Sustainability Reporting in case of Oil and Gas Industry: An Empirical Analysis in the context of GRI Sustainability Reporting Standards, 2016
1. Introduction & Evolution of the Sustainability Paradigm
Sustainability has emerged as an indispensable cornerstone of modern corporate governance. While its operational definitions remain multifaceted, the conceptual foundation traces back to the 1987 Brundtland Report, Our Common Future, published by the United Nations World Commission on Environment and Development (WCED). The commission defined sustainable development as progress that fulfills present human needs without compromising the capacity of future generations to meet their own requirements, resting upon three intertwined dimensions: economic viability, environmental stewardship, and social equity.
From Milton Friedman’s Shareholder Primacy to Freeman’s Stakeholder Theory
Classical Shareholder Primacy Model
Historically enshrined in the landmark 1919 ruling Dodge v. Ford Motor Company and later championed by Nobel Laureate Milton Friedman (1970), classical agency theory asserted that the exclusive social responsibility of enterprise is profit maximization for equity owners. Expenditures on societal welfare or environmental conservation were seen as illegitimate agency costs eroding net earnings.
Modern Stakeholder Primacy Paradigm
Escalating externalities—climate volatility, pollution, resource exhaustion, and wealth inequality—prompted a doctrinal re-evaluation. R. Edward Freeman (1984) formulated Stakeholder Theory, defining stakeholders as any constituency affected by or affecting corporate pursuits. Long-term commercial survival demands harmonizing the rights of regulators, workers, suppliers, and communities alongside shareholders.
Subsequent empirical literature (e.g., Andersen & Dejoy 2011; Laskar & Maji 2017) corroborates that rigorous sustainability disclosure enhances corporate reputational capital, mitigates class-action litigation risks, reduces capital costs, and protects long-run operating margins.
The Global Reporting Initiative (GRI, 2011) defines sustainability reporting as the institutional practice of measuring, disclosing, and assuming accountability toward internal and external stakeholders regarding organizational contributions toward sustainable development. This comprehensive communication architecture encompasses three distinct communicative pillars:
- Environmental Communication: Disclosures detailing organizational footprints on terrestrial ecosystems, atmospheric emissions, freshwater withdrawal, biodiversity reserves, and hazardous effluents (GRI, 2012).
- Social Communication: Reporting regarding operational effects on human systems, including occupational safety, human capital development, fair compensation, supplier labor standards, and community engagement.
- Economic Communication: Disclosing macroeconomic value generation, distributed cash flows, procurement localization, capital expenditure, and regional development spillovers.
2. Global Reporting Initiative (GRI) & Institutional Evolution
Headquartered in Amsterdam, Netherlands, the Global Reporting Initiative (GRI) is an independent international standard-setter providing the most widely adopted universal disclosure language for organizational sustainability impacts. Approximately 94% of the world’s 340 largest corporations across more than 100 countries utilize the GRI Standards for non-financial accountability (GRI Standards, 2021).
Figure 1: Chronological Evolution of GRI Frameworks (1997–2021)
Source: Adapted from GRI Mission and History Archives (globalreporting.org)
Evolution of Sustainability Reporting in India
India’s regulatory landscape has systematically transitioned from voluntary guidance to enforceable statutory mandates over the past decade and a half:
- 2007 (RBI Advisory): The Reserve Bank of India advised scheduled commercial banks to formally account for and disclose non-financial CSR and sustainable initiatives.
- 2011 (MCA NVGs): The Ministry of Corporate Affairs released the voluntary National Voluntary Guidelines (NVGs) on Social, Environmental and Economic Responsibilities of Business.
- 2012 (SEBI BRR Mandate): SEBI mandated mandatory Business Responsibility Reporting (BRR) for the top 100 listed entities by market capitalization.
- 2014 (Companies Act Amendment): Section 135 made India the first nation to mandate a statutory 2% CSR expenditure allocation for qualifying corporate entities.
- 2015 (BRR Expansion): SEBI expanded mandatory BRR filing obligations to the top 500 listed firms.
- 2021 (SEBI BRSR Framework): In May 2021, SEBI instituted the comprehensive Business Responsibility and Sustainability Report (BRSR), mandating audited ESG disclosures for the top 1,000 listed entities from FY 2022–23.
