Climate-related financial disclosure byimplementing oil and gas thecompanies: TCFD recommendations Contents
1 EXECUTIVE SUMMARY | 3
2 INTRODUCTION | 6
3 EFFECTIVE DISCLOSURE PRACTICE – OVERARCHING ISSUES | 10
4 EFFECTIVE DISCLOSURE PRACTICE AGAINST THE TCFD RECOMMENDATIONS | 16 GOVERNANCE | 17 STRATEGY | 21 RISK MANAGEMENT | 33 METRICS AND TARGETS | 35
5 CONCLUSION | 40
6 APPENDIX | 43
2 Climate-related financial disclosure by oil and gas companies 1 Executive summaryThis report provides a snapshot of how four energy companies are currently providing effective climate-related financial disclosures.
3 Climate-related financial disclosure by oil and gas companies 1 Executive summary
The Oil & Gas Preparer Forum The challenge now is to provide should recognize the limited nature (“the Forum” or “we”) is a disclosures that are relevant and of the engagement with users. collaboration between Eni, useful and are consistent and This report has been prepared by Equinor, Shell, Total and the comparable among companies WBCSD based on input from Forum World Business Council for within a sector. members and the TCFD’s areas of Sustainable Development focus: (WBCSD). This report aims Section 2 explains the background to highlight how the four and purpose of the Forum’s work. Governance – Investors want companies are implementing Section 3 considers effective to see that climate change is the Task Force on Climate- climate-related disclosure practice considered appropriately when related Financial Disclosure and other overarching issues a business makes strategic (TCFD) recommendations such as the placement of such decisions. The examples illustrate today and gives practical disclosures. Section 4, the main the companies’ approaches examples of effective climate body of the report, is an illustrated to disclosing climate change change disclosure. The Forum guide to reporting in each area governance from the Board level received valuable input of the TCFD recommendations: down. Where climate change issues from the TCFD Secretariat governance, strategy, risk are already integrated into robust and representatives of a management and metrics and overall governance processes, limited number of financial targets. In Section 4, we provide governance disclosures made in institutions and other users. examples of current disclosures the ordinary course of reporting by the Forum members, highlight might provide much of the The TCFD describes an challenges we have identified information recommended by the illustrative implementation path and suggest opportunities for the TCFD. of how preparers and users further development of corporate could increasingly adopt the climate reporting to align better Strategy – The TCFD recommends recommendations. While corporate with the TCFD recommendations. that companies identify climate- reporting on climate change is Section 5 provides high-level related risks and opportunities over still evolving, this report provides conclusions and suggestions for the short, medium and long term a snapshot of how four energy further work. and quantify their impact on the companies are currently providing business, including analyses of the effective climate-related financial During the course of its work, the resilience of their strategy to those disclosures. The Forum also Forum consulted informally with risks. The progression of disclosure considers how reporting may a limited group of self-selected in this area is clear – from identifying continue to develop in future, with users of climate-related financial risk through to assessing resilience wider engagement from other disclosures, consisting mainly of – and this is likely to warrant companies in the energy sector and environment, social and governance particular attention in the future as users of these disclosures. (ESG) analysts. The purpose of preparers and users move along the the consultation was to seek implementation path. Twenty years ago, companies general views from those users were challenged to calculate and on the TCFD’s recommendations, Achieving consistent and report their operational greenhouse based on a pre-defined list of comparable scenario analyses will gas emissions. Since then, the questions. Their perspectives be challenging given the range of focus has shifted to the strategic have been synthesized for the views on the pace and implications implications of climate change purposes of this report and are of the transition to a low-carbon and, consequently, approaches to presented anecdotally in the “user economy. Against a background governance and risk management. perspectives” sections of the of such significant uncertainty, Today the emphasis is on the report. In view of time constraints, scenario analyses should be used inclusion of more financially- the limited group of users has to inform strategy and assess oriented disclosures in financial not been consulted on the way in near term resilience rather than as filings and more forward- which the user perspectives are forecasts. looking analysis of the business presented in this report. Readers implications of climate change.
4 Climate-related financial disclosure by oil and gas companies Disclosures should also be However, information about how Other next steps could relate to accompanied by appropriate they are applied, such as stress- disclosing business resilience to cautionary language to explain this testing new projects against the risk potential climate change risks, uncertainty. of carbon pricing and identifying managing opportunities, and the relative significance of climate improving the connectivity of All Forum member companies change in relation to other risks is financial and other information use energy transition scenarios helpful. within reports so that its overall to inform choices and strategic relevance to climate analysis is decisions. The companies provide Metrics and targets – Although clear. detailed disclosures of the inputs there is clear progress in identifying to and outputs of their scenario and reporting climate-related Analyzing and disclosing business analyses including strategic metrics and targets within the resilience to different climate- responses to the low-carbon Forum members’ disclosures, the related scenarios is considered transition such as changes in TCFD’s work highlights the need one of the more challenging areas portfolio mix or investment in for a progression from operational of the TCFD’s recommendations. new technologies. Evidence of to more financial measures. As As many variables are needed to resilience to climate change risks disclosures develop in this area, illustrate resilience over the longer- can also be found in conventional we anticipate greater linkage and term, the complexity, uncertainty measures such as capital and cost coherence between operational and lack of consistency between base flexibility, reserve life, capital metrics such as GHG emissions, companies of these scenario allocation plans or R&D spending - water usage, energy usage, analyses can limit their value to although these may not necessarily strategic targets, management of users. Further work is required to be labeled as specifically climate- risks and opportunities and financial determine whether and to what related. metrics. extent longer-term resilience assessments can be developed in Risk management – The examples As we are only part of the way along order to make them comparable in this report show how risk the TCFD’s “implementation path,” and meaningful to users. management processes, internal Section 4 considers possible next controls and external assurance steps in climate-related disclosure. Enhancing climate-related practices are already disclosed These include more standardization disclosure in the future will need in Forum members’ mainstream of metrics (to support greater ongoing interaction between users reports. Where climate change is comparability among oil and gas and preparers of information along already integrated into a company’s companies), particularly those that the implementation path. We look overall risk management process, convey the financial implications of forward to that interaction. The separate or additional disclosures climate change. foundations of effective disclosure that specifically address climate- practice are already firmly in place. related risk management processes are unlikely to add value.
5 Climate-related financial disclosure by oil and gas companies 2
IntroductionThe TCFD Oil and Gas Preparer Forum was established in October 2017 by the World Business Council for Sustainable Development (WBCSD) with input from the TCFD Secretariat. The Forum’s objectives are to review the current state of climate-related financial disclosures, to identify examples of effective disclosure practices and make proposals on how disclosures may evolve over time.
6 Climate-related financial disclosure by oil and gas companies 2 Introduction
to as “the Forum” in this report) BACKGROUND TO THE and its work is coordinated by PURPOSE OF AND FORUM, ITS MEMBERS WBCSD. Membership in the Forum AUDIENCES AND PURPOSE was deliberately restricted to a FOR THIS REPORT The TCFD Oil and Gas Preparer small, manageable number of oil The report is designed to: Forum was established in October and gas companies because of • Reflect the current state 2017 by the WBCSD with input the limited time the Forum had to of climate-related financial from the TCFD Secretariat. The complete its work. Forum members disclosures by Forum Forum’s objectives are to review include companies whose senior companies that align with the the current state of climate-related management has made public TCFD’s recommendations. financial disclosures and to identify statements of support for the examples of effective disclosure TCFD’s work and welcomed the • Identify challenges associated practice consistent with the TCFD’s initiative to further enhance with responding to the TCFD’s recommendations. In addition, the transparency regarding climate- recommendations and make Forum aims to make proposals on related financial risk. proposals about how those how disclosures may evolve over challenges might be addressed time. In doing so, the Forum has During the course of its work, the as well as how disclosures may sought to apply the seven principles Forum consulted informally with evolve over time. of effective disclosure that form a limited group of self-selected part of the TCFD recommendations users of climate-related financial The audiences for this report (Figure 6, page 18, TCFD Final disclosures, consisting mainly of include but are not limited to: Report). environment, social and governance • Oil and gas companies seeking The Forum is made up of (ESG) analysts. The purpose of to enhance their climate-related representatives from Eni, Equinor(1), the consultation was to seek financial disclosures. Shell and Total (collectively referred general views from those users on the TCFD’s recommendations, • The TCFD, in order to inform based on a pre-defined list of their Monitoring Report to questions. Their perspectives the Financial Stability Board have been synthesized for the in September 2018 and to FORUM MEMBERS purposes of this report and are provide input into any further Stefano Goberti (Eni) presented anecdotally in the “user deliberations on how the Rosanna Fusco (Eni) perspectives” sections. In view of recommendations should Filippo Ricchetti (Eni) time constraints, the limited group evolve over time. Hilde Røed (Equinor) of users has not been consulted on the way that the user perspectives • Investors and others using Marc Jacouris (Equinor) are presented in this report. climate-related financial Martin ten Brink (Shell) Readers should recognize the disclosures who seek to Peter Snowdon (Shell) limited nature of the engagement understand the current state of climate-related financial Ladislas Paszkiewicz (Total) with users. disclosure and the scope for Bertrand Janus (Total) development of disclosure Vincent Dufief (Total) practices over time.
(1) Statoil ASA changed its name Equinor ASA to following its Annual General Meeting on 15 May 2018. Examples in this report are based on the company’s publications prior to the name change and thus refer to Statoil.
7 Climate-related financial disclosure by oil and gas companies 2 Introduction
• Organizations the TCFD has • Provides commentary The examples were selected by identified as making valuable on possible responses WBCSD in consultation with Forum contributions towards adoption to the recommendations, members based on an assessment of the recommendations. This including disclosure of whether disclosures within report includes stock exchanges, challenges and possible sources: investment consultants, credit approaches for addressing rating agencies, organizations those challenges, • Respond to one or more of the that produce ESG reporting highlighted under blue TCFD’s recommendations (as guidance and organizations headings. set out in Figure 4 page 14 of that develop climate-related the TCFD’s Final Report). scenarios etc. so that they • Reflects perspectives from • Provide one or more of the can consider what further users of information, related information points set out in the work is required to support to the oil and gas industry Guidance for All Sectors (pages and enhance climate-related basedThe Task on Force limited, recognizes informal reporting by asset managers and asset owners is intended to satisfy 19 – 23 of the TCFD’s Final financial disclosure. consultationthe needs of clients, with beneficiaries, financial regulators, and oversight bodies and follows a format that is institutions,generally different highlighted from corporate in financia l reporting.Report). For purposes of adopting the Task Force’s • Companies from other turquoiserecommendations, boxes. asset managers and asset owners should use their existing means of financial reporting to their clients and beneficiaries where• relevantProvide and one where or feasible. more Likewise, of the asset industries looking to implement managers and asset owners should consider materialityinformation in the context points of their set respective out in the TCFD’s recommendations. • Showsmandates examples and investment of performance how for clients and beneficiaries.38 current disclosures from the Supplemental Guidance ForumThe Task memberForce believes companies that climate-related financialfor disclosures the Energy should Sector be subject in to appropriate internal governance processes. Since these disclosures should be included in annual financial respond to the TCFD’s Chapter E of the TCFD’s STRUCTURE, SCOPE AND filings, the governance processes should be similarAnnex to those “Implementingused for existing financial the reporting CONTENT OF THIS REPORT recommendationsand would likely involve review and by the chief financial officer and audit committee, as appropriate. guidance.The Task Force recognizes that some organizationsrecommendations may provide some or all of of their the climate - • Section 3 considers certain related financial disclosures in reports other than financialTask Force filings. Thison mayClimate-related occur because the overarching issues that apply This reportorganizations is based are on not a required review to of issu e public financialFinancial reports (e.g.,Disclosures.” some asset managers and asset owners). In such situations, organizations should follow internal governance processes that across the reporting landscape current publicare the disclosuressame or substantially by Forum similar to those used for financial reporting. • Reflect the Principles for and provides Forum members’A member companies only. A full list of insights on approaches to Introduction sources forc. Principles this report for Effe isctive available Disclosures in Effective Disclosure (below). To underpin its recommendations and Figure 6 B address those issues. Section Appendixhelp 1 and guide they current are and collectively future Principles for Effective Disclosures Climate-Related Risks, 4, the main body of this report,Opportunities, andreferred todevelopments here as “Report in climate- relatedSources.” financial Disclosures should represent Financial Impacts is an illustrated guide to reporting, the Task Force developed 1 relevant information seven principles for effective disclosure reporting on each of the TCFD’sC Examples of disclosure practice (Figure 6), which are described more fully Recommendationsthat and respond to the TCFD’s 2 Disclosures should be specific recommendations: governance,Guidance in Appendix 3. When used by and complete strategy, risk management recommendations,organizations in guidance preparing their climate- D and the Fundamentalrelated financial disclosures, Principles these Disclosures should be clear, and metrics and targets. EachScenario Analysis and 3 balanced, and understandable Climate-Related forIssues Effectiveprinciples Disclosure can help achieve (to the high -quality section: and decision-useful disclosures that Disclosures should be consistent E right) are identified in this report. • Summarizes the enable users to understand the impact of 4 over time Key Issues ConsideredThe and examples climate changerepresent on organizations. an The TCFD’s “recommended Areas for Further Work illustrative,Task non-exhaustive Force encourages organizations mix of to 5 Disclosures should be comparable disclosures” with excerptsF consider these principles as they develop among companies within a sector, possible responses to the TCFD’s industry, or portfolio from associated guidance,Conclusion climate-related financial disclosures. recommendations. Appendices Disclosures should be reliable, verifiable, highlighted in pink boxes. The Task Force’s disclosure principles are 6 and objective largely consistent with internationally accepted frameworks for financial Disclosures should be provided reporting and are generally applicable to 7 on a timely basis most providers of financial disclosures. The principles are designed to assist organizations in making clear the linkages between climate-related issues and their governance, strategy, risk management, and metrics and targets.
38 The Task Force recommends asset managers and asset owners include carbon footprinting information in their reporting to clients and beneficiaries, as described in Section D of the Annex, to support the assessment and management of climate-related risks.
Recommendations of the Task Force on Climate-related Financial Disclosures 18
8 Climate-related financial disclosure by oil and gas companies
organi ations’ risk anage ent and strategic planning processes. s this occurs organi ations’ and in estors’ understanding of the potential financial i plications associated ith transitioning to a lo er car on econo and ph sical risks ill gro infor ation ill eco e ore decision useful and risks and opportunities ill e ore accuratel priced allo ing for the ore efficient allocation of capital. Figure outlines a possi le path for i ple entation.
idespread adoption of the reco endations ill re uire ongoing leadership the and its 2 Introduction e er countries. uch leadership is essential to continue to ake the link et een these reco endations and the achie e ents of glo al cli ate o ecti es. eadership fro the F is also critical to underscore the i portance of etter cli ate related financial disclosures for the functioning of the financial s ste .
