How EO100™ Helps Companies Verify their ESG Performance

A Q&A with Equitable Origin's CEO Soledad Mills

ESG, or Environmental, Social, and Governance factors are growing increasingly important for investors and even employees. The term is making headlines, and companies are increasingly focused on these non-financial ESG elements. One ESG element in the energy industry comes with certification of natural gas. 

To learn more about how companies are verifying their gas, we sat down with Soledad Mills, the CEO of Equitable Origin, a non-profit focused on protecting people and the environment by ensuring that energy development is conducted under the highest social and environmental standards. 

Q1: Can you tell us about Equitable Origin and the EO100™ certification? 

Soledad: Equitable Origin is a non-profit organization that was founded over a decade ago with a vision to create a market-based mechanism to recognize and reward responsible energy producers and to empower energy purchasers through independent, site-level certification. The EO100™ Standard for Responsible Energy Development is grounded in a set of comprehensive, globally applicable Environmental, Social and Governance (ESG) indicators developed with extensive stakeholder input from industry, NGOs, academia, communities, and government agencies. It represents leading industry practices for site-level ESG performance of energy projects and incentivizes operators to strive for excellence. The EO100™ Standard encompasses five core ESG principles and is measured by over 500 performance targets which are graded through a three-tier scoring system. 

Equitable Origin issued the world's first independent certification of a responsibly operated oil production site in 2014. The first site to achieve certification in the natural gas sector was in Canada in 2019. Since then, the program has continued to grow to ten certified sites at the time of this interview. We currently have certified approximately 11 billion cubic feet per day (bcf/d) of gas and are on track to reach 15 bcf/d in 2022, with a goal to expand certification across the natural gas supply chain, including transmission and storage.  

Key highlights of our Standard include:

• Comprehensive ESG scope: robust and broad assessment criteria to address all elements of ESG, not just carbon or methane intensity.  
• Continuous improvement is required: operators must develop plans to improve scores annually.
• Basin-level approach: all assets within a geographical area must be included in the certification including aging assets and inactive inventories.
• Independent, third-party verification: Equitable Origin-approved, third-party assessments against the EO100™ Standard provide an in-depth look into company practices and policies.
• Transparency and stakeholder engagement: our Standards and summary reports of all certified sites are posted to our website, and updates to our Standards undergo public consultation.

Transparency, independence and striving for continuous improvement are the key tenets of the EO100™ Standard.

Q2: What is the purpose of certification for energy companies?

Soledad: Energy companies may certify their production for many reasons: independent, credible validation of effective ESG risk management, recognition of responsible practices, and the potential of a premium price for certified product. On the demand side, liquefied natural gas (LNG) offtakers, utilities, and local distribution companies (LDCs) are seeking to demonstrate responsible procurement practices, have assurance that their suppliers are responsive to environmental and local community concerns, and that they are addressing climate impacts of supply. Investors and shareholders are also increasingly demanding integration of full scope of ESG risks and impacts as well as independent verification of ESG data.

Q3: What is the general process of getting certified and how long does it typically take for an operator to get certified? 

Soledad: Operators seeking certification against the EO100™ Standard for Responsible Energy Development and the relevant sector-specific Technical Supplement will go through a set of key steps:

1. Operator provides basic information about their site to determine scope.
2. Operator completes a self-assessment and provides supporting documentation. Equitable Origin reviews the self-assessment to determine certification readiness.
3. An independent site-level certification assessment is conducted by Equitable Origin-approved assessors. The assessment includes review of documentation and calculations, observation of a sample of operations, stakeholder and rightsholder interviews. Through the independent assessment process, the operator demonstrates that they meet or partially meet (where applicable) all Level 1 Performance Targets. The assessment report is peer-reviewed by an independent expert. Equitable Origin makes the certification decision based on the recommendation of the assessors and the results of the peer review.  
4. The operator drafts a Continuous Improvement Plan for any gaps identified during the assessment.
5. Annual reviews by the independent third-party assessors assess progress towards the Continuous Improvement Plan. Updated scores are published annually.

The process takes about six months beginning with the self-assessment process. It may be longer or shorter, depending on the workload of the operator and the complexity of the unit being certified. 

Q4: Can you describe the factors that EO100™ takes into account for responsible energy development?

Soledad: By taking part in the EO100™ certification process, operators undergo a qualified, independent third-party assessment that looks broadly at company practices and policies against over 500 performance targets covering these 5 ESG Principles:

1. Corporate Governance, Transparency & Ethics
2. Human Rights, Social Impact & Community Development
3. Indigenous People’s Rights
4. Health & Safety and Fair Labor & Working Conditions
5. Climate Change, Biodiversity & Environment

Q5: Is EO100™ audited and if so, who serves as the auditor? How important is it for certification to be carried out by independent and verified auditors?

