategy and achieve the expected high standards. Previous sustainability reports could not be found on the AWE website, so it is suggested that an archive of reports is established to allow readers to track performance, reporting and trends over time and increase transparency.
Oil and gas companies are increasingly under scrutiny around the globe for employing the use of hydraulic fracturing, or fracking, to extract gas from deep within the Earth. AWE employs the hydraulic fracturing (fracking) method for gas extraction at its onshore Perth Basin operation in Western Australia but discusses it only briefly in the report. The report fails to provide the ‘adequate disclosure’ promised around what is currently a very controversial, and therefore material, issue. AWE could use its report as a vehicle to communicate with stakeholders on the issue of fracking by providing information that informs stakeholders of the impacts, AWE’s actions to reduce environmental impacts, as well as a list of stakeholders engaged on the issue. AWE does provide detailed disclosure on the issue of fracking on their website. The sustainability report would benefit by providing a link to this disclosure.
AWE has reported its performance by presenting a scorecard of progress against previous years’ targets and provides a summary of progress. Almost all targets were met, except for a Zero Harm target. The majority of targets were qualitative, as are those set for the next reporting period. These existing qualitative targets are not sufficiently measureable and should be combined with some quantitative targets, especially in relation to environmental issues. More discussion could be included on these targets to communicate to readers why these actions were chosen and how performance was managed throughout the year. Credit is also due for establishing objectives for the coming year but these also need more commentary on how they are to be achieved.
The report is structured well but is disappointingly short. It feels like reading the synopsis of a much bigger story that doesn’t eventuate. In fact, the summary of the report found on the Sustainability page of AWE’s website contains nearly all the content in the full version of the report. As this is AWE’s fourth sustainability report, we would expect a more comprehensive picture of the company’s key material issues and how AWE is responding to these issues. The website can then be a reference point for additional information.
AWE is a member of a very competitive industry sector, including many companies that are demonstrating real leadership in sustainability disclosures and performance. Since AWE has not reported on the size and scale of their operations within this sustainability report, comparing AWE with its peers is difficult and potentially unfair to the company.
The fact that this report covers key material issues for oil and gas in such little depth ultimately erodes the credibility of the report. Although the report touches on issues such as the Australian Clean Energy Futures Bill, New Zealand Emissions Trading Scheme and fracking, these are covered in such a brief and superficial manner that the reader doesn’t get a sense of how important these are from a sustainability (and industry) and risk management perspective and how crucial they are likely to become in the very near future.
The lack of depth or discussion given to the issues touched on throughout the report does not provide any balance or context for the reader, which again diminishes the report’s credibility. Readers, including investors, want to see that a company is aware of and managing its risks as this will impact decisions to invest. AWE needs to go further in future years, covering, for example, not only its own preparations for the carbon price, but the drivers and potential impacts of carbon legislation on its business and what that may mean for operations. This is information that leading oil and gas companies are already disclosing, and which will be increasingly demanded by shareholders and other stakeholders.
1. AWE needs to provide readers with a basic understanding of the organization itself and the scale of operations. Then start thinking about who for the audience for the report is and what AWE aims to achieve in producing it.
2. Sustainability information in the report should be better integrated with additional information found on the website. Previous sustainability reports could not be found on the AWE website, so it is suggested that an archive of reports is established to allow readers to track performance over time.
3. AWE should aim for more disclosures on how it manages issues, risks and opportunities in order to give a more holistic view of the company and how it is anticipating and responding to sustainability issues.
4. This is AWE’s fourth report; future reports should reflect this by increasing the level and number of disclosures particularly on environmental and social issues.
Samantha Eyre is Project Consultant at Net Balance, a sustainability advisory services firm with offices in Melbourne, Sydney, Brisbane and London.www.netbalance.com