IllustrativeFigure implementation path IMPLEMENTATION PATH Implementation Path (Illustrative)
The TCFD acknowledges road understanding of the concentration of that implementation of their car on related assets in the financial s ste and the financial system’s exposure to cli ate related recommendations will take time as risks ntroduction illustrated in their “Implementation Path”. li ate elated isks pportunities and Financial pacts The progression of disclosure reater adoption further de elop ent of infor ation pro ided e.g. etrics and content and the quality of scenario anal sis and greater aturit in information depends on: eco endations and using infor ation ore co plete consistent and uidance co para le infor ation for arket • Input from and interaction participants increased transparenc and appropriate pricing of cli ate between the preparers cenario and nal sis and related risks and opportunities li ate elated ssues users of information so that doption olu e the appropriate balance is e ssues onsidered and rgani ations egin to li ate related issues ie ed as found between information reas for Further ork disclose in financial filings ainstrea usiness and in est ent needs and the interests of considerations oth users and F preparers reporting companies,Conclusion including Final T F eport eleased commercial sensitivities. o panies alread reporting under other fra e orks i ple ent the Task ppendices Force’s recommendations. Others consider climate related issues ithin • The continuing development of their usinesses Fi e ear Ti e Fra e enabling conditions to support effective disclosure including data collection processes, The Task Force is not alone in its ork. ariet of stakeholders including stock e changes agreed definitions and common in est ent consultants credit rating agencies and others can pro ide alua le contri utions methodologies for climate- to ardthe adoption discretion of the reco endations. of the company The Task Forcedepends elie es that on ad ocac whether for thethese responding standardsdepending ill e necessar on its for particular idespread adoption includingcompany educating has organi ations governance that and ill related financial disclosure, disclose cli ate related financial infor ation and those that ill use those disclosures to ake assurance approaches, etc. financialcircumstances, decisions. To this end reporting the Task Force notes thatrisk strong management support the F policies and and authoritiesmaturity, ould ha erelevance a positi e to i pact the onoverall i ple entation. processes With the FSB’sin place extension and of how the Task they are Furthermore, progress towards Force report,through epte er etc. the Task Force ill orkapplied to encourage to climate-related adoption of the issues. effective disclosure is likely to reco endations and support the F and authorities in pro oting the ad ance ent of cli ate related financial disclosures. depend on developments in • Complementary information By contrast, disclosures regarding corporate information, management enhances the quality, breadth, strategy, metrics and targets analysis and the overall quality, depth and comparability depend on a range of interpretations breadth and comparability of of information achieved including management analysis, Recommendations of the Task Force on Climate-related Financial Disclosures 42 information: through application of the strategic discussion, some forward- TCFD’s Principles for Effective looking assessment and the • Corporate information identifies, Disclosure. application of principles to support describes and provides effective disclosure practice. operational information, for Disclosure recommendations example, about the existence relating to governance and risk Generally, disclosure practice of policies and procedures on management expect or encourage regarding strategy, metrics and governance and management predominantly operational and targets involves a greater degree structures. Generally corporate descriptive corporate information of judgement compared with information is taken from about the processes used by governance and risk management. the organization’s suite of reporting companies to govern Hence, the implementation pathway procedural and operational and monitor/manage climate for strategy, metrics and targets manuals, codes and change risks and opportunities. disclosure is expected to proceed requirements. Implementation of the TCFD’s through more steps and at a recommendations on governance different pace than for governance • Management analysis and risk management therefore and risk disclosure. discusses, assesses and analyzes the procedural, strategic, business and financial implications of climate change. Analytical information relies on judgement and is provided at
9 Climate-related financial disclosure by oil and gas companies 3 Effective disclosure practice: Overarching
Thisissues section considers some overarching challenges and opportunities associated with climate-related financial disclosures.
10 Climate-related financial disclosure by oil and gas companies 3 Effective disclosure practice: Overarching issues
This section considers some Strategies that might assist in overarching challenges and addressing those challenges User perspective: opportunities associated include: Investors refer to many different with climate-related financial sources of information for their disclosures, in particular, • Agreeing with management the decision-making purposes. those related to the TCFD’s degree of flexibility required to Mainstream financial filings are an recommendations. keep the mainstream annual important source of information. financial filing as concise However, where it has the The TCFD’s Final Report as possible and to ensure characteristics of mainstream recognizes that its information, including relevance, that climate-related financial reliability, objectivity, assurability recommendations share information is proportionate in etc., investors accept and rely objectives, processes and relation to other material risks for their decision-making on content requirements with while responding to the TCFD’s information reported through other other disclosure frameworks recommendations. channels. and mandatory reporting • Identifying with management Analyst and management day requirements. Therefore, presentations often provide some of the challenges and and relevant information forward-looking and other opportunities associated users where climate-related information that may be difficult with implementing the TCFD’s financial information should be to incorporate into financial filings recommendations also apply reported in order to maximize given regulatory requirements or its usefulness. because of efforts to manage the to other disclosure and length and volume of mainstream reporting provisions across • Considering the advice in the reports – for example on oil and the wider reporting landscape. gas “resources.” The form, format TCFD’s Final Report (pages and types of disclosures provided 17 – 18 and 33 – 34) about in these presentations should PLACEMENT the circumstances in where complement risk factors as well The TCFD recommends that it is appropriate to report as management’s discussion and climate-related financial disclosures information outside the analysis as described in financial filings. should be made in mainstream mainstream financial filings, in annual financial filings, and that “other” reports. organizations should use the TCFD recommendations to • Considering whether and how disclose material information information presented outside where compatible with their the mainstream financial national disclosure requirements. filings should be identified Mainstream financial filings as having the characteristics typically consist of audited financial of information reported in results, governance statements mainstream filings in line and management commentary with the TCFD’s advice that under the corporate, compliance such information should be or securities laws of different “subject to internal governance jurisdictions. processes that are substantially similar to those used for The structure and limitations of financial reporting… and would the mainstream annual financial likely involve review by the filing can present challenges for chief financial officer and audit companies when considering which committee as appropriate” information and how much detail to (TCFD Final Report page 34) include in response to the TCFD’s (Figures 1 and 2). recommendations.
11 Climate-related financial disclosure by oil and gas companies 3 Effective disclosure practice: Overarching issues
Figure 1: Eni’s Internal Control and Risk Management System (ICRMS) Eni website - controls and risks
Controls and Risks
The Internal Control and Risk Management System (ICRMS) is a set of tools, organisational structures, regulations and business rules put in place to facilitate the sound management of the Company in line with the business goals set by the Board of Directors. It provides proper means for the identification, measurement, management and monitoring of risks, while also ensuring that information is circulated as appropriate.
Board of Directors Chairman
Watch Structure Board Control of Statutory Auditors and Risk Committee
CEO1
Compliance Committee
Risk Committee
First level of control Second level of control Third level of control
Dedicated Functions Process Owner: /not-exclusively identified -dedicated in the Compliance/ core business and (if any) functions: Governance Risk specialist Process Owner models business Risk Compliance/ support Owner Governance processes Planning Internal and control Audit3 Financial Reporting Officer Integrated Risk Management
Compliance Objectives2 Strategic, Operating and Reporting Objectives
(1) Director in charge of the internal control and risk management system. (2) Including objectives on the reliability of nancial reporting. (3) The Senior Executive Vice President Internal Audit reports to the Board, and on its behalf, to the Chairman, without prejudice to his functional reporting to the Control and Risk Committee and the CEO, as Director in charge of the internal control and risk management system.
The Eni ICRMS is structured along the following three levels of internal control:
first level of control: identifies, assesses, manages and monitors the risks for which it is responsible, for • which it identifies and implements specific management actions;
second level of control: monitors the main risks in order to ensure the effectiveness and efficiency of • their management; also responsible for monitoring the appropriateness and operation of controls implemented for the main risks. It also provides support to the first level in defining and implementing adequate systems for managing the main risks and the associated controls;
third level of control: provides independent, objective assurance on the appropriateness and effective • operation of the first and second control levels and, more generally, on the Eni ICRMS as a whole.
The structure of the first and second control levels is consistent with the size, complexity, specific risk profile and with the regulatory environment in which each company operates. The third level of control is exercised by the Internal Audit Unit of Eni SpA, which, on the basis of a centralised model, performs its controls using a risk-based approach to the overall Eni ICRMS, monitoring Eni SpA and the subsidiaries.
12 Climate-related financial disclosure by oil and gas companies 3 Effective disclosure practice: Overarching issues
Figure 2: Equinor (formerly Statoil) - extracts from KPMG’s Independent assurance report, 2017 Sustainability Report
Independent assurance report to Statoil ASA The Sustainability Report is covered by our Our specific procedures for reasonable We have been engaged by the management limited assurance engagement. The scope ex- assurance on the Safety and Environmental of Statoil ASA (‘Statoil’) to provide reasonable cludes future events or the achievability of the Performance Indicators information as outlined assurance in respect of the Safety and Envi- objectives, targets and expectations of Statoil. above involved: ronmental Performance Indicators identified • Interviews with relevant staff at below and limited assurance in respect of the Reasonable assurance over the Safety and corporate, business and local level information as disclosed in Statoil’s Sustainabil- Environmental Performance Indicators responsible for providing the information ity Report for the year ended 31 December 20i7 The procedures selected in our reasonable in the Sustainability Report, carrying (‘the Sustainability Report’). assurance engagement depend on our judg- out internal control procedures on the ment, including the assessment of the risks data and consolidating the data in the Our reasonable assurance engagement of material misstatement of the Safety and Sustainability Report. covers the following Safety and Environmental Environmental Performance Indicators whether • Two visits to production sites aimed at on performance indicators for the year ended 31 due to fraud or error. a local level, validating source data and to December 2017: evaluate the design and implementation • Safety indicators: Total recordable injury In making those risk assessments, we have of internal control and validation frequency (TRIF), serious incident fre- considered internal control relevant to the procedures. quency (SIF), fatalities, oil spills, serious oil preparation and presentation of the Safety • Evaluating the design and implementation and gas leakages. and Environmental Performance Indicators in and tests of the operating effectiveness • Environmental indicators: Greenhouse order to design assurance procedures that are of the systems and methods used to gas emissions scope 1, control based appropriate in the circumstances, but not for collect and consolidate the data. CO , CH emissions, NO emissions, the purposes of expressing a conclusion as • An analytical review of the data and trend 2 4 x to the effectiveness of Statoil’s internal control energy consumption and SOx emissions. explanations submitted by all sites for over the preparation and presentation of the consolidation at corporate level. Sustainability Report.
13 Climate-related financial disclosure by oil and gas companies 3 Effective disclosure practice: Overarching issues
LABELING AND CAUTIONARY LANGUAGE CONSISTENCY AND AMPLIFYING EXISTING Given the high degree of COMPARABILITY DISCLOSURES uncertainty around the timing The TCFD’s Principles for Effective In the ordinary course of mainstream and magnitude of climate-related Disclosure (Principles 4 and 5) disclosure, oil and gas companies risks, Forum members highlighted stipulate that disclosures should disclose much of the information the importance of meaningful be consistent over time and investors need to analyze exposure cautionary language to accompany comparable across organizations to risk and the resilience of a more detailed forward-looking within a sector, industry or company’s strategy. However, disclosures. portfolio. Greater consistency and the connection to climate-related standardization in climate-related Meaningful cautionary language risk is not always immediately financial information would help may include a definition of forward- obvious where disclosures appear investors to compare disclosures. looking statements (e.g. “statements under headings related to risk Currently, comparability between of future expectations that are management, financial results, companies on some aspects of based on management’s current capital discipline, capital flexibility, climate-related financial disclosure expectations and assumptions reserves, resources, production, is challenging. The TCFD’s and involve known and unknown operations and strategy. Implementation Path indicates that risks and uncertainties that could consistency and comparability of For example, the TCFD’s Final Report cause actual results, performance information between companies (page 9) notes that investors find it or events to differ materially needs to develop over time. helpful to understand companies’ from those expressed or implied capital expenditure plans and in these statements”). It may However, the TCFD’s Principle 4 how the resilience of those plans include statements identifying (Final Report page 4) states that is supported by organizations’ related terms and phrases (e.g. individual companies should use flexibility to shift capital to respond ‘‘anticipate,’’ ‘‘believe,’’ ‘‘could,’’ consistent formats, language and to climate-related risks and ‘‘estimate,’’ ‘‘expect,’’ ‘‘goals,’’ ‘‘intend,’’ metrics from period to period to opportunities. Some oil and gas ‘‘may’’ etc.). It may also include an allow for inter-period comparisons. companies already provide this explanation of conditions that could Figure 3 provides an example of 10 information, but within their financial affect future expectations (e.g. price years of comparable GHG emissions statements and not necessarily with fluctuations; changes in demand data with an accompanying a narrative that shows the relevance for products; reserves estimates; explanation of the scope (including of the disclosures to climate change environmental and physical risks; omissions), methodology (including analysis. legislative, fiscal and regulatory the standard applied and emission developments including regulatory factors used) and boundary (equity Therefore, companies considering measures addressing climate and operational control basis). implementing the TCFD’s change etc.)(2). GHG emission movements between recommendations could consider 2016 and 2017 are also identified whether existing disclosures on and attributed to acquisitions, capital flexibility, for example, could reduction activities, change in be labeled or amplified to show their output and divestments. relevance to climate-related risk and opportunity. The usefulness of disclosures is enhanced by maximizing coherence, integration and connectivity between climate- related information and operational, strategic and financial information.
(2) Definitions & examples from Shell’s Energy Transition Report - https://www.shell.com/energy-and-innovation/the-energy-future/shell-energy-transition-report/_ jcr_content/par/toptasks.stream/1524757699226/f51e17dbe7de5b0eddac2ce19275dc946db0e407ae60451e74acc7c4c0acdbf1/web-shell-energy-transition- report.pdf
14 Climate-related financial disclosure by oil and gas companies 3 Effective disclosure practice: Overarching issues
Figure 3: Shell’s emissions reporting & GHG breakdown, GHG movements from 2016 to 2017 [A] Shell Sustainability Report 2017 [A] Shell website - sustainability reporting & performance data million tonnes CO2 equivalent
90 2.8 Direct greenhouse gas emissions 85 3.4 d e 85 c million tonnes CO2 equivalent 81 b (0.5) (2.1) 80 100 a 75
70 50 2016 2017
a EmissionsCd hange in Output 0 b Acquisitions e Divestments and 08 09 10 11 12 13 14 15 16 17 c Reduction Activities [B] Other Reasons
[A] Direct and energy indirect greenhouse gas emissions. Numbers have been rounded so some totals may not agree exactly.
[B] Does not include 1 million tonnes of CO2 captured and sequestered by our Quest CCS project in Canada in 2017.
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Greenhouse gas emissions (GHGs) Direct total GHGs (million tonnes CO2 equivalent) [A] 73 70 72 76 73 72 74 76 69 75 Carbon dioxide (CO2) (million tonnes) 70 67 68 73 71 69 71 72 66 72 Methane (CH4) (thousand tonnes)[B] 123 138 132 126 120 93 133 128 127 126 Nitrous oxide (N2O) (thousand tonnes) 1 1 1 1 1 1 1 2 2 2 Hydrofluorocarbons (HFCs) (tonnes) 23 21 18 16 17 23 22 23 25 23 Energ:i indirect total GHGs (million tonnes CO2 eguivalent) [C] 12 11 9 10 10 9 10 9 9 n/c [Al Greenhouse gas emissions IGHG) comprise carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perlluorocarbons, sulphur hexafluoride ond nitrogen trifluoride. The data are calculated using locally regulated methods where they exist. Where there is no locally regulated method, the data are calculated using the 2009 API Compendium, which is the recognised industry standard under the GHG Protocol Corporate Accounting and Reporting Standard. There are inherent limitations to the accuracy of such data. Oil and gas industry guidelines )IPIECA/API/IOGP) indicate that several sources of uncertainly can contribute to the overall uncertainly of a corporate emissions inventory. 2015-2017 emissions are calculated using Global Warming Potential factors from the IPCC's Fourth Assessment Report. Data for prior years were calculated using Global Warming Potential factors from the IPCC's Second Assessment Report. [Bl We have updated our 2015-2016 figures following review of data. [CJ These emissions were calculated using the marke•based approach in line with the GHG Protocol Corporate Accounting and Reporting Standard.