While Indian participation in global reporting expanded from 34 companies in 2011 to 80 in 2012 (Times of India, 2012) and reached 334 entities by December 2020 (GRI Standards, 2021), corporate sustainability communications have historically exhibited considerable narrative divergence and lacked uniform cross-sector standardization.
3. Literature Review & Strategic Role of the Oil and Gas Sector
Global academic inquiries into corporate disclosure trends indicate that organizational size, industry risk profile, regulatory scrutiny, and geographic maturity significantly dictate reporting thoroughness:
- Kelly (1981): Evaluated 50 Australian enterprises, confirming that market capitalization and corporate scale positively correlate with disclosure volumes.
- Guthrie & Parker (1990): Examined 146 annual reports across Australia, the UK, and the USA, identifying marked cross-jurisdictional disparities in disclosure scope.
- Bewley & Li (2000): Established that environmental disclosure volume in Canadian manufacturing firms is heavily influenced by pollution propensity, media visibility, and audit scrutiny.
- KPMG International Survey (2011): Revealed that while 95% of the world’s 250 largest corporations disclose sustainability information, significant reporting asymmetries exist between advanced and emerging economies.
Strategic Economic Weight and Environmental Exposure:
The petroleum sector represents the energetic engine of the Indian macroeconomy. Beyond providing transportation fuels and power generation inputs, its petrochemical derivatives feed pharmaceuticals, agrochemicals, polymers, textiles, construction, and electronics. According to the International Energy Agency’s India Energy Outlook 2021, India’s primary energy demand will expand to 1,123 million tonnes of oil equivalent (Mtoe) as GDP scales to USD 8.6 trillion by 2040. With 100% Foreign Direct Investment (FDI) permitted across multiple sub-segments, this extractive, carbon-intensive sector faces unmatched societal, investor, and regulatory scrutiny.
4. Research Methodology & Analytical Framework
Sample Selection: The empirical study evaluates seven leading oil and gas companies listed on the National Stock Exchange (NSE 100 index):
1. Bharat Petroleum Corporation Ltd. (BPCL)
2. GAIL (India) Ltd.
3. Indian Oil Corporation Ltd. (IOCL)
4. Reliance Industries Ltd. (RIL)
5. Oil and Natural Gas Corporation Ltd. (ONGC)
6. Oil India Ltd. (OIL)
7. Hindustan Petroleum Corporation Ltd. (HPCL)
Data Collection & Coding Protocol: Data was hand-collected from audited annual reports, standalone sustainability reports, and official corporate investor portals spanning three consecutive fiscal years: 2017-18, 2018-19, and 2019-20. In accordance with established content analysis conventions (Cyriac, 2013), an unweighted binary coding scheme was employed: assigning a score of 1 where a specific GRI indicator is disclosed, and 0 where absent.
Table 1: Operational Parameters Contained in GRI Standards (2016)
Classification Across Economic, Environmental, and Social Dimensions
| GRI Standard | Disclosure Topic | Information Scope & Core Metrics |
|---|---|---|
| I. Economic Disclosures (GRI 200 Series) | ||
| GRI 201 | Economic Performance | Direct economic value generated and distributed, revenues, operating costs, employee wages, taxes paid. |
| GRI 202 | Market Presence | Ratios of standard entry-level wage compared to local minimum wage; proportion of senior management hired locally. |
| GRI 203 | Indirect Economic Impacts | Infrastructure investments, public utility support, community transport links, healthcare facilities, technology adoption. |
| GRI 204 | Procurement Practices | Proportion of spending on local suppliers, micro/small/medium enterprises, and vulnerable vendor groups. |
| GRI 205 | Anti-Corruption | Operations assessed for corruption risks, employee anti-corruption training, confirmed incidents and corrective actions. |
| GRI 206 | Anti-Competitive Behaviour | Legal actions and litigation pending regarding anti-competitive practices, cartelization, and monopoly abuses. |
| GRI 207 | Tax Strategy | Approach to tax governance, tax planning transparency, stakeholder engagement, transfer pricing, and incentives. |
| II. Environmental Disclosures (GRI 300 Series) | ||
