ESG Q&A with Gibson Energy

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Steve Spaulding
President & Chief Executive Officer
Gibson Energy

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Environmental

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What is the visibility in achieving your emissions reduction goal(s) and can you provide us with concrete examples of how you plan to get there?

A key part of developing our net zero target was that we wanted to understand the potential pathways to achieving it, rather than simply stating a long-term aspiration.  As such, believe we can reduce approximately 90% of current Scope 1 and 2 emissions across our entire asset base through the application of existing technologies already in commercial use in North America, with the potential for superior alternatives to emerge over time, without relying heavily on offsets or credits.

We’ve already taken steps on that path through projects like the installation of heat exchangers to recycle waste heat at our Moose Jaw Facility, and are currently in-progress of switching that facility to run on lower-emission natural gas as the heat source.  Looking forward, we will eliminate our scope 2 emissions entirely by 2030 by sourcing green power for our facilities and see multiple paths to achieve net zero by 2050.
 

 
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What do you think investors should expect to see from companies – in terms of reporting, transparency, and accountability – when it comes to net zero targets?

This would be an area where it is somewhat difficult to have a one size-fits all approach across all industries, and it is probably more important that what a company is doing makes sense for their set of circumstances.

On the reporting and accountability side, I think we have already seen the space move towards a handful of frameworks, including TCFD and SASB which we have aligned our reporting to. Having now filed these reports, I would think the discloses required are fairly thorough, so I would believe the transparency has improved a lot in the past few years.

On the accountability front, I think the differentiator is having a credible path to reach net zero 2050.  For us, that meant a key part of developing our net zero target was understanding the potential pathways to achieving it, rather than simply stating a long-term aspiration.  For example, we believe we can reduce approximately 90% of current Scope 1 and 2 emissions across our entire asset base through the application of existing technologies already in commercial use in North America, with the potential for superior alternatives to emerge over time, without relying heavily on offsets or credits.
 

 
 
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You have a net zero by 2050 goal, but what are your interim milestones? What are the KPI’s we can track to monitor your progress?

Yes, we are working toward net zero by 2050 as a long-term goal, though we also have interim targets for each of 2025 and 2030 so that we ensure we are working towards our 2050 target today.  

 

In terms of those interim targets, we have several, but the ones I will highlight would include reducing our overall emissions intensity by at least 20%, as well as our processing intensity by at least 40% and our storage and handling intensity by at least 95% by 2030.

 

Also, we will reduce our absolute Scope 1 and Scope 2 emissions at the Moose Jaw Facility by at least 15% by 2025 and, as I mentioned before, fully eliminate our absolute Scope 2 impact from our entire business by 2030.

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Is your company’s non-financial reporting treated with the same rigour (standards, auditing etc.) as financial reporting?

Yes – we understand that we have a duty to our shareholders and the investment community to publish the most accurate and refined data as we possibly can. As such, we have a rigorous process in place to ensure internal controls for disclosing non-financial information and also secure third-party verification of certain metrics.

 

On an annual basis, we seek third-party verification of our Scope 1, 2 and 3 company-wide greenhouse gas emissions from Brightspot Climate. We also engage Korn Ferry to collect and verify our DE&I data. Although there are currently no requirements for independent certification or audit of ESG disclosure, we continue to develop our internal controls process for all ESG disclosure to ensure enhanced data quality and reliability. 

 
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Do you think the reporting and management of scope 3 emissions (upstream and downstream) is becoming an inevitable reality for global listed infrastructure companies? If so, what is your company’s plan to manage them?

We do believe that scope 3 emissions are important, and as such, we made a commitment to start quantifying and tracking our scope 3 emissions to increase transparency in our ESG disclosures having made our first ever complete disclosure around all categories of scope 3 emissions in our recent TCFD Report. 