15 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice against the TCFD
Thisrecommendations section is an illustrated guide to reporting in each area of the TCFD recommendations: governance, strategy, risk management, metrics and targets. Commentary on each recommendation is accompanied by examples illustrating some of the current disclosures by Forum members.
16 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice against the TCFD recommendations
This section provides a • Information that enables COMMENTARY commentary and illustrative In the first steps on the readers to understand the examples for each area of the implementation path, disclosures processes and policies used TCFD’s recommendations. can focus on describing the for climate change governance, It also highlights some of process used for governing climate why companies have made the challenges associated change. Where they are already particular governance choices, with climate-related integrated into a company’s overall how the policies are executed, financial disclosure and governance and management who is involved and what suggests opportunities for processes, a detailed description decisions result from the the further development of of the processes used to govern policies. corporate climate reporting and manage climate change is Similarly, where climate issues have to align better with the TCFD unlikely to add value to the report recommendations. been fully integrated into broader and might appear repetitive. This governance processes that do not is because where climate change change significantly over time, a GOVERNANCE considerations are embedded detailed description of the process into governance structures at the might not be required every year. Disclose the organization’s Board level, it follows that major governance around climate-related decisions take account of climate Major business decisions are risks and opportunities. change. Therefore, provided that based on a range of factors and The TCFD recommends that the annual report describes the companies: climate change is one of many company’s governance process important risk factors for oil and 1. Describe the Board’s oversight of climate-related risks and and it is clear that it applies gas companies. It can therefore opportunities equally to climate change, it is not be difficult to attribute Board level 2. Describe management’s role necessary to make separate or decisions solely to climate change in assessing and managing additional disclosures about the issues or to explain specifically climate-related risks and process used for governance of how climate change issues are opportunities climate change. However, even taken into account during decision- Information about the role an where climate change is embedded making as it is one factor among organization’s Board plays in into governance structures at overseeing climate-related issues many. The level of detail disclosed as well as management’s role in Board level, a company should about the relevance of climate assessing and managing those be able to illustrate how climate- change should be proportionate. issues “supports evaluation of related information flows up and whether climate-related issues down the organization between receive appropriate Board and teams involved in these decisions management attention” (TCFD Final Report p.19). and show succinctly how climate change is integrated into key business decisions.
As disclosure practices develop, information about the process can be complemented with: • Explanations about whether and how the Board and management integrate processes relating to climate change into overall governance structures.
17 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Examples – Governance 4. Show whether and how User perspective: The following Figures provide oversight and management Long-term capital holders in examples of disclosures that: of climate change risks and particular want the Board to own opportunities are taken into 1. Outline the process for Board climate change and to talk about account in business and the risks in their governance oversight of climate change strategic decisions, risk conversations. We want to see (Figure 4). that climate change is considered management, budgeting, appropriately in business decision- 2. Identify roles and performance and capital making and is on the table with responsibilities for climate expenditure, acquisition and other issues when boards make divestment (Figure 7). key strategic decisions like new change (Figure 5). acquisitions. 5. Describe how management 3. Define the frequency with which monitors climate-related issues climate change is discussed by (Figure 7). the Board (Figure 6).
Figure 4: Figure Climat 5:e change management organogram Total’s description of climate change Shell’s climate change management organogram, Shell Annual Report 2017 oversight, Total Annual Report 2017 Board of Royal Oversight by the Board of Directors Climate change managemenDutch Shellt oplcrganogram [1] TOTAL’s Board of Directors ensures that climate-related issues are incorporated into the Group’s strategy. Since 2008, Board of Royal these major issues for the Group have no Dutch Shell plc [1] longer been treated as one component Corporate and Audit Remuneration of environmental risks, but rather on an independent basis. Every year, the Board Social Responsibility Committee Committee of Directors reviews the main issues related Committee (CSRC) [2] (AC) [3] (REMCO) [4] to climate change in the strategic outlook Corporate and Audit Remuneration review of the Group’s business segments, Social Responsibility Committee Committee which are presented by the respective Committee (CSRC) [2] (AC) [3] (REMCO) [4] general management structures. CEO and Executive Committee Most senior individuals Also, the Audit Committee does more with accountability for specific work on the climatic and CEO and Executive Committee climate change risk environmental reporting processes in management Executive Vice President, Most senior individuals the review of the performance indicators Safety & Environment with accountability for published by TOTAL in its annual reports climate change risk and audited by an independent third-party Executive Vice President, management organization. In 2016, the Compensation Safety & Environment Committee also decided to introduce changes to the variable compensation of Vice President, Group CO2 Businesses and the Chairman and Chief Executive Officer Functions [5] to take better account of the achievement Chair 2 Vice President, Group CO Businesses and of Corporate Societal Responsibility (CSR) Functions [5] and HSE targets. Finally, in September 2017, Chair the Board of Directors decided to change CO2 Leadership Team the regulations of the Strategic Committee Ensures the effective delivery of Shell´s CO2 Leadership Team in order to broaden its missions in the realm GHG management programme throughout Shell´s buEnsusinreessess the ,ef anfectdiv the ede ovliveerrysight of Shell´ of s of CSR and in questions relating to the GHGGH managementG policy po prsitiogonramms e throughout inclusion of climate-related issues in the Shell´s businesses, and the oversight of Group’s strategy. This committee is now GHG policy positions called the Strategic & CSR Committee.
The Board of Directors is fully mobilized [1] Oversight of climate change risk management. [1] Oversight of climate change risk management. by this issue in order to support the [2] Non-executive Directors appointed by the Board to review and advise development of TOTAL, and it approved on sust[2] aiNon-nabiexlitecy utivepolici Diesre ctorands appractipoincested byinclud the inBogard clim toate review change and .advise the publication of the first Climate Report on sustainability policies and practices including climate change. [3] Non-executive Directors appointed by the Board to oversee the effectiveness in March 2016. This report is updated [3] Non-executive Directors appointed by the Board to oversee the effectiveness every year. of th e systemof the systemof risk of management risk management and an indterna internal col controntrol. l. [4] Non-[4]ex Non-ecutiveexec Diutiverector Dires ctorappos apinpotedin tebyd thbye thBoe Boardard to toset set the the re remunemuneration poli cy inpo alignmlicy in alignment wientth stwirathtegy stra.tegy. [5] Resp[5]on Resibspleon fosibr imle plemenfor implementing Shell´ting Shell´s GHs GHG stGra sttegyrategy. They. They are are rereprpresentetedd in th e COin th2 eLe COader2 Leshaderip Teshamip Te. am.
18 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations (1/2)
Figure 6: Figure 7: Equinor (formerly Statoil) disclosure Eni’s description of governance and management processes and roles, of how the board consider climate- Eni, Path to Decarbonization 2017 related issues, Annual Report 2017 BASED ON PROPOSALS FROM THE CEO, THE BOD EXAMINES AND/OR APPROVES:
Statoil regularly assesses climate-related The objectives related to climate change and the energy transition, as an integral part of business strategies business risk, whether political, regulatory, market, physical or related to reputation, as part of the enterprise risk management The "GHG Action Plan" with investments to achieve the objectives of reducing emissions by 2025 process. This includes assessment of both upsides and downsides. Statoil uses tools such as internal carbon pricing, scenario analysis and sensitivity analysis of the The portfolio of Eni's top risks including climate change project portfolio against various oil and gas price assumptions. We monitor technology developments and changes in regulation The Short Term Incentive Plan with objectives related to the reduction of GHG emissions for CEO and assess how these might impact the oil and managers with strategic responsibilities and gas price, the cost of developing new assets and the demand for oil and gas and Annual sustainability results and HSE reviews, including performances on climate change opportunities in renewable energy and low carbon solutions.
On a regular basis, the corporate executive Institutional reporting including the Interim Consolidated Report and the Annual Financial Report (including the consolidated committee and board of directors review and Disclosure of Non-Financial information) and the sustainability report (Eni for) monitor climate change-related business risks and opportunities. In 2017, the board The relevant projects and their progress, on a six-monthly basis, with sensitivity to the Eni and IEA SDS carbon pricing discussed climate-related issues in four out of eight meetings (including one risk update), and the safety, sustainability and ethics com- mittee discussed climate-related issues in all Resilience test on all the upstream Cash Generating Units (CGU) applying the IEA SDS scenario of the five committee meetings held.
Strategic agreements, including initiatives related to climate change
On the subject of climate change, the integration among strategy, integrated approach in the evaluation the BoD is mainly assisted by three evolution scenarios and business of sustainability and energy scenarios. Board committees: Sustainability and sustainability over the medium to In each of the twelve meetings held in Scenarios Committee, Control and long term and examines the scenario 2017, the SSC discussed issues related Risk Committee and Remuneration for the strategic plan preparation. to climate change and assessed the Committee. The Sustainability and Set up in 2014, the SSC was the first consistency of the results achieved Scenarios Committee (SSC) addresses example, in the Oil & Gas sector, of an with the climate objectives.
19 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Figure 7 (Continued): Eni’s description of governance and management processes and roles, Eni, Path to Decarbonization(2/2) 2017
| Role of Management
Issues relating to climate change risks contribute to the decarbonization path. actions. Every year, the CEO assigns and opportunities are considered The CEO is responsible for identifying Guidelines7 to each business line and and integrated in all stages of the the main business risks, including those support function for the definition business cycle, from negotiation to connected with climate change, ensuring of the strategies in the strategic plan, decommissioning. All the company their assessment and management, and including those regarding the path to functions, within their area of responsibility, monitoring the progress of mitigation decarbonization.
The CEO’s Short-Term Incentive Plan operated hydrocarbon production, in line to top management and managers (STI) includes objectives associated with with the 2025 target announced to the with responsibilities associated with the climate strategy that are consistent with market. This objective is also assigned emissions reduction. the guidelines defined in the Strategic Plan. Under the Short-Term Incentive 2018 TARGETS FOR THE SHORT-TERM Plan, a portion of the bonus matured is INCENTIVE PLAN WITH DEFERRAL deferred over a three-year period, subject Economic and financial results Operating results and sustainability (25%) of the economic results (25%) to further performance conditions, in order to assess sustainability over the EBT (12.5%) Hydrocarbon production (12.5%) medium term. In particular, 25% of the Free cash flow (12.5%) Exploration resources (12.5%) STI is composed by environmental Environmental sustainability Efficiency and financial strength sustainability and human capital and human capital (25%) (25%) objective, half of this refers to reducing CO2 Emissions (12.5%) ROACE (12.5%) the GHG emissions intensity rate of Severity Incident Rate (12.5%) Debt/EBITDA (12.5%)
The “Energy Solutions” business FUNCTIONS INVOLVED IN THE CLIMATE CHANGE PROGRAMME division, which reports directly to the CEO, was set up in 2015 to develop
renewable energies with large-scale HSEQ PLANNING projects. In order to identify new technological, managerial and strategic
solutions to support the path to OTHER FUNCTIONS INVESTOR decarbonization, the Climate Change ON DEMAND RELATIONS Programme, was also set up in 2015, at CLIMATE top management level with a cross- CHANGE cutting team that reports to a Steering PROGRAMME
Committee chaired by the CEO. ENERGY SUSTAINABILITY In 2016, the Programme’s objective SOLUTIONS was updated in order to define a roadmap for the medium-long term RESEARCH E INTEGRATED decarbonization strategy in line with DEVELOPMENT RISK MANAGEMENT the Paris Agreement goals.
The Programme is coordinated by the aspects related to climate change. technologies aimed at supporting energy HSEQ (Health, Safety, Environment & In 2016, the Energy Transition Programme transition. Furthermore, the management Quality) division, which encompasses a was set up under the research and is constantly informed about progresses specific competence centre that oversees development function to identify the related to the path to decarbonization.
20 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
The organization of this section into STRATEGY COMMENTARY two parts is designed to simplify As a first step, disclosures can the structure of this report. It is not describe the climate-related risks Disclose the actual and potential impacts of climate-related risks and intended to imply that disclosures and opportunities that have been opportunities on the organization’s in response to the recommended identified, together with the time businesses, strategy and financial disclosures on strategy should be scales over which the risks and planning where such information is presented in two parts. opportunities are expected to material materialize. As disclosures develop, they can: This section is divided into two STRATEGY: RISK • Explain the way in which the parts. The first considers the initial IDENTIFICATION AND TIME company defines short, medium “recommended disclosure” under FRAMES and long term. the main recommendation on Strategy about the identification • Describe the process used of risks and opportunities and the The TCFD recommends that for assessing vulnerability to timeframes over which they are companies: risk and for identifying material expected to materialize. Describe the climate-related risks climate-related risks and and opportunities the organization opportunities. has identified over the short, The second part focuses on the medium and long term • Identify the drivers of climate second and third recommended “Improved disclosure of climate- change risk. disclosures which deal with: related risks and opportunities • The impacts of risks and will provide investors, lenders and • Elaborate on the type of risks opportunities on business, insurance underwriters and other (transition and/or physical) and stakeholders with the metrics and strategy and financial planning. opportunities that have been information needed to undertake identified and how they are robust and consistent analysis of • The reporting company’s managed. the potential financial impacts of strategic response to climate change” (TCFD Final Report the identified risks and page 5). User perspective: opportunities. Investors find information most useful when it is disaggregated, • The resilience of the strategy for example, by upstream under different climate-related and downstream, geography, scenarios. business segment or division, operated and non-operated activities, entity and facility. They encourage companies to consider segmenting information according to financial reporting practice. However, investors recognize the limitations on segmentation where it threatens commercial sensitivity.
21 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Forum member companies all The complexity and uncertainty However, changes in portfolio mix, recognize climate change as associated with climate change can business models or corporate a relevant risk factor. As such, make it difficult to identify where and structures mean that risk analyses they routinely make disclosures when specific issues could affect depend on assumptions about how about climate-related risks and an organization. When defining the portfolio, the industry, market and opportunities in annual reports, short, medium and long term, the regulatory environment will evolve. investor presentations and other TCFD recommends that companies Therefore, longer-term views focus disclosures. Usually, risks and their “Take into consideration the useful on the generally anticipated direction relative severity are monitored and life of the organization’s assets of energy transition and monitoring managed through enterprise risk or infrastructure and the fact that of external indicators that enable the management (ERM) processes, climate-related issues often manifest company to test its assumptions. materiality assessment, business themselves over the medium and Disclosures relating to longer-term continuity plans and specialist longer terms.” Forum members risk are more likely to be qualitative. functions. explained the way in which they define short, medium and long term, The TCFD encourages companies The TCFD distinguishes between specifying the number of years to to consider providing a description transition risks (e.g. regulatory which the short and medium term of their risks and opportunities requirements, carbon prices, new applies. by sector and/or geography as technologies, changes in market appropriate (TCFD Final Report demand) and physical risks from The type of information disclosed page 20). Decisions about climate change. Transition risks are about the short and medium term is whether, to what extent and how to typically more material to Forum different from information suitable segment information will depend member companies and are for disclosure about the long-term. on several factors. One is whether identified and described in the risk Disclosures relating to the short and it is feasible to disaggregate section of their mainstream financial medium term provide information information on climate-related risks filings. Forum members disclose the about near term financial and and opportunities in a way that is safeguards in place to minimize the operational risks and resilience and consistent with the approach to possibility of physical risks becoming can include quantitative information. segmenting other information in material risks. As physical risks are In the longer-term, climate change the mainstream reports. Another currently considered less material presents potential portfolio risk. is whether there are contractual, for Forum members, their disclosure practical or legal reasons that in this area can be more limited, prohibit or limit the scope for commensurate with the risk level, disaggregation of information. but explaining how they assess and adapt to such risks.