| GRI 301 | Materials | Weight or volume of raw materials utilized, renewable versus non-renewable components, and recycled inputs. |
| GRI 302 | Energy | Internal and external energy consumption (electricity, heating, steam), energy intensity, and reduction initiatives. |
| GRI 303 | Water and Effluents | Total water withdrawal by source, water recycled, consumption intensity, and effluent discharge management. |
| GRI 304 | Biodiversity | Operational sites adjacent to protected biodiversity areas, ecological impact assessments, and species restoration. |
| GRI 305 | Emissions | Direct Scope 1, indirect Scope 2 and Scope 3 GHG emissions, emissions intensity, and ozone-depleting substances. |
| GRI 306 | Waste | Generation of hazardous and non-hazardous wastes, disposal methodologies, recycling volumes, and spill prevention. |
| GRI 307 | Environmental Compliance | Monetary sanctions and non-monetary penalties for non-compliance with national environmental statutory laws. |
| GRI 308 | Supplier Environmental Assessment | Percentage of new vendors screened using ecological criteria, negative screening mechanisms, and audit impacts. |
| III. Social Disclosures: Workforce Focus (GRI 400 Series) | ||
| GRI 401 | Employment | Total workforce headcounts, recruitment rates, employee turnover by age/gender, and full-time employee benefits. |
| GRI 402 | Labour Management Relations | Mandatory notice periods regarding operational restructuring, collective bargaining agreements, strikes, and lockouts. |
| GRI 403 | Occupational Health & Safety | Occupational health management systems, incident rates, lost days, work-related fatalities, and health insurance. |
| GRI 404 | Training and Education | Average training hours per employee per annum, technical reskilling initiatives, and transition assistance schemes. |
| GRI 405 | Diversity & Equal Opportunity | Demographic breakdown of governance bodies and workforce (gender, age, minorities) and zero child/forced labour codes. |
5. Empirical Findings: Parameter-Wise Disclosure Performance
(i) Economic Dimension Performance (GRI 201 – GRI 207)
Narrative Disclosure Scores (NDS) reveal that sample corporations universally disclose core Economic Performance (GRI 201: 100% compliance across all three fiscal cycles) and place prominent emphasis on Anti-Corruption governance (GRI 205: rising from 85.71% in 2017-18 to 100% in 2019-20). Conversely, Tax Strategy reporting (GRI 207) remains profoundly neglected, registering a dismal 28.57% disclosure rate in 2019-20 and only 14.28% in preceding years.
| Disclosure Standard | 2019-20 | 2018-19 | 2017-18 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| NDS | % | Rank | NDS | % | Rank | NDS | % | Rank | |
| Economic Performance (201) | 7 | 100.00 | 1 | 7 | 100.00 | 1 | 7 | 100.00 | 1 |
| Market Presence (202) | 4 | 57.14 | 4 | 4 | 57.14 | 4 | 1 | 14.28 | 6 |
| Indirect Economic Impacts (203) | 5 | 71.42 | 3 | 5 | 71.42 | 3 | 5 | 71.42 | 3 |
| Procurement Practices (204) | 4 | 57.14 | 4 | 4 | 57.14 | 4 | 4 | 57.14 | 4 |
| Anti-Corruption (205) | 7 | 100.00 | 1 | 6 | 85.71 | 2 | 6 | 85.71 | 2 |
| Anti-Competitive Behaviour (206) | 6 | 85.71 | 2 | 5 | 71.42 | 3 | 3 | 42.86 | 5 |
| Tax Strategy (207) | 2 | 28.57 | 5 | 1 | 14.28 | 5 | 1 | 14.28 | 6 |
| GRI Standard | N | Minimum (%) | Maximum (%) | Mean (%) | Std. Error | Std. Deviation |
|---|---|---|---|---|---|---|
| 201 | 3 | 100.00 | 100.00 | 100.00 | 0.00 | 0.00 |
| 202 | 3 | 14.00 | 57.00 | 42.85 | 14.29 | 24.75 |
| 203 | 3 | 71.00 | 71.00 | 71.42 | 0.00 | 0.00 |
| 204 | 3 | 57.00 | 57.00 | 57.14 | 0.00 | 0.00 |
| 205 | 3 | 86.00 | 100.00 | 90.47 | 4.76 | 8.25 |
| 206 | 3 | 43.00 | 86.00 | 66.66 | 12.60 | 21.82 |
| 207 | 3 | 14.00 | 29.00 | 19.04 | 4.76 | 8.25 |
(ii) Environmental Dimension Performance (GRI 301 – GRI 308)
Given that oil and gas extraction carries immense pollution propensity, entities exhibited near-perfect disclosure across Energy management (GRI 302: 100% mean across all years), Water and Effluents (GRI 303: 95.24% mean), and Environmental Compliance (GRI 307: 95.24% mean). Nevertheless, deep institutional blind spots remain in Supplier Environmental Screening (GRI 308: mean of only 38.10%) and Biodiversity protection (GRI 304: 66.67% mean).
