May 03, 2021
Signs of improvement are on the horizon for the Canadian oil and gas sector. While the industry heads towards recovery, though, it is seeing new challenges, such as a rise in M&A activity, increased focus on workplace health and safety regulation and growing demand for greater ESG accountability.
Speaking to Canadian Lawyer, Calgary partner Stephanie Stimpson noted that “the Canadian industry is reacting not only to COVID and all of the issues that came with reduced demand in 2020 but also to the general pressure that the industry has been under for several years.”
She added that although the industry continues to deal with challenges including depressed stock prices, limitations on capital investment and restrictions to accessing certain markets there is a strong level of optimism in light of a rise in oil prices, production increases and the development of efficient cost structures.
Stephanie also touched on the mounting pressure oil and gas companies are facing relating to ESG, but noted that Canadian companies in particular have a good track record (read more about this trend in our article “ESG leadership in the Canadian energy sector”).
“The ESG record for our oil and gas companies in Canada is very good compared to most other jurisdictions,” Stephanie said.
“There has already been intense pressure on the industry for several years for sustainability, emissions reduction, workplace safety and proper engagement with Indigenous communities.”
Stephanie added that it is important to err on the side of caution in order to manage the reputational and legal risks associated with misrepresenting a firm’s ESG values.
“We have seen increasing criticism and activism from shareholders, employees, communities and other stakeholders where companies are falling short on their stated commitments to sustainability, diversity and other socially responsible practices,” Stephanie said.
“Corporate commitments should be supported by an internal system of accountability with clearly articulated roles and responsibilities, properly allocated resources and capital and alignment of performance and compensation criteria.”
You can learn more about our ESG work on the practice page.