[Editor's note: This Q&A on new sustainability reporting guidelines for the oil and gas sector originally appeared at World Resource Institute and is reprinted with permission.]

Last month IPIECA, the global oil and gas industry association for environmental and social issues, along with the American Petroleum Institute (API) and the International Association for Oil and Gas Producers (OGP) released their revised guidance on corporate sustainability reporting. This was the first update to the guidance since 2005.

As part of this process, an IPIECA Reporting Task Force convened an Independent Stakeholder Panel, made up of representatives from business, environmental and community-based NGOs, investors, and multilateral institutions. WRI Vice President Janet Ranganathan participated in this panel, and reports back on the results.

Why does corporate sustainability reporting matter?

Sustainability reporting is a key transparency and accountability mechanism that can drive more sustainable decisions both inside and outside companies. Businesses can use the reporting process to identify gaps and prioritize areas for improvement. At the same time, standardized sector-specific reports can inform the decisions of a range of stakeholders, including investors, NGOs, and customers that have a stake in seeing companies become more sustainable.

The Independent Stakeholder Panel said that these new guidelines are a "major improvement." How so?

The new guidance does represent a major improvement over the 2005 edition. The IPIECA task force made a significant effort to engage a wide variety of people in this revision process, including our Independent Stakeholder Panel comprised of representatives from Living Earth, F&C Asset Management, International Finance Corporation, World Resources Institute and a former industry executive. We were able to be frank and honest in our consultations, and the IPIECA task force took the risk of inviting us to write an unedited statement at the beginning of the guidelines, an indicator of the level of transparency and trust in this process. Overall, I think the guidelines are much stronger as a result of the engagement with the panel and others consulted in the process.

Panel members contributed especially to the front section that now contains guidance on setting the strategic context. This asks companies to show how their core business vision and strategy addresses key sustainability challenges, such as climate change. This big picture section ensures that cross-cutting issues like climate change are addressed up-front rather than getting lost in the details of specific technical indicators.

Participation by Independent Stakeholder Panel members also helped stimulate the inclusion of new indicators on ecosystem services , process safety and five social and economic indicators focusing on local content, suppliers and business partners. We also provided the IPIECA task force with examples of emerging best practices for issues such as community engagement. In addition, there is new guidance on determining the materiality of issues for reporting, with a list of the main sustainability issues confronting the sector.

Yet the Panel also noted some shortcomings. What were those?<

We had three major concerns. First, there is no minimum reporting standard. The IPIECA task force's rationale for not setting a minimum bar was that they wanted to avoid discouraging first-time reporters. However, this might have been addressed by defining levels of minimum, good, and best reporting practices, and letting companies gradually increase their participation over time.

Second, the guidelines do not require companies to report on targets -- the basic building block of any corporate sustainability effort. Any company that is serious about driving continuous improvement needs targets. Targets spur progress inside companies, but they allow for benchmarking against what other companies are doing and improve corporate reputation as a leader on sustainability issue. I see reporting as a means to an end -- the end being to improve corporate sustainability performance. Targets are a key mechanism to ensure this happens.

Third, while the revised guidance emphasizes reporting on greenhouse gas reductions, it does not provide a vision on how the industry should respond to growing concerns about climate change and energy security. Obviously there is a big elephant in the room here. To address this, I encourage IPIECA, OPG and API to initiative a multi-stakeholder process to develop a long-term sustainable vision for the sector.