The ESG perspective

ESG issues continue to be front and center. As companies struggle to decide how, and where, they begin when developing their ESG programs, I have brought in a unique perspective from Farhana Morales, formerly with Anadarko and Ovintiv and now an advisor that helps companies understand their ESG impact.

Farhana has worked in the oil and gas industry for over 14 years, working in many U.S. basins and overseas in North Africa. She considers herself an anomaly as a woman of color, who did not grow up around the oil and gas industry but is still a passionate advocate for it. She gained her Bachelor’s degree in Information Technology from the University of Denver and Master’s degree in Finance from Colorado State University. Farhana recently completed an ESG micro-credentialing program at the University of Houston. She works for ENGAGE, helping them implement their software and advises on matters relating to ESG. We conducted a short question and answer session.

Mark Patton (MP): As an operator, what is the biggest challenge to developing an ESG program—internal cooperation, lack of management support or something else?

Farhana Morales (FM): I feel the biggest challenge in developing an ESG program is creating the initial ESG strategy. If you can build a strategy with key stakeholders—such as a board of directors—leadership and those who will have input to key ESG metrics and disclosure, then your success rate will rise. With such a strategy, you have essentially laid out a roadmap on what and who is needed to achieve your ESG goals. Presenting this strategy to your leadership will then help gain that buy-in, as you have presented them a solution to developing your program, rather than expecting them to come up with one.

MP: We discussed ESG reporting parameters and where to start, but as a consultant, what do you think your clients see as the struggle with tangible, quantifiable parameters?

FM: I think the biggest struggle is which parameters to report against. There are many standards and guidelines out there, and this can be overwhelming. I advise people to pick a standard that aligns with your company strategy and build upon this collection of metrics. One of my favorites to start with is the SASB (Sustainability Accounting Standards Board) metrics under the Value Reporting Foundation, as they are specifically tied to financial risk. If you find there are others you would like to collect, then look at metrics such as GRI (Global Reporting Initiative), as they cover many other topics. Performing an ESG gap analysis on what you report now, versus what you would like to report, can help your company uncover what is missing.

MP: What do you think the oil and gas industry will do, embrace ESG initiatives, push back, or with the SEC likely to require it for public companies, will we only see such firms participate?

FM: I believe they will embrace it, and in different ways. In the 14 years I have been in the industry, merger and acquisition activity is always high, so some of the smaller companies that are struggling may end up being acquired by companies that have the resources to allocate towards ESG efforts. ESG can seem specifically overwhelming, because companies think this is new and burdensome, but it is not and does not have to be. A company’s ESG journey should be a marathon and not a sprint. Every improvement should be celebrated. Create a baseline for ESG data gathered and keep appending to it. Oil and gas veterans know that ESG metrics have always existed, in one form or another, and have been reported to government bodies, for example, for years. Some companies will fare well, and some will continue to struggle; but if they can make ESG universal within their companies, where the goals are shared amongst all, then push back becomes a thing of the past.

MP: Have you read Liberty’s ESG quarterly report? What did you think about their approach of pushing back against some of the perceptions against the industry?

FM: I heard their CEO, Chris Wright, speak at Enercom. I find him to be very passionate about the industry and taking care of his employees. I support much of what he discusses, because my parents were immigrants to the United Kingdom from India. I feel countries who do not have infrastructure in rural areas are relying on us to ensure they have energy, just as we do. I also think it is ironic, when many people tout for clean energy but then ignore the harmful side effects of the creation or disposal of it. I am all for energy diversification, but we should ensure that all forms of energy have the same accountability and standards tied to them, because ignoring them now will only lead to issues later.

I have been an anomaly in my industry as a woman of color, and I will always remain a supporter of my industry, because if Individuals, like myself, do not have a direct impact within it, then how will it improve? It’s easy to point fingers from the outside of an industry instead of working with it to enhance and improve its aspects. It’s why I switched to a working at the technology company, ENGAGE, as I wanted to work with several companies, to help them reap the benefits of what innovation can do for our industry. We are in this together, holistically, and the only way we will address issues such as climate change, for example, is thinking outside the box and using innovative methods.

I will, in the future, try to bring you some unique perspectives from industry leaders and insiders. It takes a collaborative effort and unique perspectives to develop an ESG program, that covers Environmental, Social and Governance issues comprehensively. Farhana’s unique perspective as a woman of color, industry insider and now consultant begins to bring this collaborative effort to the forefront.

About the Authors

Mark Patton

Hydrozonix

Mark Patton is president of Hydrozonix and has more than 30 years of experience developing water and waste treatment systems for the oil and gas industry. This includes design, permitting and operation of commercial and private treatment systems, both nationally and internationally. He has seven produced water patents and two patents pending. He earned his B.S. in chemical engineering from the University of Southern California (USC) in 1985.