22 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Examples – Strategy A Figure 9: Figure 10: Total material financial risks Total climate change opportunities, The following Figures provide associated with climate change, Total Annual Report 2017 examples of disclosures that: Total Annual Report 2017
1. Identify and describe material Climate change also provides TOTAL with climate-related risks (Figures Laws and regulations related to climate opportunities: 8 & 11), such as regulations change as well as growing concern of • In the coming decades, demand for stakeholders may adversely affect the electricity will grow faster than the global significantly affecting the Group’s business and financial condition. demand for energy, and the contribution development of projects and Global concern over greenhouse gas of renewables and gas to the production (“GHG”) emissions and climate change, of electricity is essential to the success the economic value of assets which notably led to the signature of the of the 2°C scenario. This represents an (Figure 9). Paris Agreement on 12 December, 2015 as opportunity for TOTAL. Access to energy part of the United Nations Climate Change and decentralized production are part of 2. Identify and describe climate- Conference (COP 21), is likely to lead to this opportunity. related opportunities - access further regulation in these areas. • But electricity alone will not be sufficient to new markets and new to meet all the needs, and in particular These additional regulatory requirements those of transport: gas and biofuels are technology (such as biofuels could lead the Group to curtail, change amongst the solutions that the Group or cease certain of its operations, and intends to develop. markets and carbon, capture submit the Group’s facilities to additional compliance obligations, which could • Speeding up the development of and storage technology. (Figure CO capture, utilization and storage adversely affect the Group’s businesses and 2 10). financial condition, including its operating technologies (CCUS) is a source of income and cash flow. opportunities to meet the needs of 3. Describe the time horizons over various industries (electricity generation, which climate-related risk and Regulations designed to gradually limit but also cement works, steel works, opportunities might affect the fossil fuel use may, depending on the waste treatment, etc.). GHG emission limits and time horizons • Helping customers to reduce their organization (Figure 12). set, negatively and significantly affect the energy costs and environmental impact 4. Describe the process(es) used development of projects, as well as the also offers opportunities, as part of a economic value of certain of the Group’s trend that will be accelerated by digital to determine which climate- assets. technology. TOTAL intends to innovate in related risks and opportunities order to provide them with new product Internal studies conducted by TOTAL and service offers that will support their could have a material financial have shown that a long term CO2 price energy options and their usages. The impact on the organization of USD $40/t (1) applied worldwide would promotion of hybrid solutions combining have a negative impact of around 5% hydrocarbons and renewables is part of and how the impact has been on the discounted value of the Group’s this approach. (2) assessed e.g. the process assets (upstream and downstream) . In Similarly, services can be offered to addition, the average reserve life of the for assessing physical risk optimize energy for industrial sites. The Group’s proved and probable reserves is Group aims to develop this approach for vulnerability (Figure 13). approximately 20 years and the discounted industrial and mobility applications. value of proved and probable reserves with a reserve life of more than 20 years is less Figure 8: than 10% of the discounted value of the Equinor (formerly Statoil) description Group’s upstream assets. of transition risk as a key risk factor, In response to these possible Annual Report and Form 20-F 2017 developments, natural gas, which is the fossil energy that emits the least amount of GHG, represented nearly 48% of The transition to a lower carbon economy TOTAL’s production in 2017, compared to risks approximately 35% in 2005, and the Group’s Market-related risk: There is continuing objective is to grow this percentage over uncertainty over demand for oil and the long term with the expected growth gas after 2030, due to factors such of gas markets. In addition, the Group as technology development, climate ceased its coal production activities and policies, changing consumer behavior is developing its activities in the realms of and demographic changes. Statoil uses solar energy production and energy from scenario analysis to outline different biomass (renewable energies). possible energy futures. Technology development and increased cost- competitiveness of renewable energy and (1) As from 2021 or the current price in a given low-carbon technologies represent both country. threats and opportunities for Statoil. (2) Sensitivity calculated for a crude oil price of As an example, the development of battery $60/80/b compared to a reference scenario
technologies could allow more intermittent that takes account a CO2 price in the regions renewables to be used in the power sector. already covered by a carbon pricing system. This could impact Statoil’s gas sales, particularly if subsidies of renewable energy in Europe were to increase and/or costs of renewable energy were to significantly decrease.
On the other hand, Statoil’s renewable energy business could be impacted if such subsidies were reduced or withdrawn. As such, there is significant uncertainty regarding the long-term implications to costs and opportunities for Statoil in the transition to a lower-carbon economy.
23 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Figure 11: Eni’s consideration of different climate risk drivers , Eni Path to Decarbonization 2017
RISK RISK MITIGATION DRIVER FACTORS ACTIONS
MARKET • Decline in global hydrocarbon demand • Assets resilience to low carbon scenarios SCENARIO DRIVER • Loss of results and cash flow • Increasing role of natural gas in the portfolio • "Stranded asset" risk • Development of renewable energies and • Impacts on shareholders’ returns green business
REGULATORY • Increase in operating and investment costs • Resilience of assets to low carbon scenarios DRIVER • Reduction of oil demand • Energy efficiency initiatives • Commitment to the research on renewable technologies and green business • Sustainable mobility initiatives
TECHNOLOGICAL • Reduction of hydrocarbon demand due to • Development of renewable energy and green DRIVER technological breakthrough in the field of business electric vehicles or renewables and related • Energy efficiency initiatives economic impacts • Commitment in research and development • Digital trasformation to support efficiency (e.g. fugitive methane monitoring and preventive maintenance) • Partnership for the development of technological solutions
PHYSICAL • Interruptions of industrial operations • Adoption of additional technical measures to DRIVER • Damage to plants and infrastructures protect wells, plants and structures in areas • Recovery and maintenance costs most exposed to extreme events • Introduction of more stringent design and control criteria for new projects, which consider the effects of climate change scenarios • Geographical diversification of the portfolio
REPUTATIONAL • Impacts on stakeholders relations • Well structured climate change governance DRIVER • Impacts on stock price • Role and commitment of management • Partnerships to address climate change • Transparent communication of the decarbonization strategy
Figure 12: Figure 13: Shell’s explanation of short, medium Total’s explanation of how and long-term timeframes in its the company assesses asset business planning, Shell Annual vulnerability to climate change, Report 2017 Total Annual Report 2017
This is how we describe the different time horizons and the relevance for the The Group ensures that it assesses the identification of risks the business planning: vulnerability of its facilities to climate hazards so that the consequences do not • Short term (up to three years): detailed affect the integrity of the facilities, or the financial projections are developed safety or people. and used to manage performance and expectations on a three-year cycle. This More generally, natural hazards (climate- three-year plan is shared with the Board; related risks as well as seismic, tsunami, • Medium term (three years up to around soil strength and other risks) are taken into 10 years): the majority of production and account in the conception of industrial earnings expected to be generated in this facilities, which are designed to withstand period come from our existing assets; both normal and extreme conditions. and • Long term (beyond around 10 years): for The Group carries out a systematic this period, the current Shell portfolio is assessment of the possible repercussions not representative of our performance of climate change on its future projects. or the potential risks, and questions These analyses include a review by type emerging on the thematic structure of of risk (e.g., sea level, storms, temperature, the portfolio guide decision-making and permafrost) and take into account the risk identification. lifespan of the projects and their capacity to gradually adapt. These internal studies have not identified any facilities that cannot withstand the consequences of climate change known today.
24 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Scenarios are not forecasts, they STRATEGY: IMPACTS COMMENTARY OF CLIMATE RISK AND In brief, companies are encouraged are hypothetical constructs, used OPPORTUNITIES, STRATEGIC to provide disclosures that reflect to explore critical uncertainties and RESPONSE AND RESILIENCE the: support internal business decision • Potential impacts of risks and making. They can be used to look opportunities on business, at very specific and immediate Describe the impact of climate- strategy and financial planning situations like political challenges related risks and opportunities and how they are factored into or they can look out over decades on the organization’s businesses, decision-making. to consider the development of strategy and financial planning. the global energy system and the • Strategic response to energy transition. Given the primary Describe the resilience of the the identified risks and purpose of using scenarios to organization’s strategy, taking into opportunities. support internal decision-making, consideration different climate- related scenarios, including a 2°C along with their exploratory and or lower scenario. • Resilience of the strategy complex characteristics, it can be under different climate-related challenging to provide consistent scenarios. “The financial impacts...are driven and comparable disclosures related to scenario analysis. by the specific climate-related • How financial planning supports risks and opportunities to which the organization is exposed and the company’s risk mitigation All Forum member companies its strategic and risk management and opportunity realization use energy transition scenarios, decisions on managing those strategies, for example, by considering different possibilities risks (i.e.: mitigate, transfer, accept disclosing capital allocation and and their implications, to inform or control) and seizing those expenditure plans in place to opportunities.” (TCFD Final Report strategic choices in times of Page 8). support their strategies. uncertainty. In response to the TCFD guidance related to scenario Many factors influence and support analysis, Forum member companies The TCFD recommends that after resilience against climate-related a company has set out implications explain how their business strategies impacts and risks. It can be for different climate-related remain resilient to changes in the challenging to identify and provide scenarios, it should disclose “how energy system as the transition their strategies might change clear measures and metrics that progresses. to address potential risks and provide appropriate evidence of how opportunities” – for example by and why the company is resilient describing the options they have To help users understand how for bolstering their strategic and to these. Therefore, a range of these conclusions have been business resilience. approaches may be used to assess reached, companies can provide the potential impacts of climate details of the inputs, assumptions change on the business and the and analytical choices relevant to resilience of the company’s strategy the climate-related scenarios they to those impacts. Sensitivity use and the analyses they conduct. analysis is used to demonstrate They can also refer to recognized the resilience of the business to third-party published scenarios changes in variables such as the oil and assumptions. These may price or carbon price. include policy assumptions, energy demand projections and technology The TCFD recommends that pathways. companies take “into consideration different climate-related scenarios, Assumptions and parameters can including a 2°C or lower scenario.” be tracked and communicated in The purpose of using scenarios is to many different ways. For example, demonstrate a company’s resilience through monitoring, “signposts,” under a range of possible economic, “signal tracking” and “event triggers,” regulatory, social and physical all of which enable the organization conditions. to ascertain which scenarios are becoming more or less dominant over time.
25 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Companies can demonstrate Further, scenario analysis is a Today, the most useful disclosures how scenario analysis supports complex process that could be in response to the Strategy decision-making by describing how challenging and resource intensive recommendation are those that: financial planning supports their risk for smaller companies. While • Reflect the potential impacts of mitigation and opportunity realization scenario analysis can be a useful climate-related risks and how strategies and how strategies might exercise for companies on an they are factored into decision- change to address potential risks individual basis, it is questionable making and strategic responses. and opportunities. how valuable it is for investor decision-making, given the • Demonstrate resilience, capital Several of the Forum companies uncertainty and lack of comparability flexibility and capital discipline. use the IEA scenarios to perform of the analysis. According to the TCFD, sensitivity analysis. The assumptions “Organizations should consider underlying these scenarios are Over time, analysts and financial discussing their flexibility in publicly available through World institutions may evolve a practice positioning/repositioning capital Economic Outlook reports that are of performing their own scenario to address emerging climate- published by the IEA annually. analysis enabling more comparison related risks and opportunities.” and control of assumptions. (TCFD Annex page 48 – The Forum recognizes that scenario Supplemental Guidance for analysis can be difficult to compare Non-Financial Groups). between companies, in particular where different scenarios are used. Given the long-term nature of scenario analysis, a detailed description of the process and outcomes might not be required every year, provided that there have been no significant changes in the analysis.
At the moment, the best disclosures Capital and cost base flexibility are User perspective: Scenario analysis is most useful when: have long-term targets, measure useful indicators for assessing an progress towards those targets international oil company’s (IOC) • It is based on recent or current and have some good sensitivity resilience in a time of transition. IOCs information and current views analysis. But most disclosures are not are good at giving information about of technology development and contextualized. Some information is their capital flexibility over 5 years and costs. provided about CCS, natural carbon assessing the effect of dependencies • Disclosures are as specific as sinks, renewables, chemicals, increase such as the oil price. possible so that, for example, in downstream activity etc. but it is What could be better is communicating sensitivities to specific inputs are hard for investors to understand how how capital could be redeployed and clearly described. material this is in the context of overall the breakdown between committed • It is based on defined and disclosures. A more integrated picture spend and free spend. Analysts want recognized third party reference to link strategic discussions and to understand what value is being scenarios (such as issued by the decisions to operations is important. generated. Are investments supporting IEA) together with associated Investors value financial metrics that current returns or future prospects? Is demand profiles and oil and gas help them understand how money is the money being spent well? Over time, prices. being invested and whether investment we would like to know more about the Companies should be transparent decisions support future prospects potential for foregone capex, retirement about the thought process, and value creation in line with the obligations and divestment. assumptions and approaches Paris Agreement. Relevant financial Reserves, production and resources used. This could include qualitative information includes capital expenditure are used for long-term cash flow descriptions of the categories or plans and commitments, investment in valuations and the PV10 method of variables/parameters used (e.g. and projected earnings from non-fossil valuation. We would like to complement technology development/deployment fuel activities, and evidence of capital this with analysis that looks at whether and quantitative information relating to discipline to control costs and risks. the resource base is consistent with GDP, demographics, energy mix/supply, 2⁰C transition. However, underlying energy demand/use). data is missing and limited, preventing full modeling.
26 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Examples – Strategy B & C 10. Key quantitative assumptions/ Figure 14: parameters: population, GDP, Total’s strategic resilience, The following Figures provide Final consumption (by Carrier) Total Annual Report 2017 examples of disclosures that show: (EJ/year), Primary Energy The Group’s strategy incorporates the 1. Sensitivity to carbon pricing (by Carrier) (EJ/year), CO2 challenges of climate change, using as (Figures 14, 15, 16, 18 & 19). emissions and emissions a point of reference the 2°C Sustainable Development scenario of the IEA and its 2. Sensitivity to oil price (Figures captured (Figure 20). impact on energy markets. The Group 15 & 16). 11. Factors and options that ensures sustainability of its projects and long-term strategy relative to climate 3. Committed and uncommitted support strategic and business change issues by the incorporation into capital expenditure (Figures 16 resilience (Figures 21 & 22). financial evaluations of its investments submitted to the Executive Committee & 18). 12. The optimization and a long-term CO2 price of $30 to $40 per 4. Reserve life (Figure 14). development of the business, ton (depending on the crude price), or the current CO2 price if this is higher in a given 5. Descriptions of portfolio its portfolio (e.g. via ventures country. Regulations designed to gradually optimization (Figures 18 & 19). into new energies/renewables limit fossil fuel use may, depending on the GHG emission limits and time horizons 6. Management of the cost base business lines or diversified set, negatively and significantly affect the (Figures 17 & 19). downstream product development of projects, as well as the economic value of certain of the Group’s 7. Internal rate of return offerings), new capabilities assets. Internal studies conducted by TOTAL have shown that a long-term CO (Figure 18). or technologies (e.g. carbon 2 price of $40/t(1) applied worldwide would 8. Production forecasts capture technologies) (Figures have a negative impact of around 5% on (Figure 19). 23 & 24). the discounted present value of the Group’s assets (upstream and downstream)(2). In 9. Breakeven and cost of supply 13. Capital allocation and addition, the average reserve life of the (Figures 17, 18 & 19). expenditure plans in place to Group’s proved and probable reserves is approximately 20 years and the discounted support strategies (Figures value of proved and probable reserves with 25 & 26). a reserve life of more than 20 years is less than 10% of the discounted value of the Group’s upstream assets.
