Opinion: Reflections on ESG in Canadian O&G

Source: Marquee Energy Ltd.

Editor's note: Author Tony Rino recently published his thesis "I know something you don’t know’: Analysis of perceptions of Environmental, Social and Governance (ESG) Reporting in the Canadian Oil and Gas Industry through signaling, dramaturgy, and reception theories."  He reflects on the work in the following article. 

The first time I encountered an ESG report was in early 2018 while working as a website and social media community manager for an oil and gas company in Calgary. I was familiar with words for corporate sustainability reporting like stewardship, responsibility, and sustainability that always seemed a bit ambiguous to me, and these new words environmental, social and governance seemed more concrete.

As a communicator, I wondered about the new terminology and if non-investor audiences would notice or even care about an ESG report. At the same time, I was thinking of research ideas for my Master of Arts degree in communications, and my thesis topic was born! I hoped my research would help understand industry and public perceptions of ESG reporting and learn how ESG content is best communicated.

After receiving ethical research certification and approval for my study, I recruited 23 volunteer participants.The 12 industry participants work in the Canadian oil and gas industry in a role related to ESG reporting, including five subject matter experts, four ESG report authors, and three communicators. And, the 11 non-industry participants live in Canada and do not work in the energy industry, including three who work in public relations, two post-secondary students, two who personally invest in Canadian oil and gas companies, one teacher, one independent businessperson, one who works in the banking sector and one pension fund administrator. Based on those who disclosed their age and location, I interviewed people between the ages of 19 and 59 from seven Canadian provinces.

I asked open-ended questions about the reports like, what do the three terms mean to you, what do you think of the content in the reports and did you know about the lack of a universally agreed-upon reporting standard. I also asked questions about communicating ESG reporting like, are ESG reports best suited for a website or social media, would you rather hear about ESG from an employee or the company, and does your opinion matter to an oil and gas company. I tried my best to keep the focus of this public relations and communications research away from understanding ESG matters and toward understanding public perceptions and how to best communicate ESG matters.

To be clear, my research is not a survey with definitive answers. I wanted qualitative interviews to explore perceptions of ESG reporting, and to inform better questions, deeper thought and more research. I also took a something-for-now/something-for-later approach by analyzing not only the responses, but also creating a communications framework to help communicators ask strategic questions when creating complex communications like ESG reports.

I named my research framework “I know something you don’t know” because it is designed to answer two fundamental questions: “What do I know that my audience does not know?” And “What does my audience know that I do not know?”  The framework uses signaling theory by Michael Spence, dramaturgy by Erving Goffman and reception theory and cultural hegemony by Stuart Hall to understand why a communications signal is sent, how a company presents itself and how the audience perceives the presentation, and whether the audience accepts, rejects, or takes a negotiated position on the message. It’s a complex framework that helps analyze the complexities of industry and non-industry perceptions of ESG reporting.   

There were four key outcomes to my research questions:

  1. Most non-industry participants were unaware of ESG reporting. At the same time, most industry participants acknowledged there is a contentious level of public awareness and low level of public support surrounding oil and gas development – which contributes to the reason why ESG reports target a narrower investor audience and not a broader public audience.
    One non-industry participant commented that “everybody has to be a winner in this story.” And, an industry participant expressed that, “ESG for me is about exploring the balance between sometimes competing interests and trying to not make them compete directly with one another so it’s not a zero-sum game.”
  2. The majority preferred the content prioritized and re-ordered as social, environment and governance. Most felt ESG content is important, and some felt disillusioned by the investor focus following the shift away from community-focused CSR reports and non-investor stakeholders. With observations that ESG content is too corporate sounding, difficult to read, and only highlights good things and not bad things – partly due to a lack of a universal standard for ESG reporting – most participants felt the reporting was not transparent and inauthentic. However, some participants felt the lack of a universal standard for ESG reporting highlighted an opportunity for companies to express individuality while working together to create their own reporting standard.
    One industry participant summarized that “there is a much greater awareness these days of some of the trade-offs involved in kind of the way we've been doing business and a desire to address some of those trade-offs. And ESG is kind of the way that we reckoned with that.”
  3. According to participants, the reputation level for the oil and gas industry is already low and most respondents expressed it was important to communicate ESG reporting transparently through public discussion on social media to regain public support. As one non-industry participant observed, if people are silent and don’t have a way to provide feedback, “the companies have nothing to gauge anything. There’s a void of opinion. And so, the companies just make assumptions.”
    However, some industry participants believed the reports should be published on websites only without discussion because they are designed to appeal to investor stakeholders and not the public. One industry participant felt the reports are strictly for investors and “speaking to a particular audience. It’s not a community report.”   
  4. Participants generally felt that discussion is important when communicating ESG. However, they also believed their opinions did not matter to oil and gas companies based on the investor audience focus of the reports and the contentious level of polarized discussion online. Most participants in my research did not feel their voice would make a difference to oil and gas companies.
    When asked if their opinion matters to an oil and gas company, one non-industry participant replied, “In my average Joe kind of perspective right now in the world, no. No, it doesn’t.” And one industry participant summarized that companies “have all of the in-house and specialty groups and consultants to formulate opinions for them,”

Some key themes also bubbled up during the interviews: Half of the participants (including three quarters from industry) felt that companies were picking and choosing content, or cherry picking only the best content to report on. And, more than half (including two thirds of the industry participants) felt that companies were not reporting the “bad stuff.”

I believe the most intriguing themes raised for future study are dealing with polarized opinions on social media and appealing to the middle audience. Most respondents felt that polarized opinions are too strong to change and that it is therefore not worth having a discussion with people who have extreme views. However, the middle audience who do not have extreme views are worth having a discussion with because they are more likely to be influenced. The challenge is that the middle audience may be unreachable. As one industry participant advised for companies who want to gain supporters, “you got to get in that middle.” 

I concluded in my research, the study revealed the existential struggle oil and gas companies face in shifting their ESG message from a public to an investor audience. One industry participant summarized the struggle of focusing ESG messages more on investors and less on publics as “a circular argument in that you want the public to believe it so that they put less pressure on the investing side.”

Find Tony’s complete thesis at: http://dc.msvu.ca:8080/xmlui/handle/10587/2183 and reach him at Antonio.Rino@msvu.ca

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