ONGC receives 'Adequate' ESG Rating from NSE; Scores on Climate Change from CDP
ONGC received an 'Adequate' ESG Rating of 61 for FY2025 from NSE, an improvement from 58 in FY2024. Scores include Environment (51), Social (73), and Governance (63). The company also received climate change scores from CDP, with several categories rated 'B'.
ESG ratings and climate change scores are increasingly important for investors and stakeholders. While not directly impacting immediate financial performance, these ratings can influence long-term investment decisions, access to capital, and company reputation, thus having a medium-term impact.
The announcement provides information on ESG ratings and climate change scores. While there's an improvement in the overall ESG rating and some positive social indicators, the environmental score and specific governance aspects indicate areas for improvement, balancing the overall sentiment to neutral.
Oil and Natural Gas Corporation Limited (ONGC) has received its ESG Rating Report from NSE Sustainability Ratings and Analytics Ltd., assigning an 'Adequate' rating category for FY2025 with an overall ESG Rating of 61, an improvement from 58 in FY2024. The company also received scores on Climate Change from CDP.
The NSE ESG Rating Report indicates scores of 51 for Environment, 73 for Social, and 63 for Governance, with an overall ESG Rating of 61 for FY2025. The 'Adequate' rating signifies modest but positive efforts in ESG practices.
Key drivers for the Environment score of 51 include high greenhouse gas emissions from direct operations and energy consumption, a higher-than-standard carbon footprint from Scope 3 emissions (increase of 31% year-on-year), and lagging renewable energy adoption. However, the company showed improvement in water intensity performance (decrease of 22% year-on-year) and a decrease in waste generation per unit of production (12% year-on-year), though waste recycling and recovery fall short of peer performance.
The Social score of 73 is driven by a low lost time incident rate for workers, adequate health insurance coverage, and lower-than-average employee turnover. The company also observed a 7% increase in women's representation and a 7% increase in employee grievances, while customer complaint frequency is lower than benchmarks (10% increase year-on-year).
The Governance score of 63 reflects that the board's composition does not meet the required percentage of independent directors, although it meets regulatory requirements for women on the board and has better-than-compliance representation in Nomination and Remuneration, Audit, Risk Management, and CSR Committees.
Furthermore, ONGC received a Core ESG Rating of 58 for FY2025, comprising an environment score of 45, a Social Score of 75, and a Governance Score of 56. The company also obtained scores on Climate Change from CDP, with various categories assessed including Business Strategy, Emissions Reduction Initiatives, Energy, Governance, and Targets, receiving 'B' ratings in several areas.
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