(1) As from 2021 or the current price in a given country. (2) Sensitivity calculated for a crude oil price of $60/80/b compared to a reference scenario
that takes account a CO2 price in the regions already covered by a carbon pricing system.
27 Climate-related financial disclosure by oil and gas companies Geographic diversity Our global business has operations in more than 70 countries, giving us a wide geographic reach. This exposure is spread across countries at different stages in their economic development and transition to lower-carbon energy, reducing our exposure to potential rapid changes in any one country.
Sensitivity to oil prices The capital investment levels included in our business In 2017, 19 countries accounted Assuming we meet the conditions in our operational plan offer sufficient flexibility to be reduced by $5-10 plans, especially with regards to production and costs, billion per year, without materially impacting the long- for about 80% of Shell’s cash flow we estimate that to 2027, a $10 per barrel change term sustainability of our business. from operations. These included in oil prices would be expected to have a roughly Australia, Brazil, Canada, Nigeria, $6 billion impact per year on our cash flow from Our financial framework could sustain a potential Qatar and the USA. We expect operations. This is an indicative estimate and not a reduction of up to $15 billion per year in organic a similar spread in our sources of prediction. free cash flow, according to our estimates. Some of the ways we could respond to this shortfall include cash flow from operations in the Based on this assumption, if the oil price fell from reducing capital investment to below $25 billion, coming decade. around $65 per barrel today to $40 per barrel money- further reducing operational expenditure, increasing of-the-day, our cash flow from operations would be our levels of debt and accelerating divestments. During this time, we expect to see 4 expectedEffective to decrease disclosure by $15 billion perpractice year.12 agains the TCFD recommendations a reduction in demand for oil and If prices were to remain below the bottom of our range Similarly, if the oil price rose to $100 per barrel for more than three to five years, an outcome we think gas in some countries, as well money-of-the-day, our cash flow from operations would unlikely, we would consider making further strategic, as rapid growth in others. For be expected to rise by $21 billion per year.12 portfolio and financial framework choices to remain example, our Sky scenario shows financially resilient. that demand for oil starts to decline In addition to the resilience of our cash flow from globally after 2025 but still grows operations, we are also managing the resilience of our Conversely, in periods of high oil and gas prices we in some countries, including India Figureorganic free 15: cash flow by actively managing the upper would use the excess organic free cash flow to strengthen Shell’slevels of ourdisclosure expected capital ofinvestment. the potential impactour balance ofsheet carbon and consider and share buybacks.oil price changes on their cash flow and portfolio diversity andproviding China until the middle of resilience through price cycles, Shell Energy Transition Report the century.
OUR PORTFOLIO DIVERSITY PROVIDES We are adapting the products we RESILIENCE THROUGH PRICE CYCLES offer to match the different needs of A $10 PER BARREL A $10 PER TONNE our customers in different countries. 2013 2014 2015 2016 2017 CHANGE IN OIL PRICES INCREASE IN GLOBAL CO2 $ billion $/bbl WOULD BE EXPECTED TO HAVE A ROUGHLY PRICES WOULD RESULT IN 25 20 100 80 $6 BILLION A REDUCTION 15
Earnings 60 10 40 IMPACT PER YEAR OF ABOUT 5 20 ON OUR CASH FLOW 0 0
FROM OPERATIONS $1 BILLION -5 IN SHELL’S PRE-TAX Downstream Integrated Gas Brent price (RHS) CASH FLOWS Upstream Corporate
Source: Shell analysis.
Figure 16: 29 Equinor12 Significant variations(formerly in oil and/or gas Statoil) prices will potentially stress-testing impact certain operating costs, or and flexibility, Socially Responsible Investor Day presentation result in foreign exchange movements the effect of which are not reflected in this price sensitivity.
Since the acquisition of BG Group, we have reduced underlying operating expenses15 in Integrated Gas by around 11%, while increasing our sales volumes by 15%. The reliability of our LNG plants has been on average above 95% for the last 3 years. As a result, AVERAGE IEA CRUDE OIL IMPORT PRICE BY SCENARIO10 the forward-delivered cost of LNG from our operational supply sources
160 is below expected pricing levels. 140 120 Alongside our existing assets, 100 we are improving the cost 80 • • competitiveness of our future • 60 supply projects. Over the last few 40 years, we have lowered the unit 20 CPS - Oil IEA (real) - $2016/bcost of supply16 of the investment NPS - Oil •IEA (real) - $2016/b 0 options we hold in our portfolio. 2010 2015 2020 2025 2030 2035 2040 SDS - Oil IEA (real) - $2016/b 2000 2005 We aim to reduce costs to a level that makes any project we execute Source: IEA WEO 2017. able to produce and deliver LNG at a price that is competitive in relevant gas markets. This is a For comparison, the average Brent price for the last Today, around 60% of our Integrated Gas portfolio necessary condition for any further fi ve years has been around $70 per barrel. The is linked to oil prices. Based on our view of possible investments in LNG supply. IEA’s most rapid transition scenario – the Sustainable future oil prices, we consider a range of between $6 Development Scenario – indicates an average oil and $12 per million British thermal units (MMBtu) Given the long-term nature of gas price of $6811 per barrel in the period to 2030. The to 2030 for LNG to be a plausible price for Asian projects, we usually only develop FigureIEA’s Current 17:Policies Scenario, that models current and markets, where we sell around 60% of our LNG. Shell’s illustration of Industry Undeveloped Resourcesinitially part of the Breakeven resources, which Cost Curve Ranges announced energy policies, indicates an average price allows us to tailor our capital &of $90LNG11 per Unit barrel forCost the same of period. Supply For Future Projects, Shell Energy Transition Report investments according to demand in later years. When combined INDUSTRY UNDEVELOPED RESOURCES BREAKEVEN COST CURVE RANGESwith our trading and optimisation UNIT COST OF SUPPLY FOR FUTURE PROJECTS (PRE-FID) (INCLUDING YTF*) capabilities, this provides flexibility. $/mmbtu 160 We are increasingly bringing gas 15 140 and LNG produced by third parties
120 into our portfolio, making our revenues less dependent on equity 100 gas reserves. 80 10
60 Additionally, we are pursuing
Breakeven (Brent $/bbl) 40 ways to provide electricity to our facilities from renewable sources to 20 lower CO emissions and increase 2 5 0 sustainability, in close collaboration 0 200 400 600 800 1000 1200 1400 1600 1800 2000 with our New Energies business. Undeveloped Crude resource (bin bbl)
Median R/P** (Years) 0 15 Operating$40/bbl expenses excluding11 New Energies North American LTO OPEC Onshore Conventional Non-OPEC Onshore Conventional and scope/accounting$80/bbl changes.33 2014 2015 2016 2017 16 Cost of supply includes shipping costs, Bitumen/EHO Deep Water OPEC Offshore Shelf Arctic Non-OPEC Offshore Shelf $120/bbl 52 excludes finding costs and fiscal take. Note: Diamonds represent the funnel of future supply options in our LNG projects portfolio. Unit cost of supply includes all estimated costs from reservoir to delivery at LNG receiving terminals. * YTF: Yet To Find Source: Shell. ** R/P is Undeveloped Resource volume divided by the current production rate, which gives an indication of future development potential compared to needs. It excludes volumes from already developed fi elds. Source: Wood Mackenzie, Rystad Energy, IHS, EIA, NEB (Canada), IEA and Shell internal data/analysis.
10 Actual 2017 oil prices averaged $54 per barrel and actual prices for the 11 The IEA oil price refl ects the “weighted average import price among IEA fi rst three months of 2018 averaged $66 per barrel (source: US Energy member countries”. Source World Economic Outlook 2018. Information Administration).
35
28 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Figure 18: Eni’s Portfolio Resilience, Eni, Path to Decarbonization 2017 Portfolio resilience
Portfolio resilience is ensured by the monitoring of projects, based on the upstream sector, since the break- regular review of the assets portfolio following assumptions: even price of Oil & Gas projects have and new investments in order to • Eni’s scenario of hydrocarbon prices been gradually reduced through the
identify and assess potential emerging and cost of CO2; optimization of the asset portfolio with risks associated with changes in • IEA SDS low-carbon scenario of the high incidence of conventional gas,
emissions regulations and in the hydrocarbon prices and cost of CO2. near-field exploration and efficiency physical conditions of operations. The results of the most recent improvements in development projects. The return on the main investment monitoring have highlighted marginal In this regard, the management has projects is tested using a sensitivity to impacts (-0.8 percentage points) subjected to a sensitivity analysis
carbon pricing of 40 $/ton CO2eq in on internal return rates. In addition, the book value of all CGUs (Cash actual terms in 2015, when the Final the portfolio composition and Eni’s Generating Units) in the upstream Investment Decisions (FID) is made decarbonization strategy minimises sector, adopting the IEA SDS scenario; and later during the six-monthly the risk of stranded assets in the this stress test highlighted the substantial retention of the asset book RESPONDING TO CLIMATE CHANGE values, with a reduction of about 4% of CO PRICES USED FOR SENSITIVITY ANALYSIS 2 the fair value. ($/ton CO₂)
250 The analysis conducted in 2017 demonstrated that due to the There was a slight decrease in the volume of CO injected for CO₂ IEA SDS 2 significant differences inHaving assumptions tested around its oil resilience, and gas prices Eni’s storage from 1.38 million tonnes to 1.36 million tonnes in 200 in the different IEA scenarios,flexibility the impact and on Statoil’sadaptability net present are 2017. The main contributing factor was the turnaround at the value (NPV) varies significantly in the various scenarios.18 Hammerfest LNG plant. 150 confirmed in the fact that the Due to the combination of a high CO price used by Statoil in Direct greenhouse gas emissions (so called Scope 1 emissions) 100 uncommitted2 portion of the capital internal planning assumptions, and a relatively low CO2 intensity in 2017 remained at the same level as for 2016, at 15.4 million CO₂ ENI (around half of the industry average19) the changes in value are tonnes CO equivalents. expenditures is 36% in 2018-2021 2 50 almost entirely driven by the oil and gas price assumptions. Methane (CH ) emissions decreased from 24,200 tonnes in 0 and equal to approximately 50% with 4 IEA’s ‘’New policies scenario’’ could have a positive impact of 2016 to 22,200 tonnes in 2017. 2018 2023 2028 2033 2038 around 20% and the ‘’Currentreference policies to scenario’’ the last a positive two-year impact period of around 42% on Statoil’s baseline NPV compared to Statoil’s Several CO emission reduction initiatives were implemented Eni elaborations on IEA data 2020-2021. 2 internal planning assumptions as of 1 December 2017. The during 2017, amounting to a total of around 360,000 tonnes
“Sustainable development scenario”, which is largely compatible of CO2. The largest contributors to the reductions included the with a global warming of a maximum of two degrees Celsius with following: 50% probability, could have a negative impact of approximately 13% on Statoil’s NPV. • Optimising production in order to enable the stopping of one turbine on weekdays and energy efficiency modifications at Portfolio optimisation and efficiency improvements have the Hammerfest liquified natural gas (LNG) plant: 120,000 Figure 19: substantially strengthened the robustness of our portfolio during tonnes Equinor (formerly Statoil) analysis of the impact of thethe pastIEA few scenarios years, and despite on the negative its net impact present on NPV in the value, • SustainabilityEnergy efficiency measures Report at the Kårstø2017 gas processing ‘’sustainable development scenario’’, we see very limited stranding plant: 42,000 tonnes
of assets. Statoil’s portfolio continued to improve its robustness • CO2 removal from Gudrun gas at Sleipner and injection for
in 2017 compared to 2016 – achieving a breakeven oil price of storage of the CO2 into the Utsira formation: 43,000 tonnes USD 21 per barrel for next generation20 projects. • Flaring reduction measures at our offshore Gullfaks field: 35,000 tonnes In 2016 our stress test, using the IEA’s 450 two degrees celsius scenario, showed a positive impact of 6% over our assumptions. Statoil was awarded the Rystad Energy ‘’green initiator of the The difference is largely related to significantly different oil and year’’ award in February 2018, in recognition of our climate gas price assumptions in the IEA scenario which now includes strategy and environmental goals, and the energy improvement factors such as access to energy and reduction of pollution, measures we have implemented in recent years, through a alongside climate goals. company culture that enables contributions from across the company. This analysis is based on Statoil’s and the IEA’s energy scenario assumptions which may not be accurate and which are likely New energy solutions and low carbon to develop over time as new information becomes available. Scenarios should not be mistaken for forecasts or predictions. research and development Accordingly, there can be no assurance that the assessment is a reliable indicator of the actual impact of climate change on In 2017 the share of the total research and development (R&D) Statoil’s portfolio. operating expenditure allocated to new energy solutions and energy efficiency remained at approximately the same level as for 2016, at 18%. Statoil’s target is to reach a 25% share of R&D Greenhouse gas emissions and carbon operational expenditure committed to low carbon projects by intensity of our oil and gas portfolio 2020.
The upstream CO2 intensity for Statoil’s operated production Total renewable energy delivered from our wind operations in decreased from 10kg per boe in 2016 to 9kg per boe in 2017, 2017 was 830 gigawatt hours (GWh) (Statoil equity share), mainly due to the exit from our activities in the Canadian oil compared to 423GWh in 2016. This was delivered through the sands projects and increased export of gas from the electrified Hywind Demo in Norway and Sheringham Shoal, Dudgeon and Troll field. Hywind Scotland in the UK.
Total CO2 emissions increased slightly from 14.8 million tonnes Capital expenditure (capex) for new energy solutions during in 2016 to 14.9 million tonnes in 2017. The main contributors 2017 was in line with the ambition for annual investments of to this increase were the extensive turnaround activity in our between USD 500 million and 750 million. mid-stream business, including Mongstad, Kalundborg and Kårstø, and increased drilling activity in our onshore shale gas and tight all assets in the USA.
