Strike Energy - ESG Framework Overview and Materiality Workshop

Overview

Strike Energy Limited (Strike) is a Western Australian based independent explorer and producer that is building an integrated, low-carbon energy business, based on their access to Perth Basin gas and new energy resources. Their primary objective is to provide sustainable, low-cost and reliable gas to the domestic market in order to support the Western Australian energy transition away from coal-fired power and to enable the growth of the critical minerals industry.

Strike is dedicated to improving its sustainability performance while advancing from a small, independent explorer to an energy producer. As part of this process, Strike has committed to maturing its materiality assessment; where environmental, social and governance (ESG) issues are ranked on their importance to the business and its stakeholders, with the objective of determining which issues are the most material. This process is vital to ensure reporting is aligned with current best practice in ESG reporting requirements, and ensure that stakeholder needs and expectations around sustainability are met.

Challenges

The ESG landscape is evolving rapidly, and it important for Strike to be across the changes in their industry sector, reporting frameworks, and global, regional and national trends. With the increased focus on ESG, Strike must carefully consider a number of factors, including:

• A growing momentum and expectations for mandatory ESG Reporting
• Updated regulator guidance on making sustainability claims and environmental claims
• Rollout of mandatory climate reporting for Australian companies
• Environment Protection and Biodiversity Conservation (EPBC) Act reforms
• Peer and industry best practice
• Emerging climate and nature reporting expectations (e.g. climate transition plans, climate scenario analysis, Scope 3 emissions and supply chain considerations).

ESG reporting provides a detailed overview of a company's ESG performance, attracting socially responsible investors and improving access to capital. Moreover, it demonstrates to current investors that the company is well-positioned for future challenges and opportunities, fostering long-term investment.

Solutions

Over the last 18 months, there have been considerable developments in all three types of ESG frameworks (impact materiality, financial materiality and context-based materiality). MCC provided expert advice to Strike summarising what each of the current key ESG frameworks deliver, providing recommendations of how to start preparing to disclose against these frameworks and which frameworks they would recommend.

Considering the current regulatory, industry and public perception changes, MCC also suggested that rather than rolling over material topics used from Strike’s previous sustainability report, Strike should conduct a materiality assessment using a variety of internal and external perspectives.

Implementation

Preparation by MCC for the materiality workshop included a full review of Strike’s current policies, risk ranking of ESG topics and prior materiality work. MCC also created an employee questionnaire and conducted several stakeholder interviews to help identify internal perspectives on ESG impacts to the business. Furthermore, MCC conducted a benchmarking process of ESG disclosures of peer companies, to include as an external perspective on the positioning, reporting and best practice of peers.

MCC then facilitated a materiality assessment workshop with members of the board and senior management, including an ESG overview. The materiality process utilised a standardised, repeatable approach, developed by MCC, that allows for the justification of results based on internal and external stakeholder feedback, where possible. The output of this workshop was a materiality map that shows how topics are ranked, with the most material topics used to form the basis of the Sustainability Framework to sit within the Strike FY24 Sustainability Report.

Results

Through MCC’s materiality process, Strike was able to clearly quantify its ESG impacts to the business during the last reporting period. This, along with comprehensive internal and external stakeholder input, provided Strike with a clear materiality map that highlighted the likely material topics and priorities for the upcoming reporting period.

MCC’s approach to materiality differs from merely adjusting a list of predefined ESG Sector Standards topics to fit what the business perceives as its key impacts. Instead, MCC first identifies the most significant ESG impacts for the business, considers stakeholder perspectives on these topics, ranks them accordingly, and categorizes them into relevant themes aligned with ESG Sector Standards. This materiality process provided Strike with confidence that their ESG reporting focuses on the topics that are most significant to their business drivers and stakeholders.

Feedback from Strike’s CEO and HSEC Team on MCC’s delivery of the workshop and materiality map was incredibly positive, praising the ease and efficiency of the materiality process used compared to previous years, as well as our knowledge and understanding of the current ESG reporting process in the industry. MCC has since been asked to brief the Strike board directly on the materiality process and outcomes.