Soledad: Independence is key to the credibility of any certification program. Considering this, the EO100™ Standard is only audited by Equitable Origin-approved assessors who conduct the independent certification assessment process. The requirement to use independent assessment bodies provides greater validity, transparency, and accountability in the certification process. Given that the EO100™ Standard covers a broad range of ESG topics, each assessor brings their own area of expertise ranging from GHG emissions calculations to stakeholder engagement. All approved assessors must meet Equitable Origin requirements for experience and undergo extensive training to be approved as a qualified assessor for the EO100™ Standard. Assessors must also demonstrate that they are free from conflicts of interest with the entity they are assessing. Experienced, trained assessors who are integrally involved in the certification process ensures that sites are evaluated fairly, consistently, and professionally.

Q6: How does certification drive down methane emissions?

Soledad: We see the certification as an avenue to drive down emissions by encouraging and incentivizing better practices through increased transparency and standardization of reporting metrics. With the EO100™ grading system, operators are incentivized to bring their level of performance up in all areas of our standard.

Certification to the EO100™ standard does not ensure that the asset is a “low methane intensity” supply of natural gas. What we do ensure is that:

• Methane and GHG intensities are reported to a standardized framework.
• Methane and overall GHG intensities are publicly reported on our website separately for the segments of the natural gas value chain that the operations encompass: production, gathering and boosting, processing, and transmission and storage.
• Description of methods used to determine those intensities, including any measurement-informed methane emissions estimates.
• Best practices to control methane have been incentivized, evaluated, and scored.
• The Standard encourages enhanced methane leak monitoring and has requirements that go above minimum regulatory compliance with some stretch targets that go well beyond business as usual.

An operator will achieve a higher score if it goes above and beyond business as usual such as deploying fugitive emissions monitoring technology, enhanced leak detection and repair schedules, retrofitting facilities with no-bleed pneumatic devices, and installing vapor recovery systems tying in tanks and compressor seals. A requirement of our program is that each operator create a continuous improvement action plan and progress towards meeting those goals are evaluated annually. Requiring continuous improvement results in improved practices annually, driving down methane emissions.

Q7: You’ve partnered with MiQ so that operators can seek joint certification from you both. Tell us about the joint certification process and how that differs from the single certification process.

The partnership between Equitable Origin and MiQ is very complementary. MiQ certification focuses on methane performance evaluation whereby EO100™ certification covers a broader scope of performance evaluation over the ESG spectrum. In this way, joint certification allows an operator to address all stakeholder needs – both from a pure climate perspective as well as from a broader ESG perspective. There may be some cost synergies as an operator can use the same assessment body for both certifications. Finally, we have very similar operating models, as EO100™ and MiQ are the only certifications that are: 

• Transparent – our standards are publicly available;
• Third-party independently audited;
• Basin-level scope – we do not support partial site certification;
• Technology neutral – multiple technologies are supported;
• Free from conflicts of interest; and
• Run by non-profit corporations. 

Q8: What type of operators are seeking joint certification?

Soledad: We are seeing the spectrum from large publicly held to small privately held independent operators seeking certification. Right now, interest is primarily with natural gas production, but we are seeing increased interest from operators throughout the natural gas supply chain. All of the current jointly (EO100™ + MiQ) certified operations are in the United States.

Q9: Anything else you would like to share?

Soledad: EO100TM certification is enabling differentiation and recognition of independently certified gas. Certification demonstrates an operator’s commitment to improved environmental and social performance and meets the increasing demand across the market for gas that has been certified based on ESG performance.

Soledad has spent more than a decade working in corporate social responsibility, sustainable development, and socially responsible investment. At Equitable Origin, she is responsible for leading strategic planning, stakeholder engagement, and program development to deliver on EO’s mission. Soledad also established and manages EO's governance, assurance, and standard-setting procedures.

Prior to joining Equitable Origin, Soledad worked in the Responsible Sourcing division at Underwriters Laboratories (UL), where she managed supply chain and due diligence assessments against a variety of international standards and codes of conduct on behalf of multinational corporations and financial institutions. She has been involved in over 100 assessments in more than twenty countries, including Nigeria, where Soledad worked with human rights and environmental NGOs in the Niger Delta to assess the impacts of oil production on local communities. Soledad also worked with the Interfaith Center on Corporate Responsibility on shareholder advocacy and engagement around supply chain and human rights issues.
Soledad holds a Master’s degree in International Affairs and Human Rights from Columbia University.