By Garrett Delk, Pickering Energy Partners
As quickly as two weeks ago, anxiety around liquidity concerns in the banking space grew to a new zenith as SVB (Silicon Valley Bank) collapsed spectacularly in 2008-esque fashion. Of the market and sector impacts that have quickly accumulated in the immediate aftermath of SVB and an overhang of the ongoing banking crisis, we see both external and internal stakeholders intensely focused on (outside of solvency) corporate governance and risk management, not just at financial institutions but at all U.S. issuers.
Given the heightened state of interest, we advise issuers take this time to survey individual governance and risk landscapes to identify if and where gaps exist. To mitigate risk and corporate governance scrutiny, we believe the highest priority issues to be policies, procedures, committees and oversight. For energy, in particular, we have laid out the highest priority risk and corporate governance areas to focus on.
Policies and Procedures
- Cybersecurity – SEC cybersecurity/governance requirements are expected to be announced in April 2023. Companies would be required to disclose within four business days after the company has determined that it has experienced “a material cybersecurity incident.”
- Business Ethics – Specifically outlining procedures on whistleblowers, bribery and corruption, and human rights.
- Health & Safety – How the company builds health and safety procedures to address on-the-job safety concerns and issues.
- Emissions – Does the company outline steps, procedures and mitigation efforts (however small or large) as a part of operations?
- Water – How does the company implement effective and responsible water use as a part of operations? Efficient water handling in operations is an area we’ve seen grow dramatically in interest by external stakeholders.
Outside of having the below committees, issuers should ask the question: Are stakeholders able to easily find committee charter language outlining responsibility and oversight for company initiatives, area strategy and progress? The names of these committees may not always be the same; however, the key point is clear regarding areas of oversight for committees.
- Audit Committee
- Compensation Committee
- Nominating & Governance Committee
- Sustainability Committee
Energy Workforce partner Pickering Energy Partners provides insights on ESG due diligence, disclosures and reporting. Garrett Delk is Associate, ESG Strategy & Integration.