18 The sensitivity analysis has been conducted by replacing Statoil’s oil, gas and carbon price assumptions as of 1 December 2017 with the price assumptions in the IEA’s scenarios in the World Economic Outlook 2017 report 19 Source: Association of International Oil and Gas Producers (IOGP) Environmental Performance data 2017 20 Statoil and partner operated projects sanctioned since 2015 or planned for sanction, with start up before 2022. Volume weighted
24 Statoil, Sustainability report 2017
29 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Figure 20: Shell’s Sky Scenario Numbers – Total Final (Energy) Consumption (EJ/year) – By Sector & Carrier, Shell - The numbers behind Sky
Year 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 2080 2085 2090 2095 2100
3 Total Final Consumption - By Sector (EJ / year)
1 Heavy Industry 36.31 37.41 36.74 40.64 43.02 51.22 62.06 67.06 70.09 73.95 76.15 79.38 82.47 85.79 87.40 88.32 87.43 85.09 82.00 79.43 77.21 75.75 74.78 73.81 72.73 2 Agriculture & Other Industry 51.21 48.90 56.55 45.12 44.32 51.42 57.48 59.68 64.31 69.85 73.62 76.66 78.69 80.47 82.43 84.27 85.97 87.06 87.75 87.58 86.81 85.97 85.36 84.71 84.03 3 Services 16.83 17.55 18.83 21.09 23.31 27.01 29.94 31.59 34.73 39.64 44.89 50.75 56.98 64.32 71.86 78.89 85.94 91.43 95.45 97.94 99.50 98.70 97.29 95.87 93.78 4 Passenger Transport - Ship 0.33 0.54 0.50 0.47 0.56 0.64 0.73 0.96 1.02 1.05 1.08 1.11 1.13 1.11 1.09 1.06 1.03 1.00 0.96 0.92 0.88 0.84 0.80 0.75 0.71 5 Passenger Transport - Rail 0.69 0.72 0.85 0.68 0.67 0.72 0.72 0.78 0.81 0.84 0.87 0.89 0.91 0.94 0.97 1.00 1.00 1.00 0.99 0.98 0.97 0.95 0.94 0.93 0.91 6 Passenger Transport - Road 24.14 25.26 28.24 31.31 35.60 40.61 46.29 51.23 55.14 56.71 51.88 51.51 50.12 48.06 47.47 47.58 47.57 46.90 47.51 47.69 47.64 47.73 47.85 47.89 47.87 7 Passenger Transport - Air 4.84 5.32 6.20 6.31 7.50 8.14 8.35 9.68 9.92 10.85 11.38 13.29 15.45 17.58 20.02 22.15 24.51 26.70 29.01 31.08 32.94 34.66 36.34 37.97 39.48 8 Freight Transport - Ship 5.79 5.03 5.91 6.64 7.77 8.84 9.97 10.00 10.62 11.53 12.24 13.04 13.71 14.25 14.68 14.97 15.17 15.25 15.27 15.22 15.14 15.05 14.95 14.82 14.66 9 Freight Transport - Rail 2.49 2.29 1.63 1.26 1.30 1.57 1.43 1.51 1.55 1.57 1.54 1.58 1.65 1.73 1.82 1.89 1.96 2.01 2.06 2.13 2.20 2.28 2.36 2.45 2.54 10 Freight Transport - Road 12.30 13.99 18.91 21.20 24.52 27.49 29.72 34.27 36.96 40.41 42.52 45.72 48.75 51.79 55.40 58.98 62.81 66.31 69.72 72.66 75.12 77.21 79.01 80.54 81.83 11 Freight Transport - Air 1.01 1.19 1.43 1.69 1.97 2.12 2.10 2.50 2.85 3.01 3.10 3.50 3.94 4.35 4.81 5.20 5.65 6.07 6.49 6.84 7.12 7.37 7.62 7.85 8.08 12 Residential - Heating & Cooking 49.27 55.33 58.23 65.08 66.96 69.07 70.73 71.86 74.61 75.27 73.14 71.50 69.00 67.48 66.25 65.71 65.64 65.85 65.87 65.28 64.46 63.02 61.30 59.42 57.24 13 Residential - Lighting & Appliances 3.99 4.84 5.95 7.26 8.79 10.71 12.73 14.10 15.64 17.45 18.70 19.97 20.83 21.91 22.99 24.09 25.10 25.42 25.48 24.92 25.06 25.20 25.13 25.05 24.82 14 Non Energy Use 14.81 16.17 20.00 22.49 25.83 29.89 32.59 35.01 38.38 43.16 47.28 52.82 58.80 64.96 71.59 77.75 83.63 89.18 94.36 99.14 103.57 107.83 111.87 115.72 119.25 Total 224.00 234.54 259.98 271.24 292.11 329.45 364.85 390.21 416.61 445.28 458.39 481.73 502.44 524.75 548.79 571.85 593.39 609.26 622.93 631.82 638.61 642.57 645.59 647.80 647.92
4 Total Final Consumption - By Carrier (EJ / year)
1 Solid Hydrocarbon Fuels 26.96 29.53 29.30 25.78 21.43 31.58 39.46 41.16 40.05 41.78 43.12 45.39 48.93 53.82 57.98 59.30 56.85 52.33 47.49 44.34 42.86 42.55 43.23 44.13 44.85 2 Liquid Hydrocarbon Fuels 96.86 92.61 101.23 107.61 118.60 131.25 137.90 146.23 156.95 164.56 158.34 157.18 154.55 149.56 144.81 140.00 133.74 124.48 115.43 109.70 105.91 103.54 101.92 100.18 97.65 3 Gaseous Hydrocarbon Fuels 41.53 44.86 47.47 51.69 58.37 62.56 71.51 77.10 83.67 87.75 85.05 80.06 73.92 66.31 58.46 52.61 47.84 44.08 43.47 43.49 43.43 43.04 42.74 42.33 41.61 4 Electricity 24.50 28.87 34.82 39.14 45.67 54.51 64.49 72.78 83.26 99.98 120.61 146.88 173.71 204.11 235.56 264.71 294.64 323.21 347.44 361.99 370.17 372.38 371.21 368.36 363.75 5 Hydrogen 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.04 0.14 0.43 1.04 2.18 4.37 8.74 15.20 23.52 31.61 38.70 44.35 49.27 53.89 58.49 63.46 68.81 6 Heat 5.05 6.79 14.17 12.11 10.60 11.16 12.12 12.59 13.36 14.19 14.16 14.02 13.98 13.53 12.51 11.63 10.68 9.62 8.50 7.58 7.26 7.04 6.87 6.74 6.57 7 Biomass - Commercial 7.75 8.61 6.99 7.06 8.62 9.23 10.19 10.99 10.50 10.10 12.34 15.91 18.05 19.84 21.34 22.12 22.09 21.37 20.38 19.53 19.18 19.80 20.93 22.50 24.64 8 Biomass - Traditional 21.34 23.28 25.99 27.86 28.81 29.16 29.18 29.35 28.78 26.78 24.34 21.25 17.12 13.21 9.41 6.27 4.03 2.56 1.53 0.83 0.54 0.32 0.20 0.10 0.04 Total 224.00 234.54 259.98 271.24 292.11 329.45 364.85 390.21 416.61 445.28 458.39 481.73 502.44 524.75 548.79 571.85 593.39 609.26 622.93 631.82 638.61 642.57 645.59 647.80 647.92
Figure 21: Shell’s Strategic approach and investment decision-making, Shell Energy Transition Report
Our strategic ambitions are to be a world-class We assess portfolio decisions, including (for example, by adding new wells to existing investment case, to thrive through the energy divestments and investments, against potential deep-water fields); transition, and to maintain a strong societal impacts from the transition to lower-carbon • Improving capital efficiency to lower break- licence to operate. energy. These include higher regulatory costs even prices; linked to carbon emissions and lower demand • Considering specific performance standards
We aim to grow our business in areas that will be for oil and gas. on CO2 intensity for various asset classes essential in the energy transition, and where we when investing in new assets; see growth in demand over the next decade. We When making investments we consider the • Deploying technologies to further drive expect these will include natural gas, chemicals, following factors to enhance resilience: resilience, including the use of CCS and electricity, renewable power, and new fuels such • Short-cycle investment and flexibility to renewables in Upstream assets; as biofuels and hydrogen. We are also growing • GHG and energy management to lower CO allow production to increase or decrease in 2 our oil business, including in deep water and response to changes in demand or price (for intensity and potential costs from carbon shales, to meet continued demand. example in Shales); prices in our operating assets. • Focusing on projects that generate positive WtW gCO e/MJ1 cash flow in a short period 2 of time 90 S
~20% reduction by 2035 60
Figure 22: In line with society by 2050 Shell’s ambition for a net carbon footprint, Shell Energy Transition30 Report Society trajectory2 WtW gCO e/MJ1 2 Shell trajectory2 90 S 0 2015 2020 2025 2030 2035 2040 2045 2050 ~20% reduction by 2035 60 1 Net Carbon Footprint measured on an aggregate “well to wheel” or “well to wire” basis, from production through to consumption,
on grams of CO2 equivalent per megajoule of energy products consumed; chemicals + lubricants products are excluded. Carbon In line with society by 2050 30 Footprint of the energy system is modelled using Shell methodology aggregating life-cycle emissions of energy products on a fossil- 2 Society trajectory equivalence basis. The methodology will be further reviewed and Shell trajectory2 validated in collaboration with external experts. 2 Potential society trajectory includes analysis from Shell scenarios 0 estimate of Net Zero Emissions by 2070 and IEA Energy Technology 2015 2020 2025 2030 2035 2040 2045 2050 Perspectives 2017; potential illustrative Shell trajectory.
1 Net Carbon Footprint measured on an aggregate “well to wheel” or “well to wire” basis, from production through to consumption,
on grams of CO2 equivalent per megajoule of energy products consumed; chemicals + lubricants products are excluded. Carbon Footprint of the energy system is modelled using Shell methodology aggregating life-cycle emissions of energy products on a fossil- equivalence basis. The methodology will be further reviewed and validated in collaboration with external experts. 2 Potential society trajectory includes analysis from Shell scenarios estimate of Net Zero Emissions by 2070 and IEA Energy Technology 30 Climate-related financial disclosure by oil and gas companies Perspectives 2017; potential illustrative Shell trajectory. Downstream ELECTRIC VEHICLES AND Our Downstream business comprises two strategic themes: Oil IMPACT ON LIQUID FUELS Products and Chemicals. Oil Products activities are marketing, Shell’s Mountains, Oceans and Sky and refi ning and trading. Marketing includes retail, lubricants, scenarios show a rise in demand business-to-business, pipelines and biofuels. Chemicals has for electric vehicles (EVs) in the manufacturing plants and its own marketing network. In trading next few decades. and supply, we trade crude oil, oil products and petrochemicals. This trend is fastest in Sky, where MARKETING more than half of global new We expect demand for oil products to grow to 2030. That’s passenger car sales are electric by because some key sectors such as road freight, aviation and 2030. By 2050, consumers in this petrochemicals have strong underlying growth in demand, and scenario will not be able to buy an an expected slower transition away from oil than other sectors. internal combustion engine (ICE) anywhere in the world. We expect a faster transition in sectors like passenger cars, as more people switch to EVs (see box on EVs). As a result, the number of ICE cars will fall over time and the number In 2017, our marketing business represented around 50% of of passenger kilometres driven on Downstream’s4 Effective earnings. disclosure We expect practice marketing againsto deliver the an TCFD recommendationselectricity will rise rapidly. incremental $2.5 billion in earnings per year by 2025. Combined with the impact of better Earnings from our Marketing business17 are well spread and in mileage of the remaining ICE cars, 2017 were split between the Americas (44%), East Asia (23%), this means global consumption and the European Union and Africa (33%). of liquid hydrocarbon fuels in the passenger segment falls by 1.5-2 FigureThis diversity 23: is important because it gives us exposure to million barrels per day by 2030 Shell’sdifferent regional resilience economic in cycles the and medium to the different term pace to of 2030 - developmentscompared with today.in retail & chemicals, Shell Energy Transition Report energy transition in each region. This transition will happen at RETAIL CHEMICALSdifferent paces in different parts CHEMICALS DEMAND OUTLOOK By 2025, we aim to achieve 40 million daily customers and We plan toof increase the world. earnings In the Skyin our scenario, Chemicals
55,000 sites around the world, compared to 30 million daily business from100% $2.6 of newbillion car in sales 2017 will to bebetween Petrochemicals demand in thousand tonnes year customers in 44,000 sites around the world in 2017. Around $3.5 billionelectric and $4.0 by 2030 billion in perplaces year such by 2025. 00,000 half our new sites will be in fast-growing markets such as China, as China and Western Europe,
India, Indonesia, Mexico and Russia. We expectand by strong 2035demand in Northgrowth America for chemicals 00,000 in the mediumand someterm, mostlyother parts because of the of Asiaeconomic
We are making our retail business resilient to potential changes in growth andPacifi demand c region. for the everyday products 00,000 Asia demand for oil. For example, we plan to increase the contribution that petrochemicals help produce. Chemicals of non-fuel retail sales to margins in our Shell-operated retail can also helpOther deliver countries, some includingof the materials India that 200,000 Asia network to 50%, from about 35% today. This means adding will help theand energy those transitionin Africa, –take such longer as high- 100,000 more than 5,000 convenience stores in our network by 2025. performanceto makeinsulation the change. for homes This and is partlylight plastic
parts in carsdue and to theplanes time that it takes can tohelp build save the energy. 0 We also plan to increase the portion of our fuels business that Petrochemicalspower are infrastructure also ingredients required for componentsin 200 200 2010 201 2020 202 20 0 comes from low-emission energy solutions to 20% by 2025, in energy-effithose cient countries lighting where and low-temperature the grid is ear from around 7% today. detergents.still underdeveloped. N. America Europe Asia We have opened more than 20 charging locations – called Shell Since 1998, we have reduced the number of S. America iddle East Others
Recharge – for EVs in the UK and the Netherlands. Together with chemicals production sites from 133 to 15. Our Crac er base chemicals aromatics, derivatives, ethylene, propylene and IONITY, an operator of high-powered charging networks, we plan global asset portfolio now offers both a regional isobutylene . Source I S Shell analysis. to offer 500 charge points across 10 European countries, starting balance and a balanced feedstock exposure. This with 80 of our biggest service stations in the next two years. ensures our resilience in a range of volatile market environments.
17 This excludes pipelines. 18 The Organisation for Economic Co-operation and Development. Figure 24: Figure 25: Shell’s illustrative activities supporting their net carbon footprint ambition, Equinor disclosure planned Capital Shell Energy Transition Report EIGHT CORE MARKETS FOR THE CHEMICAL INDUSTRYExpenditure in renewable energies, Capital Markets Update 2017, CEO’s Big ambitions • Changing the proportion of gas in the total presentation Reducing our Net Carbon Footprint will amount of oil and gas we produce, so that Capex potential per year require us to reduce emissions from our own natural gas increases from 50% to 75%. USD million operations. But most of the reductions will • Selling the fuel produced by 25 biofuel come from changing our portfolio to supply companies the size of our joint venture customers more products that produce lower Raízen in Brazil. emissions. We will do this in ways that make • Selling enough electricity on our forecourts 1500 commercial sense for Shell, in response to around the world to meet three times the 750 - changing consumer demand and in step with total demand for power in the Netherlands. ~ - 750 society’s progress. • DevelopingConsumer the capacity of Construction20 CCS plants Packaging500 500Agriculture Clothing, furniture, toys PVC pipes, plywood, insulation Bottles food packaging, crates Fertilizer To give some sense of the scale of the the size of our Quest CCS plant in Canada. ambition, these are some of the changes that • Planting forests the size of Spain to act as a 2016 2017-20 2020-25 reducing our Net Carbon Footprint to match carbon sink for emissions that still exist. the energy system by 2050 could mean for our business. And it could mean doing not just one, These examples reflect Shell’s size and scale but all of them. in the overall energy system: Shell produces Growth opportunities around 1.5% of the world’s total energy and we • Selling the output from 200 large offshore sell about 3% of the total energy consumed. wind farms the size of our planned Borssele (1) They also provide a sense of the far greater • 15-20% of capex in 2030 wind farm in the North Sea. ambition that society has set itself in the Paris Agreement. • Offshore wind and other options
Electronics Transportation Durables• Low &-carbon industrial solutionsEnergy and water Phone casings, resins Upholstery, car body parts Wiring, cables, hoses Fuel additives, water treatment
(1) Indicative, based on potential future corporate portfolio.