 

At the same time, I think we also need to be realistic in terms of how little influence many infrastructure companies can practically exert on their value chain as to influence their scope 3 emissions.  As such, our focus today is very much on what we can control today – our Scope 1 and 2 emissions. That said, Gibson recognizes the importance of Scope 3 emissions, and the value chain partnerships required to appropriately address them, and will continue its work with customers, suppliers and other relevant stakeholders to identify and execute on reduction opportunities and solutions. More specifically, and as you would have heard on our most recent quarterly conference call, we mentioned that we are looking at a potential renewable fuels opportunity, perhaps with a partner or two, which would be aimed directly towards reducing scope 3 emissions. 
 

 
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Biodiversity is an emerging ESG theme. Do you think global listed infrastructure companies have a role to play in protecting and enhancing biodiversity? If so, how if your company achieving this?

At Gibson, we certainly see the value of maintaining and improving the biodiversity. Fortunately, we have an very limited environmental footprint. For example, our terminals business requires far less space and is more localized than a long-haul transportation business that needs to cross all the ecosystems between point A and B.  Also, we do not have any large pumps within our terminals that would require significant energy usage, and even then, ours are electric powered rather than gas powered, meaning there are no local emissions. 

 

Our primary environmental impact would likely be water usage, where we are extremely proud to successfully recycle 97% of our water. We have a very thorough process of cleaning and testing this water to ensure that it meets all environmental regulations to be returned to the environment it came from. Further, we do not have any operations in zones that would be considered water scarce, and our water usage would not be negatively impacting the communities or the environments we operate in. 

 

More broadly, the energy storage and transportation sector has done a fantastic job in protecting Biodiversity, with our peers also taking steps to protect their areas of operations. There is a lot of pride in our industry towards protecting and enhancing the areas where we operate. 
 

 

Social

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Some companies are resetting DE&I goals. How have the goals changed, and how are they measured? What operational changes have been made to support achieving the new goals? How are management and Board engaged in DE&I?

Within the announcement of our inaugural ESG targets in March 2021, we sought to commit to targets not only in the environment category, but also the social and governance aspects as we realize the importance of DE&I at Gibson.

And I think we’ve made very good progress over a fairly short timeframe, as women currently comprise 40% of our Board, 26% of management and 37% of the overall workforce.  On the diversity side, we’ve added an individual that identifies as a visible minority to both the Board and our senior leadership team.  As such, we’ve already achieved some of the targets we set out and continue to work towards the remainder.

In terms of how we continue achieving these goals, it’s certainly been a focus for the Board and management.  To touch on specific initiatives, we have introduced certain requirements in our hiring process to ensure all candidates are viewed fairly and that the process is inclusive and supportive of DE&I. As part of these requirements, any group of shortlisted candidates must include a minimum number of individuals that are part of a minority group, which would include both gender and visual minorities. We have also created various programs such as our Women in Finance and Energy Marketing and Women in Engineering and Operations programs to seek out and attract diverse female talent. 
 

 
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What is the most important component of the “Social” part of ESG to you and how do you plan to enforce or strengthen it? 

I would say that within the Social pillar, we have placed a very high level of emphasis towards DE&I, specifically within gender equality and the equality of broader under represented populations as we’ve already discussed.
 

 

Governance

 
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Does your company actively monitor (at the Board and executive level) any gender pay gaps in like-for like positions? What is your strategy for addressing any gaps? 

We’ve recently completed a very fulsome calibration of our compensation packages for the entire company, and we’re confident there are no wage gaps in any like-for-like position at Gibson.

 

DE&I is something that is front and center for our Board and many of the ESG targets we released in March 2021 are focused on the social aspect, particularly within gender and racial equality.

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Have you set ESG targets and milestones and are there incentives in place for management to hit these goals?  Do you or do you plan to have a specifically designated ESG committee on the BoD?

Yes, as earlier mentioned, we announced our inaugural ESG targets in March 2021, which were then supplemented with our Net Zero by 2050 commitment in October 2021.  And in order to ensure day-to-day focus on delivering on these targets, ~35% of our short term compensation is tied to ESG and Safety performance. 

 

At the Board level, we have a standalone ESG and Sustainability Committee.  It is led by Judy Cotte, a widely respected and highly knowledgeable ESG leader, and she’s been very helpful as we’ve navigated our ESG journey. 
 

 

Further Reading

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