| Disclosure Standard | 2019-20 | 2018-19 | 2017-18 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| NDS | % | Rank | NDS | % | Rank | NDS | % | Rank | |
| Materials (301) | 7 | 100.00 | 1 | 5 | 71.43 | 3 | 5 | 71.43 | 3 |
| Energy (302) | 7 | 100.00 | 1 | 7 | 100.00 | 1 | 7 | 100.00 | 1 |
| Water and Effluents (303) | 7 | 100.00 | 1 | 6 | 85.71 | 2 | 7 | 100.00 | 1 |
| Biodiversity (304) | 5 | 71.43 | 3 | 5 | 71.43 | 3 | 4 | 57.14 | 4 |
| Emissions (305) | 6 | 85.71 | 2 | 6 | 85.71 | 2 | 6 | 85.71 | 2 |
| Waste (306) | 6 | 85.71 | 2 | 6 | 85.71 | 2 | 5 | 71.43 | 3 |
| Environmental Compliance (307) | 6 | 85.71 | 2 | 7 | 100.00 | 1 | 7 | 100.00 | 1 |
| Supplier Environmental Assessment (308) | 4 | 57.14 | 4 | 3 | 42.86 | 4 | 1 | 14.29 | 5 |
| GRI Standard | N | Minimum (%) | Maximum (%) | Mean (%) | Std. Error | Std. Deviation |
|---|---|---|---|---|---|---|
| 301 | 3 | 71.00 | 100.00 | 80.95 | 11.66 | 16.50 |
| 302 | 3 | 100.00 | 100.00 | 100.00 | 0.00 | 0.00 |
| 303 | 3 | 86.00 | 100.00 | 95.24 | 5.83 | 8.25 |
| 304 | 3 | 57.00 | 71.00 | 66.67 | 5.83 | 8.25 |
| 305 | 3 | 86.00 | 86.00 | 85.71 | 0.00 | 0.00 |
| 306 | 3 | 86.00 | 71.00 | 80.95 | 5.83 | 8.25 |
| 307 | 3 | 86.00 | 100.00 | 95.24 | 5.83 | 8.25 |
| 308 | 3 | 14.00 | 54.00 | 38.10 | 15.43 | 21.82 |
(iii) Social Dimension Performance: Human Capital Focus (GRI 401 – GRI 405)
Within the social sphere, Occupational Health and Safety (GRI 403) achieved top ranking across all evaluated fiscal years (95.24% mean), followed closely by Employment benefits and headcount reporting (GRI 401: 90.47% mean, reaching 100% in 2019-20). Conversely, companies showed significant reluctance in disclosing sensitive Labour Management Relations indicators (GRI 402: 52.38% mean)—such as operational strike days, employee lockouts, and union dispute mechanisms—as well as workforce Diversity and Equal Opportunity (GRI 405: 38.09% mean).