31 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Figure 26: Eni’s decarbonization strategy in response to climate change risks and opportunities, Eni, Path to Decarbonization, 2017
REDUCTION OF LOW CARBON OIL & GAS GREEN GHG EMISSIONS PORTFOLIO BUSINESSES
• Reduction of carbon intensity of the • Greater incidence of natural gas • Development of renewables different businesses through energy in the hydrocarbon resources on industrial scale efficiency initiatives • Upstream projects in execution • Green refinery: main producer • Zeroing of process flaring with a low breakeven price of green diesel in Europe
• Abatement of fugitive methane emissions • Conventional and low CO2 intensity • Green chemistry: new platform • Use of carbon offsets for emissions hydrocarbon portfolio, resilient to of bio-based products compensation a low carbon scenario
RESEARCH AND DEVELOPMENT PARTNERSHIPS
• Development of innovative and transversal solutions for all company's activities by leveraging on proprietary technologies • Development of technologies to support energy transition with the Energy Transition Program • Global network of partnerships
PILLARS OF ENI’S STRATEGY COMMITMENTS TARGETS
Reduction of GHG emission intensity index (upstream) 2025: -43% vs 2014
Zeroing of hydrocarbons' volumes sent to process Zero process flaring by 2025 REDUCTION IN flaring GHG EMISSIONS Reduction of fugitive methane emissions 2025: -80% vs 2014 (upstream) Investments in GHG emissions reduction (100% >€0.55 Bln in 2018-2021 operated activities) - upstream Promotion of Natural Gas: incidence of natural gas on total equity hydrocarbon resources 3P+ Contingent: >50% at 31/12/2017
LOW CARBON AND RESILIENT Portfolio based on conventional resources, competitive even in low carbon scenarios: OIL & GAS PORTFOLIO • upstream projects in execution -> Brent break-even(a) price <30 $/bl and internal rate of return equal to 13% (Brent @ 50 $/bl) and to 18% (Brent @ 70 $/bl) with flat scenario from 2018 • portfolio resilience tested on 100% of the upstream cash generating unit to low carbon IEA SDS scenario: fair value reduction of 4%
2021: 1 GW installed capacity Development of renewables 2018-2021 investments equal to €1.2 Bln 2025: 5 GW installed capacity Green refinery: Venice, capacity of 560 kton/y from 2021 Gela, capacity of 720 kton/y and completion by the GREEN BUSINESS end of 2018 DEVELOPMENT Reconversion of traditional industrial sites in green Biobased chemicals: plants and new chemical platform of bio-based Porto Torres, bio-intermediates production (capacity products of 70 kton/y) Porto Marghera, bio-chemicals through the metathesis of vegetable oils
2018-2021 investments equal to approximately € 390 Mln RESEARCH AND DEVELOPMENT Research projects on energy transition, renewable, 2018-2021 expenditures equal to approximately RELATED TO DECARBONIZATION biorefining and green chemistry € 280 Mln Oil & Gas Climate Initiative (OGCI) - new $ 10 Mln/year from 2017 for 10 years technologies to reduce GHG emissions MAIN PARTNERSHIPS Massachusetts Institute of Technology (MIT)/ Initial investment equal to $ 50 Mln for the industrial Commonwealth Fusion Systems (CFS) development of fusion power generation technology
(a) Actual Brent price that allows to recover, in the full life, costs, included fiscal costs, and to remunerate the capital employed at the Weighted Average Cost of Capital (WACC).
32 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
RISK MANAGEMENT • Information about how As with governance, if climate- the company assesses related risks and opportunities are the materiality and relative already integrated into a company’s Disclose how the organization identifies, assesses and manages significance of climate-related overall risk management structures, climate-related risks risks in relation to other risks. a detailed description of the processes used to manage these • Information about the scope of is unlikely to add value to the report risk management frameworks and might appear repetitive. This The TCFD recommends that (e.g. whether they apply to is because where climate change companies: wholly owned companies, joint considerations are embedded into A. Describe the organization’s ventures, companies in which overall risk management processes, processes for identifying and there is a controlling interest assessing climate-related risks it follows that major decisions take and/or individual assets). B. Describe the organization’s account of climate change. processes for managing • The tools used for risk climate-related risks identification. For example, at Therefore, provided that the annual C. Describe how processes for the asset level, tools such as report describes the company’s identifying, assessing and internal carbon pricing and risk management process and it managing climate-related is clear that it applies equally to risks are integrated into the stress-testing against various organization’s overall risk oil, gas and carbon prices can climate change, disclosures about management be used to screen new projects climate change risk management for risk. processes can be kept concise and cross-reference the company’s • Whether and how screening overall risk management approach COMMENTARY processes have affected for further detail. Similarly, where project development plans or climate change issues have been As a first step, disclosure can focus other measures put in place to fully integrated into broader risk on a description of the process manage climate-related risk. management processes that do used for managing climate- not change significantly over time, a related risks and opportunities. • Explanation about how policies detailed description of the process As disclosure practices develop, are used for management might not be required every year. information about the risk of climate-related risks and management process can be opportunities, why companies complemented with: have made particular risk management choices, how the • An explanation of whether and policies are executed, who is how the processes relating to involved and what decisions climate change are integrated result from the risk management into overall risk management process. structures.
33 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Examples – Risk management Figure 27: Figure 28: Total’s disclosure around the Equinor (formerly Statoil) disclosure The following Figures provide integration of climate risk around company risk management, examples of disclosures that: management, Total, Annual Report Annual Report and Form 20-F 2017 2017 1. Identify that climate change risk is integrated into the Integration of climate-related risks into The Board focuses on ensuring adequate organization’s overall risk global risk management control of the company’s internal control management (Figure 27). The risks related to climate issues are part and overall risk management. The Board of the major risks identified and analyzed by conducts an annual enterprise risk 2. Identify and describe the the Group Risk Management Committee, management review and two times per year process for climate change risk and they are fully integrated in TOTAL’s the Board is presented with and discusses global risk management process. the main risks and risk issues Statoil management (Figure 28). is facing. The Board’s audit committee 3. Outline risk identification assists the Board and act as a preparatory body in connection with monitoring of the processes applied at the asset company’s internal control, internal audit level (Figure 29). and risk management systems. The Board’s safety, sustainability and ethics committee 4. Outline use of impact metrics monitors and assesses safety, sustainability and prioritization matrices and climate risks which are relevant for Statoil’s operations and both committees (Figure 30). report regularly to the full Board.
Figure 29: Shell’s disclosure of its climate risk identification processes at the asset level, Shell Annual Report 2017
To test the resilience of new projects, we capture and storage (CCS) facilities. In certain assess potential costs associated with countries, these estimated GHG costs can GHG emissions when evaluating all new exceed $100/ton (in real terms) in the post investments. Our approach generally applies 2030 environment, reflecting our presumption a project screening value (PSV) of $40 (real that governments will eventually take terms) per ton of GHG emissions to the total aggressive action to regulate GHG emissions GHG emissions of each investment. This in accordance with their Paris Agreement PSV is generally applied when evaluating ambitions. Projects in the most GHG exposed our new projects around the world to test asset classes have GHG intensity targets their resilience across a range of future that reflect standards sufficient to allow scenarios. The project development process them to compete and prosper in a more features a number of checks that may require GHG-regulated future. These processes development of detailed GHG and energy can lead to projects being stopped, designs management plans. High-emitting projects being changed and potential GHG mitigation undergo additional sensitivity testing, investments being identified, in preparation including more detailed economic analysis for when regulation would make these on local GHG costs, demand sensitivity and investments commercially compelling. the potential for later retrofitting of carbon
Figure 30: Eni’s integrated risk management model, Eni, Path to Decarbonization 2017 | Integrated climate risk management model
The process for managing the risks risk-informed decisions, by taking into The IRM Model also aims to raise and opportunities related to climate full account current and potential future awareness, at all levels, that appropriate change is a part of the Integrated Risk risks, including medium and long-term risk assessment and management can Management (IRM) Model developed ones, in the frame of an integrated and effect on the achievement of company by Eni to ensure that management takes comprehensive approach. objectives and values.
RISK ASSESSMENT IN ENI MODEL
˛ It is carried out by adopting metrics that take into account dimensional matrices so that the level of each risk is obtained the potential quantitative impacts (i.e. economic, financial by combining clusters of probability of occurrence and or operational) as well as the potential qualitative clusters of impact. impacts (i.e. on the environment, health and safety, social, ˛ It includes assessments at inherent level and at reputation). residual level, respectively before and after the mitigation ˛ It is based on risk prioritization with the use of multi- actions are implemented.
34 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
METRICS & TARGETS It is therefore useful if these metrics In terms of opportunities, and targets are linked to, and help operational metrics could include explain, the organization’s other renewable energy generation Disclose metrics and targets used to assess and manage disclosures about corporate capacity, biofuels production, relevant climate-related risks strategy and risk. energy efficiency improvements. and opportunities where such As a first step, disclosures can For all metrics, companies should information is material focus on: seek to provide data “for historical periods to allow for trend analysis.” • Operational metrics related to And describe the relevant risks and opportunities (GHG The TCFD recommends that methodology, boundaries and companies: emissions, water use etc). definitions. A. Disclose the metrics the • Metrics used for managing organization uses to assess climate-related risks and As disclosure practices develop, climate-related risks and opportunities (qualitative and operational metrics can be opportunities in line with its strategy and risk management quantitative). complemented with: process • Indications of the financial The TCFD recommends that B. Disclose Scope 1, Scope 2, implications of climate-change emissions data should be and, if appropriate, Scope risks and opportunities. 3 greenhouse gas (GHG) calculated in line with the GHG emissions, and any related risk Protocol methodology to allow • Metrics that support scenario C. Describe the targets for aggregation and comparability analysis and strategic planning. the organization uses to across organizations and Indicators, metrics and targets manage climate-related jurisdictions(3). risks and opportunities and disclosed should reflect materiality performance against targets The most common method for judgements. There are different consolidating climate-related data in ways to achieve this. Companies the oil and gas industry is according can include a focus on connections between risk management The TCFD recommends that to operational boundaries and management control. This reflects, in processes, climate-related metrics disclosures should reflect and indicators and potential financial how operational metrics and part, the evolution of Health, Security, targets “such as those related Safety, Environment and Social performance or impact implications to GHG emissions, water usage, performance management, and (e.g. revenues and expenditures, energy usage, etc.” help to assets and liabilities, and/or capital manage climate-related risk and legal and contractual requirements. The focus of the TCFD however, and financing). This analysis might opportunities. According to the include disclosures that connect TCFD, companies should disclose emphasizing alignment with financial whether operational targets are reporting and analysis, likely means climate to strategy and financial absolute or intensity-based and that the equity share approach planning. Metrics could include the timeframes over which they earning sensitivities, breakeven price, apply. (based on asset ownership) should also be considered. Scope 1 & 2 internal rate of return, uncommitted Disclosures about “how emissions can be prepared and capital expenditure, impact on fair performance metrics are reported on both an operational and value, cash neutrality and portfolio incorporated into remuneration equity basis. composition/development including policies” help demonstrate the capital expenditure allocated to management team’s accountability renewables investment. for climate-related issues. User perspective: More operational and financial information will be needed in the User perspective: COMMENTARY future such as power generation Investors express a strong from different sources (e.g. gas and preference for companies to Metrics and targets explain provide quantitative climate-related how companies measure and renewables), financials specific to the new energy business and non- financial information, supported by monitor their climate-related risks, fossil fuels. Analysts could treat new explanatory narrative as appropriate. opportunities and strategies. businesses differently, they might Quantitative information facilitates They can also demonstrate the be valued or at least evaluated in a investors’ analyses of price, different way. targets, earnings and production. company’s progress in mitigating, Quantitative information can also managing or adapting to those be used to understand historical issues. patterns and estimate future trends.
(3) The second edition of the IPIECA, API and OGP “Petroleum industry guidelines for reporting greenhouse gas emissions” provides extensive guidance on how companies can quantify their emissions. It is aligned with the GHG Protocol.
35 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Examples – Metrics and Figure 31: Equinor (formerly Statoil) emission reductions, flaring, methane emissions targets and carbon captured, Sustainability Report 2017 The following Figures provide examples of disclosures that: 2017 2017 CO emissions reductions [1] Carbon captured & stored 1. Identify emission reductions, 2 356 1.36 (thousand tonnes): (million tonnes) (12% of 2030 Target) flaring, methane emissions and (2030 Target: 3 million tonnes [2]) 2016 – 1.38 million tonnes carbon captured (Figure 31). Total accumulated to date: 22.3 million tonnes 2. Identify scope 3 emissions including the use of sold 2017 2017 Share of flaring that is % Upstream flaring intensity products (Figure 32). continuous production flaring [1] 10 (tonnes per thousand tonnes of 2.1 3. Demonstrate how operational (percentage): hydrocarbon produced) [1] metrics are used to manage (2030 Aim: eliminate continuous production (2020 Target: 2) flaring at our installations by 2030) 2016 - 2.5 tonnes per thousand tonnes of hydrocarbon produced climate-related risk and 2016 - 14 % of total flaring (Industry average: 12) [3] opportunities through target- 2017 Methane emissions intensity for setting (Figure 31, 33 and 34). [4] [1] Norwegian gas to Europe Methane emissions 20.1 (percentage): 4. Connect climate to strategy (thousand tonnes): Upstream and midstream: 0.017% and financial planning (Figures Downstream: 0.209% 0.226 2016 – 24.2 thousand tonnes 35 and 36).
[1] Statoil operated oil and gas production (100 percent basis). [2] Aiming to achieve, by 2030, annual CO2 emissions that are 3 million tonnes less than they would have been had no reduction measures been implemented between 2017 and 2030. [3] International association of oil and gas producers (IOGP) Environmental performance indicators. 2016 data. [4] Source: Minimising greenhouse gas emission - greenhouse gas emissions of the Norwegian natural gas value chain 2016, July 2017, Statoil.
Figure 32: Eni’s disclosure of Scope 3 emissions, Eni, Path to Decarbonization 2017
Eni pays particular attention on the emissions impact associated steam and heat from third parties (Scope 2) are negligible
with its activities along the entire value chain (indirect emissions), for Eni (approximately 0.65 MtCO2eq), since electricity is starting from the supply chain of goods and services for the generated inside its plants and the related GHG emissions are production process up to the environmental impact connected included among direct emissions. With regard to the other with the disposal of the finished products. emissions in the chain (Scope 3), Eni reports them using As regards the emissions resulting from purchases of electricity, internationally recognized methods (IPIECA).
SCOPE 3 2017 Mln ton CO₂eq
228.62 11.0 Processing sold products Electricity (marketed) Goods and services purchased (supply chain) Products transport and distribution Business travels and employees commuting 20.44 0.47 Other contributions 0.21
2.08 4.95 1.73 Use of sold products Other contributions
The higher impact, in terms of emissions, of the Oil & Gas sector promoting a culture focused on energy savings and minimizing is associated with the final use of the products sold (natural gas the indirect emissions associated with Eni activities are in progress: and oil products, such as petrol, diesel and kerosene), that Eni optimization of the processes associated with product logistics (e.g. quantifies according to equity hydrocarbon production. In line with optimization of loads and routes), adoption of green procurement Eni’s climate strategy, promoting a low-carbon energy portfolio, criteria for goods and services, sustainable mobility initiatives and focused on natural gas and on increased energy production from the adoption of energy saving initiatives involving employees renewables, together with a strong commitment to R&D aimed (company shuttles fueled by methane, special discounts arranged at developing technologies and fuels with low environmental for public transport, smart working and use impact, will lead to a gradual reduction of the GHG emission of videoconferencing for meetings) are just some of the current intensity associated with Eni products. Further initiatives aimed at initiatives that contribute to reducing Eni’s carbon footprint.
