ISSB Proposes Scope 1 Methane Reporting for Energy Firms

Highlights

• ISSB proposes SASB standards to include scope 1 methane reporting for oil and gas companies.
• Investors and finance groups welcome methane disclosures for better market assessment.

The International Sustainability Standards Board (ISSB) has proposed amendments to the SASB standards to increase transparency with respect to methane emissions for oil and gas companies.

Traditionally, methane was grouped under a general CO₂-equivalent label, which often masked its immediate impact. The proposed changes would require scope 1 methane reporting, thereby giving investors and markets access to more precise environmental and operational data.

Separating methane disclosures from general carbon reporting, say analysts, could influence investment decisions and reshape perceptions of financial risk in the energy sector.

Read More: EU Urged by Investors to Swiftly Enforce Methane Emissions Rules

Financial impact of methane leaks on investors and companies

Methane as a material factor in valuations

Methane’s warming potential is roughly 80 times stronger than CO₂, and its presence in the atmosphere for 7–12 years can affect climate and corporate finances.

Companies failing to manage methane emissions risk not just environmental consequences, but lost revenue, as escaping gas indicates an economic loss.

An example is Australian LNG producer Santos, whose shares plummeted after a continuous methane leak—an incident that affected its acquisition bid. This shows that today, investors are aware that operational inefficiency in methane management can lead to financial losses.

Read More: Methane Emissions Climb in Brazil’s Beef Sector

Scope 1 methane reporting and investment relevance

How disclosure influences market assessments

The creation of separate scope 1 methane reporting provides investors with more comparable data, which can shape evaluations of operational efficiency and environmental performance.

Organisations, including the Environmental Defence Fund (EDF) and the Climate Bonds Initiative (CBI), say that bringing methane data to sector standards could accelerate regulatory attention and market pressure for improved emissions handling.

By exposing methane risk, investors can factor penalties into company valuations, thereby creating an incentive for oil and gas firms to reduce leaks and improve performance.

Investor and market response to ISSB proposals

Uptake by global funds and finance groups

Top investors are responding positively to the ISSB methane disclosure proposals. For instance, Norges Bank Investment Management, which oversees $1.9 trillion, welcomed the move, saying that separate scope 1 emissions can reveal direct regulatory exposure, carbon pricing impacts, and operational inefficiency.

Also, the Methane Finance Working Group, which includes PIMCO, CalSTRS, and PGIM, expects the new reporting to inform financial instruments designed for methane abatement, channeling capital towards projects that reduce emissions and influence valuation models for oil and gas companies.

Also Read: Amsterdam's Hydryx Converts Landfill Methane into Green Energy

Takeaway

The ISSB’s proposal to separate methane disclosures is a shift in corporate reporting and investment analysis. By identifying methane emissions as a material factor, the energy sector faces more scrutiny from investors, markets, and regulators.

The approach could change asset pricing and promote operational improvements, as well as encourage financing mechanisms for methane reduction projects. As methane moves from footnotes to headlines, both companies and investors will need to reconsider its financial and environmental consequences in future decisions.

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