Investors in oil and gas companies have been concerned for some time with the regulatory and reputational risks associated with methane, a greenhouse gas that represents a fast emerging form of carbon risk.

A report just out by the Environmental Defense Fund (EDF) – a not-for-profit organization described by The Economist as “America’s most economically literate green campaigners” says leading oil and gas companies are putting themselves and their investors at risk with their non-disclosure on methane emissions.

The oil and gas industry releases 7 million tons of methane annually into the United States alone, according to the Environmental Protection Agency (EPA). Four years ago, in 2012, a joint initiative of global investors around climate change projected that from 2010 to 2020, oil and gas methane emissions were projected to increase by 35 percent.

So, are oil and gas companies disclosing their emissions? Not so, it seems. The EDF report ‘Rising Risk: Improving Methane Disclosure in the Oil and Gas Industryfinds that none of the 65 oil and gas companies reviewed disclose targets to reduce methane emissions, and less than one-third of these companies voluntarily disclose emissions.

Any disclosures that do exist are “vague and overly qualitative” says EDF, making it difficult for investors in these companies to hedge risk.

Without proper disclosure, investors are “flying blind” says EDF. “There is a stark but addressable disconnect between the outsized importance of methane as a climate and reputational risk and the scant disclosure it receives in today’s corporate reporting practice’ it concludes.

The report provides a number of recommendations to improve methane disclosure centered around four key metrics aiming to bring a level of standardization and quantitative rigor to the reporting on methane.

EDF also points out that methane emissions from the oil and gas sector are increasingly viewed as a financially material issue for companies, and by extension, their investors. At the very least, there’s a ‘wastage’ issue. A 2015 study by the Rhodium Group found that the sector loses $30 billion globally each year from leaked or vented methane at oil and gas facilities. 

Last year, in 2015, shareholders filed 83 resolutions related to carbon accounting and risk management disclosure. Investors also filed 15 methane-related shareholder proxies from 2014 - 2016, urging companies to better disclose and manage their methane emissions.

The current methane leak at the Aliso Canyon storage facility in California is a handy illustration. Measured as recently as January 2016, it has cost $50 million for mitigation of environmental and community impacts and over $12 million in lost product to date, not to mention the cost of reputational damage. 

Investors are increasingly interested in the impact of environmental, social and governance (ESG) issues on the returns they can expect from their investments.

At Exxon (NYSE:XOM), shareholders are hoping that seven climate-related resolutions might be addressed at the annual shareholders meeting on May 25 this year. Two of them would also ask the company's board to disclose information about its public policy advocacy.

"We believe there is a broad cross-section of investors who are concerned about the ways oil and gas companies are using their power and influence to oppose forward-looking policies on climate," Tim Smith, senior vice president of Boston-based Walden Asset Management, a company that promotes corporate responsibility on behalf of shareholders, said recently to the media.

Exxon is now under pressure, and has simply said the company's positions on shareholder resolutions will be in its annual proxy statement, to be issued in April.

But it is not alone. Chevron (NYSE: CVX), ConocoPhillips (NYSE: COP), Devon Energy (NYSE: DVN) and Marathon Oil (NYSE: MRO) are also among publicly traded oil and gas companies where shareholder resolutions seek to influence corporate climate philosophy.

When it comes to methane, however, it becomes very specific. Company attitude to methane is a clear demonstration of an ESG issue that is not intangible and can be quantified -- potentially becoming very real, when it comes to profits.

Methane, and how it is handled, may be an excellent example of how to quantify the value of ESG in any investor’s portfolio.

Dina Medland is an independent writer, editor and commentator with a strong focus on issues around corporate governance, ethics, the workings of the boardroom and sustainable business. She is on the team of contributors to @ForbesEurope and is an ex-Financial Times staff member who has been a regular contributor in recent years. Further details about her background and a portfolio of work – including her commercially sponsored blog ‘Board Talk’ are available on her website