36 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
Figure 33: Figure 34: Total’s disclosure of its routine flaring targets, Total’s 2022 target for climate related opportunity, Total, Integrating Climate Into Our Strategy Report, 2017 Total Strategy and Outlook Presentation 2017
Routine Flaring (Mcu. m/d) Growing downstream renewables
8
7 Total EREN (solar, wind)
6 Nanao SunPower 27 MW 1.3 GW 5 Miyako Shams 25 MW 110 MW 4
3 Salvador Prieska 70 MW 86 MW
2
1 Existing solar assets Solar assets in progress 0 0 Targeting 5 GW power capacity in 5 years 2010 2011 2012 2013 2014 2015 2016 2020 2030 target target: (-80%) zero
Figure 35: Equinor (formerly Statoil) carbon intensity, emission reductions, capital expenditure in renewable energies and R&D, Sustainability Report 2017
We aim to reduce the Aiming to achieve carbon intensity annual CO2 emission of our upstream oil and reductions of gas portfolio to 3 million tonnes 8kg CO2/boe by 2030 by 2030 compared to 2017
Industrial position in By 2020 we expect new energy 25% 15-20% of research funds to be devoted to new (1) of capex by 2030 energy solutions & energy efficiency
(1) Indicative, based on potential future corporate portfolio
37 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
METRICS & TARGETS
Figure 36: Eni’s metrics and targets, including climate-related financial metrics, used to evaluate and manage the risks and opportunities related to climate change, Eni, Path to Decarbonization 2017 Below the metrics and targets used to evaluate and manage the risks and opportunities related to climate change.
2015 2016 2017 Targets
(a) Direct GHG emissions (Scope 1) (Mtons CO2eq) 42.32 41.46 42.52 -
of which CO2eq from combustion and process 32.22 31.99 32.65 - of which CO eq from non-combusted 2 2.79 2.40 1.46 - methane and fugitive emissions
of which CO2eq from flaring 5.51 5.40 6.83 -
of which CO2eq from venting 1.80 1.67 1.58 - Indirect GHG Emissions (scope 2) 0.62 0.71 0.65 - Indirect GHG Emissions (scope 3)(b) 248.04 246.38 249.06 - of which use of sold products 229.14 225.62 228.62 - GHG emissions/100% operated hydrocarbon gross (tCO eq/toe) 0.177 0.166 0.162 -43% by 2025 production (E&P) 2
GHG emissions/Refinery throughputs (tCO2eq/kt) 253 278 258 -
GHG emissions/kWheq (EniPower) (gCO2eq/kWheq) 409 398 395 -
Non-combusted methane and fugitive emissions (E&P) (tCH4) 91,416 72,644 38,819 -80% by 2025 Volumes of hydrocarban sent to flaring (MSm3) 1,989 1,950 2,283 - of which sent to process flaring 1,564 1,530 1,556 0 by 2025 Equity hydrocarbon production(c) (kboe/day) 1,760 1,759 1,816 - 1 GW installed by 2021 Renwable installed capacity (GW) 0 0 0 5 GW installed by 2025 Biorefinery capacity (Kt/y) 360 360 360 1,280 kt from 2021 of which Venice (Kt/y) 360 360 360 560 kt/y from 2021 of which Gela (Kt/y) 0 0 0 720 kton/y from end 2018 Green Investments (€ Bln) 0.03 0.05 0.11 2018-2021 equal to 1.55 R&D total expenditures (€ Bln) 0.18 0.16 0.19 2018-2021 €0.77 Bln of which related to decarbonization (€ Bln) 0 0.06 0.07 2018-2021 €0.28 Bln
a) Direct emissions (scope 1) are 100% on operatorship basis. b) Indirect emissions scope 3 are estimated on the basis of Eni equity production. c) Hydrocarbon production from fields fully operated by Eni (Eni's interest 100%) amounting to 137 mln toe, 122 mln toe and 125 mln toe in 2017, 2016 and 2015, respectively.
Other Metrics
Hydrocarbon resources (3P+Contingent) @31/12/2017: % of natural gas (%) >50% Break-even price of overall new upstream projects in execution Brent <30$/bl 13% @ Brent 50$/bl flat from 2018 Internal Rate of Return (IRR) of new upstream projects in execution 18% @ Brent 70$/bl flat from 2018 2018-2021 equal to 36% Percentage of uncommitted investments: 2018-2021 Strategic Plan (%) 2020-2021 equal to 49% Carbon pricing - Eni scenario ($/ton) 40 $ at 2015 inflated Stress test: upstream portfolio resilience (100% cash generating unit) based on IEA SDS low carbon scenario Impact on asset fair value: -4% Adjusted operating profit: -310 2018 Sensitivity: Brent (-1 $/bl) (€ Mln) Adjusted net profit: -175 Free cash flow: -205 2017: 57 Cash neutrality (investments and dividends): Brent price ($/bl) 2018: 55 2021: 50
38 Climate-related financial disclosure by oil and gas companies 4 Effective disclosure practice agains the TCFD recommendations
The table below illustrates a range These metrics can be applied these metrics should explain of useful climate-related metrics to disclose historical data and/ how they define the metric and that could be disclosed by oil and or future targets. A number of associated terminology. gas companies in appropriate metrics do not yet have universally sections of their public disclosures accepted definitions, in which case to demonstrate their performance companies choosing to disclose and progress.
TOPIC UNIT SUGGESTED DISCLOSURE COMMENTS
GHG emissions Tons CO2e Amount of GHG scope 1 emissions in reporting Operational boundary is the industry year. Specify scope and boundary (equity/ norm - not aligned with financial reporting operator). boundary (equity).
GHG emissions Tons CO2e Amount of GHG scope 2 emissions in reporting Operational boundary is the industry yea. Specify scope and boundary (equity/oper- norm - not aligned with financial reporting ator). boundary (equity).
GHG emissions Tons CO2e Amount of GHG scope 3 emissions in reporting Operational boundary is the industry year. Specify scope and boundary. norm - not aligned with financial reporting boundary (equity).
GHG emissions CO2e/boe; Industry specific GHG efficiency ratios. Specify Allow for company-specific KPIs
CO2e/MwH or similar scope and boundary (equity/operator). and targets.
R&D Currency and/ Expenditures (Opex) to low-carbon R&D (amount Flexible definition of “low-carbon” needed or % of total and/or share of total R&D expenditure). Specify to allow for practical implementation. definition of “low-carbon” and “expenditures.”
Low-carbon Currency Investment (Capex) in low-carbon alternatives, or Flexible definition of “low-carbon” needed investments (if applicable) indicative breakdown of capital investments into to allow for practical implementation. main categories. Specify definitions of “low-car- bon” and “investments.”
Low-carbon Currency Revenues from investments in low-carbon May not be practical if this is not aligned investments alternatives. Specify definition of “low-carbon” with business reporting segments. Allow and “investments.” for flexible definition of “low-carbon” and “revenues,” e.g. with respect to revenue from equity accounted companies. Recommendations suggest a clear divide between low-carbon and traditional business, which may not be the case. Portfolio resilience Not applicable Describe portfolio flexibility over time based on Relevant timeframes and metrics capital investment plans. Supporting disclosures will differ from company to company. could include future capex flexibility overview Some elements may be considered (committed vs non-committed capex), capital commercially sensitive by some payback periods or return on capital employed. companies. Flexibility needed so that companies can choose relevant and non- sensitive indicators. Portfolio resilience Currency Describe current carbon price or range of prices used in investment analysis. Specify scope.
Portfolio resilience Not applicable Describe resilience to a 2oC or lower scenario, Companies can refer to externally and other relevant scenarios (optional). recognized scenarios, e.g. IEA scenarios, Describe key assumptions of scenarios used. or use own scenarios. Supporting disclosures could be e.g. carbon This information may be better suited in price sensitivity and/or oil and gas price other reports than financial reports due to sensitivity. high uncertainty and long-time horizons. Water % of boe Share of production in areas that have high or extremely high baseline water stress. Specify scope and boundary (equity/operated).
Water % Share of water withdrawn in regions with high Depending on materiality. or extremely high baseline water stress.
39 Climate-related financial disclosure by oil and gas companies 5 Conclusion
40 Climate-related financial disclosure by oil and gas companies 5 Conclusion
Oil and gas companies’ • Improving transparency and 1. Standardization of measures disclosures, strategies and rigor in how climate-related Climate-related metrics are actions to address climate disclosures are prepared. This currently not standardized. To change receive particular includes disclosure of the support comparability among oil attention given the scale of methodologies and operational/ and gas companies, standardized emissions from the sector. organizational boundaries used methodologies and a common level There is already evidence of for reporting, as well as the of disclosure could be developed. effective disclosure practice assurance processes applicable by Forum member companies to financial and non-financial Developments in disclosure as demonstrated throughout information etc. practices are dependent not only this report. However, the on oil and gas companies but also progression and enhancement The TCFD’s implementation path on continuing engagement with of climate-related financial for its recommendations could be users. This will help to establish disclosure for the sector is further supported by action to: principles for the disclosure of dependent on the continued • Develop disclosure practices critical assumptions and may development of content and further in the oil and gas sector also lead to the development of a complementary information. and across other industries as standardized resilience test for the necessary. industry. Practical steps that companies • Deepen the dialogue between can take now to enhance their 2. Communicating resilience to preparers and users to disclosures include: potential climate change risks align understanding of the According to an informal WBCSD • Review and identify existing information needs. disclosures or internal survey, strategy disclosure recommendation 2 (c) which information sources that could ROADMAP FOR be used to respond to the asks organizations to describe TCFD’s recommendations. In DEVELOPMENT OF how resilient their strategies some cases, information already DISCLOSURE PRACTICES are to climate-related risks held or disclosed by companies FOR THE OIL AND GAS and opportunities, is the most simply needs labeling or SECTOR challenging of the TCFD’s cross referencing to highlight As indicated in this report, some recommendations. its relevance to assessment of the developments that need to take place to support and A two-day conference hosted in of climate-related risks and London by the TCFD and Bank opportunities. enhance the progress of climate- related disclosure apply across the of England was dedicated to the • Assess whether and how cross- reporting landscape more generally. subject of climate-related scenarios departmental collaboration For the oil and gas industry, the and resilience. Like other sectors, supports integration of climate near to medium term roadmap the oil and gas industry regard change issues into governance, for progressing climate-related communication about climate- risk management, planning and financial disclosures could include related resilience as challenging control processes to facilitate a focus on the communication but vital for decision-making and enterprise-wide assessment of resilience to potential climate therefore an important focus for the of the operational, strategic change risks and improving development of disclosure practice and financial consequences the coherence and linking of over time. of climate-related risks and information so that its relevance to opportunities. climate change analysis is clear.
41 Climate-related financial disclosure by oil and gas companies 5 Conclusion
Information about current and The organization’s strategic 4. Other dependencies for short-term resilience is already response may include investments successful implementation of disclosed by Forum members and that support the transition to a the TCFD’s recommendations includes details of the potential lower-carbon economy. If these • Industry leaders working financial impact on the organization, are relatively small in the context of with users to gain a deeper its existing portfolio and strategy, the overall business, disclosures understanding of their from changes in individual variables about them in mainstream annual information needs. such as carbon price. financial filings may be limited. However, this information can be • Enabling conditions to support Longer-term indicators of useful to investors in assessing climate-related financial resilience depend on a wide the company’s long-term strategic disclosure and ultimately the range of variables and parameters response to climate change. goals of the Paris Agreement. which themselves are subject Many organizations play a role to considerable uncertainty. 3. Coherence and linking in creating those conditions, Long-term assessments of the At this stage in climate-related including standard-setters energy transition are provided by financial disclosure, information, who can help negotiate agreed some oil and gas companies in strategies, results and ambitions definitions and establish specialist reports. However, as relating to climate change are principles for the disclosure of many interdependent variables often widely dispersed and critical assumptions. are needed to illustrate resilience disconnected (e.g.: mainstream The foundations of effective over the longer-term, the results reports, sustainability reports, climate-related financial disclosure of these assessments can be submissions to surveys of rating practice are already firmly in place. uncertain and may be difficult to agencies, investor presentations use for comparison. Further work etc.). Ultimately climate-related financial is required to determine whether disclosure could help to build and to what extent longer-term Better linking and coherence in what Mark Carney described resilience assessments can be climate-related disclosures could as the “virtuous circle of better communicated in a way that is be achieved by the following: understanding of tomorrow’s risks, comparable and meaningful to • Signposting and navigation better pricing for investors, better users. tools to show where and how decisions by policymakers, and a smoother transition to a lower- While that work is in progress, oil complementary information is carbon economy.” and gas companies can seek to reported. demonstrate their resilience to • Connecting a company’s climate change by describing the performance, targets and strategy implemented in response ambitions with the level of to climate change and highlighting decarbonization required their targets and ambitions over to achieve national goals or the years of implementation. to keep global temperature Moreover, companies can describe increase below 2°C. the flexibility and the adaptability of • Presenting assumptions, results, their portfolio and strategy to these strategies and actions relating to climate-related challenges. climate change. The potential building blocks for communication of longer-term resilience are climate-related scenario analysis, a description of the strategic response, and measures of capital and portfolio flexibility.
42 Climate-related financial disclosure by oil and gas companies 6 Appendix
Shell, The Numbers Behind Sky: Total’s Annual Report 2017: REPORT SOURCES https://www.shell.com/energy- https://www.total.com/sites/ Eni’s Path to Decarbonization and-innovation/the-energy- default/files/atoms/files/ 2017: https://www.eni.com/docs/ future/scenarios/shell-scenario- ddr2017-va-web.pdf en_IT/enicom/sustainability/ sky.html EniFor-2017-Decarbonization. Total Integrating Climate into Our pdf Shell Greenhouse Gas Strategy Report 2017: https:// Emissions: https://www.shell. www.total.com/sites/default/files/ Eni’s 2017-2020 Strategy, com/ghg atoms/files/integrating_climate_ March 2017: https://www. into_our_strategy_eng.pdf eni.com/docs/en_IT/enicom/ Statoil (Equinor) Annual Report investors/2017/2017-2020- and Form 20-F 2017: https:// Total Strategy and Outlook strategy/2016-full-year-results- www.statoil.com/content/dam/ Presentation 2017: https://www. strategy-2017-2020.pdf statoil/documents/annual- total.com/sites/default/files/ reports/2017/statoil-annual- atoms/files/strategy-outlook- Eni’s Integrated Annual Report report-20f-2017.pdf presentation-september-2017. 2017: https://www.eni.com/docs/ pdf en_IT/enicom/publications- Statoil (Equinor) Capital archive/publications/reports/ Markets Update 2017, CEO’s rapporti-2017/Integrated- presentation: https://www. Annual-Report-2017.pdf equinor.com/content/dam/ statoil/documents/quarterly- Eni - Controls and Risks: https:// reports/2016/q4-2016/statoil- www.eni.com/en_IT/company/ ceo-presentation-cmu-2017.pdf governance/the-internal-control- and-risk-management-system. Statoil (Equinor) Sustainability page Repot 2017: https://www. statoil.com/content/dam/statoil/ Shell Annual Report 2017: documents/sustainability- https://reports.shell.com/annual- reports/statoil-sustainability- report/2017/ report-2017.pdf Shell Energy Transition Report: Statoil (Equinor) Socially https://www.shell.com/energy- Responsible Investor Day 2018 and-innovation/the-energy- presentation: https://www. future/shell-energy-transition- equinor.com/en/what-we-do/ report.html calendar/sri-day-2018.html Shell Management Day Presentation (2017): https:// www.shell.com/investors/ news-and-media-releases/ investor-presentations/2017- investor-presentations/2017- management-day.html
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