| Disclosure Standard | 2019-20 | 2018-19 | 2017-18 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| NDS | % | Rank | NDS | % | Rank | NDS | % | Rank | |
| Employment (401) | 7 | 100.00 | 1 | 6 | 85.71 | 1 | 6 | 85.71 | 2 |
| Labour Management Relations (402) | 5 | 71.43 | 3 | 3 | 42.86 | 3 | 3 | 42.86 | 3 |
| Occupational Health & Safety (403) | 7 | 100.00 | 1 | 6 | 85.71 | 1 | 7 | 100.00 | 1 |
| Training and Education (404) | 6 | 85.71 | 2 | 5 | 71.43 | 2 | 6 | 85.71 | 2 |
| Diversity & Equal Opportunity (405) | 4 | 57.14 | 4 | 2 | 28.57 | 4 | 2 | 28.57 | 4 |
| GRI Standard | N | Minimum (%) | Maximum (%) | Mean (%) | Std. Error | Std. Deviation |
|---|---|---|---|---|---|---|
| 401 | 3 | 86.00 | 100.00 | 90.47 | 5.83 | 8.25 |
| 402 | 3 | 43.00 | 71.00 | 52.38 | 11.66 | 16.49 |
| 403 | 3 | 86.00 | 100.00 | 95.24 | 5.83 | 8.25 |
| 404 | 3 | 71.00 | 86.00 | 80.95 | 5.83 | 8.24 |
| 405 | 3 | 29.00 | 57.00 | 38.09 | 11.66 | 16.49 |
6. Company-Wise Comparative Performance & Sectoral Rankings
Aggregate disclosure scores demonstrate marked variance in sustainability reporting maturity across the peer group. Public sector upstream behemoths demonstrated substantially greater transparency and rigorous adherence to the GRI framework than their refining or downstream counterparts.
| Company Name | Aggregate NDS | Disclosure % | Rank |
|---|---|---|---|
| Oil and Natural Gas Corporation Ltd. (ONGC) | 57 | 95.00% | 1 |
| GAIL (India) Ltd. | 55 | 91.67% | 2 |
| Indian Oil Corporation Ltd. (IOCL) | 51 | 85.00% | 3 |
| Bharat Petroleum Corporation Ltd. (BPCL) | 43 | 71.67% | 4 |
| Oil India Ltd. (OIL) | 43 | 71.67% | 4 |
| Reliance Industries Ltd. (RIL) | 35 | 58.33% | 5 |
| Hindustan Petroleum Corporation Ltd. (HPCL) | 22 | 36.67% | 6 |
Diagnostic Evaluation of Corporate Leaders and Laggards:
ONGC Ltd. secured the premier sectoral position with a 95% disclosure score, demonstrating systematic and consistent disclosure across almost all GRI topic indicators throughout the 3-year study period. GAIL (India) Ltd. followed closely in second position at 91.67%, and IOCL ranked third at 85.00%. Conversely, HPCL trailed at the bottom of the ladder with only 36.67%, exhibiting acute reporting omissions despite claiming adherence to GRI guidelines. Reliance Industries Ltd. also exhibited extensive disclosure gaps, securing fifth position with 58.33%.
7. Critical Policy Recommendations, Conclusion & Study Limitations
The empirical investigation concludes that while Indian oil and gas corporations demonstrate commendable transparency regarding direct operational impacts (energy consumption, water withdrawal, basic employment figures, and code of conduct), disclosures are frequently passive, qualitative, and self-laudatory in high-risk governance domains. To establish world-class ESG credibility, corporate boards and policymakers must address five structural gaps:
Companies must link gross energy and water consumption directly to physical output volumes to establish process efficiency ratios and publish tangible decarbonisation milestones.
Regulatory authorities must mandate country-by-country tax reporting, transfer pricing documentation, and disclosures of fiscal incentives availed to eradicate aggressive tax dodging.
Enterprises must implement formal negative and positive environmental screening for vendor onboarding (GRI 308) rather than confining audits exclusively to direct facilities.
Given the proximity of offshore drilling and refinery facilities to ecologically fragile marine and forest habitats, rigorous biodiversity restoration data must be reported.
Corporations must promptly report industrial disputes, operational strikes, lockouts, formal grievance redressal mechanisms, and affirmative child/forced labour audit certifications.
Limitations of the Study:
The study evaluates disclosure completeness based strictly on the presence or absence of disclosures under the GRI Standards 2016 framework via binary content analysis. It assesses disclosure compliance rather than independently auditing the underlying technical veracity or performance quality of the reported environmental data. Future empirical research should expand evaluations across international benchmarking frameworks including SASB, TCFD, and SEBI BRSR.
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