UQAM awards the prize for the best 2020 sustainability report to Suncor
UQAM students concluded that Suncor had performed exceptionnally well in its non-financial disclosure, after an analysis of oil and gas companies for the FSI-FM Best Sustainability Report Competition.
Tools for a successul analysis
Before starting the evaluation of the sustainable development reports (SDR) of 18 oil companies, the participants benefited from the advice of Hajer Tebini, responsible finance researcher and lecturer at UQAM. In addition to scientific literature, the students revised several key concepts to better understand the complexity of the publication of an SDR: the definitions of responsibility and sustainable development; the different motivations of investors, such as risk management or reputation protection; responsible investment strategies; as well as the challenges of disseminating extra-financial or environmental, social and governance (ESG) information.
The preparation of the analysis also dealt with the principle of materiality, which is one of the 11 criteria of the evaluation grid developed by the Finance and Sustainability Initiative (FSI). "There are key criteria in each sector and companies are faced with a very large number of issues," explains Carole Zeineddine, student in international management and one of the 5 members of the UQAM jury. She recalls that even if the information from the SDR reflects the economic, social and environmental performance of the company, it is important to determine their impact on the decision-making of investors and other stakeholders. "The identification of the most significant subjects, or material topics, must be based on a dialogue with the stakeholders and be inspired by the definitions of materiality of the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB) ", she further specifies.
The future belongs to responsible companies
According to Carole, measurement protocols are essential to draw comparisons not only between companies, but also between the financial and extra-financial data they all disclosed year after year. They are also there to ensure a rigorous collection and disclosure process. The student stresses that international projects chosen by investors must take into account legitimacy in terms of corporate social responsibility (CSR) and sustainable supply chain. "I believe that companies in the Oil and Gas sector are evolving in response to pressures from their stakeholders, who are increasingly pushing them to develop relevant accountability processes," she adds.
Carole would like to promote sustainable finance, and more specifically responsible investment, during her career. She believes that it is essential to create new professions in this area. "This would help educate companies, company directors and employees to be concerned with ESG issues, at least when it comes to what is essential for their sector," she states.
Bringing the notion of concrete to universities
Ms. Tebini, who assumes the role of mentor to young analysts, is happy to see that the knowledge acquired is well mastered. "Beyond the theoretical expertise, participants took a step back and it's wonderful to hear Carole talk about it in such a way," she said. In addition, it highlights the contribution of students from the last cohort with regards to the assessment grid. "They added dimensions like the supply chain. Actually, ESG issues related to the supply chain should be a key part of the responsible investment process," she said.
If the Competition links theory and practice, the researcher believes that it would be even more beneficial for companies and students of the jury if the latter were more aware and skilled with regard to sustainability issues, helping them provide particularly profitable recommendations.
On the other hand, one of the strengths of this training is certainly the networking that it promotes. "This competition helps bridge the gap between the industry and the academic community. The interaction between the business community and the academic community is truly the beauty of the competition and arguably one of its purposes," said Ms. Tebini.
Suncor: seizing sustainable development opportunities
According to Jon Mitchell, Vice-President, Sustainability at Suncor, it is an honor for the company to be recognized by the FSI, especially since the competition jury is made up of students. "We always aim to improve, so it's great that a group of young people who are knowledgeable and keenly interested in sustainability issues have noticed what we are doing right," he said.
A question of content
Considering the size of the challenge in terms of conciseness in disclosure, Mr. Mitchell notes that Suncor's extensive experience has allowed it to develop an approach focused on the interests of most of its stakeholders. "A SDR needs to have a clear target audience, and while it can inspire public discussion of sustainability, it is primarily intended for those interested in sustainable development," he explains. Consultation of stakeholders is therefore essential to find out the real concerns of the communities and ensure disclosure meets their needs.
In order to write an effective SDR, Suncor also observes global standards such as those of SASB to determine what is material and the impact the company has on ESG issues. A process involving over a hundred people and rigorous quality control has been put in place, but this data collection is not only useful for the preparation of the SDR. "This information helps us operate our business, enhance our ESG performance, and improve our internal and external response to these issues. In the end this is about driving action," adds Mr. Mitchell.
Climate first
When Suncor launched its first action plan on climate change in 1997, the company had already been paying attention to climate issues for several years and adapted the management of its performance indicators to these issues. And when it sets its sustainability goals, it wants to drive significant change. The 2016 goal plan targeted achievements relating to greenhouse gases with a 2030 timeline. "This creates momentum within the company and provides focus for our engineers and scientists working to meet these sometimes very technical challenges," states Mr. Mitchell.
Always motivated to align with the intentions of the Paris Climate Agreement, Suncor was the first oil and gas company in North America to publicly support the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and remains the only operating oil and gas company in North America to support the TCFD. In 2017, the company released its first stand-alone report on climate risks and outcomes, demonstrating alignment with the TCFD principles, while providing credible and comparable disclosure of climate measures.
Suncor’s governance and management processes identify key risks, such as climate, which are then taken into account in its disclosure activities. Its Executive and Board examine the risks and opportunities related to climate issues. Around half of the principal risks identified relate to climate, and one of the risks is exclusively allocated to it. "This influences our capital allocation and other economic decisions," indicates Mr. Mitchell. Renewable fuel and energy are among the business opportunities that Suncor has seized, diversifying its investment portfolio. Mr. Mitchell is a member of an internal committee to ensure that sustainability is at the heart of decision making. In addition, scenario-based strategic planning is used to assess the company's choices, as well as how it approaches and reacts to long-term challenges.
With change in mind
According to Mr. Mitchell, the investment community is transforming as ESG performance gains importance, particularly for the energy sector. "There is a genuine desire for consistency and comparability in corporate ESG disclosures, which creates some tension because the context for why this information is important is also a necessary ingredient to fully understand ESG performance," he says. "When it comes to sustainability, organizations deal with very local issues as well as with global concerns, which means ESG reporting metrics must be adaptable to individual corporate circumstances," he said. He believes that the TCFD, SASB and initiatives like the Towards Sustainable Mining initiative go a long way in leveraging indicators that provide this flexibility yet remain consistent across sectors. "A strong balance of consistency, comparability and context is what I want, because I would like our disclosure activities to help the ESG community make wise decisions, in addition to demonstrating our leadership."
Suncor has also publicly committed to a sustainability goal focused on strengthening relationships with Indigenous peoples. This includes creating opportunities for greater Indigenous involvement in the energy industry through growing the Indigenous workforce, partnering with Indigenous businesses and with Indigenous youth. "We have these very specific goals in mind, as we drive our business to deliver strong ESG performance and strive for sustainability leadership," states Mr. Mitchell. "Our report is a powerful tool to help deliver these results.”
Mélanie Pilon, journalist for the Finance and Sustainability Initiative of Finance Montréal
