Oil and gas industry guidance on voluntary sustainability reporting

Transcription

1 Oi and gas industry guidance on vountary sustainabiity reporting A Reporting 2015 THE GLOBAL OIL AND GAS INDUSTRY ASSOCIATION FOR ENVIRONMENTAL AND SOCIAL ISSUES Endorsed by: REGIONAL ASSOCIATION OF OIL, GAS AND BIOFUELS SECTOR COMPANIES IN LATIN AMERICA AND THE CARIBBEAN

2 LEGAL NOTE This vountary guidance document is designed to serve as a resource for interested companies; the indicators and information referenced in this work do not estabish an industry standard as to the nature of a company s pubic reporting practice. The recommendations in this Guidance on how to report on a particuar issue are addressed to those companies who choose to incude that issue in their vountary sustainabiity reporting, and terms such as the reporting company shoud are to be understood in this sense. The terms and definitions used in this document are not necessariy the same as terms and definitions used in various statutes, rues, codes or other authoritative ega documents. Users and readers of this document shoud refer to reevant ega sources or consut their own ega counse for expanations as to how the terms and definitions used in this document may differ from the ega terms and definitions (e.g. spis and hazardous wastes) used in their particuar areas of operation. Anything in this document regarding vountary reporting of indicators is not intended to impy that any of the indicators are required to be reported under any nationa, oca or other aw. Furthermore, it is not intended to serve as a substitute for existing pubic reporting requirements and reguations. Any company reporter that has a question as to whether or not reports that foow the information contained herein wi meet any specific reporting requirements appicabe to their particuar operations shoud consut with the reporter s own ega counse. A CAUTIONARY NOTE REGARDING PERFORMANCE INDICATORS Aggregated, company-eve, non-financia performance data, deveoped using the indicators in this Guidance, can be informative for comparing reative performance among different companies, such as benchmarking safety incident statistics across the oi and gas industry. A company can use such comparisons to evauate its own performance reative to peers, and identify areas for potentia improvement. However, imitations to comparabiity exist due to various factors incuding the different methods companies may use to measure, normaize and report specific indicators. Athough efforts have been made throughout the Guidance to improve comparabiity, report users are advised to exercise caution when using data from sustainabiity reports to compare performance. For exampe, comparing two companies that report greenhouse gas emissions on a different basis (e.g. equity share vs. operated, as described in Appendix A) coud be miseading regarding actua performance. Specific indicators from simiar operations can sometimes be usefuy compared to hep performance management. However, the company-eve, aggregate data typicay reported in sustainabiity reports may not provide adequate comparabiity for some metrics. Where this Guidance mentions comparabiity, it is not intended to impy that data in sustainabiity reports, and therefore companies performance, are aways directy comparabe. Separate from company sustainabiity reporting, industry associations and others may choose to impement specific performance benchmarking studies, which may buid upon the indicators in this Guidance. It is aso recognized that it may take a number of years for companies to begin to report new or revised indicators and/or reporting eements. This is particuary important for socia and economic indicators that are sti evoving within company sustainabiity reports. IOGP Report 437 IPIECA/API/IOGP 2015 A rights reserved. No part of this pubication may be reproduced, stored in a retrieva system, or transmitted in any form or by any means, eectronic, mechanica, photocopying, recording or otherwise, without the prior consent of IPIECA, API and IOGP.

3 Oi and gas industry guidance on vountary sustainabiity reporting 3rd Edition, 2015 The goba oi and gas industry association for environmenta and socia issues 14th Foor, City Tower, 40 Basingha Street, London EC2V 5DE, United Kingdom Teephone: +44 (0) E-mai: Website: The American Petroeum Institute 1220 L Street NW, Washington DC, , USA Teephone: Internet: Internationa Association of Oi & Gas Producers 14th Foor, City Tower, 40 Basingha Street, London EC2V 5DE, United Kingdom Teephone: +44 (0) E-mai: reception@iogp.org Website:

4 IPIECA API IOGP OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Contents Lega and cautionary notes Inside front cover Improving our transparency: a foreword 2 from the oi and gas industry associations Joint statement of the independent 4 Stakehoder Pane Acknowedgements 6 Section 1 7 Setting the context: why report? Benefits of reporting 8 About the Guidance 9 Using the Guidance 9 Section 2 11 The reporting process: how to report Genera reporting principes 12 Process overview 12 Engaging stakehoders 13 Step 1: Articuate vision and strategy 15 Step 2: Describe governance and management systems 16 Step 3: Determine and prioritize materia 18 issues for reporting Step 4 Seect indicators and coect data 21 Step 5 Anayse data and incorporate into narrative 23 Step 6 Provide assurance 27 Section 3 29 Issues and indicators: what to report Vaue chain 30 Life-cyce considerations 31 Overview of issues and indicators 31 Issue reporting 33 Indicator reporting eements 33 Data management 35 Data normaization 36 Standard issue and indicator format 38 Section 4 39 Environmenta issues and indicators Environmenta issues and indicators: an overview 40 Cimate change and energy 41 E1: Greenhouse gas (GHG) emissions 42 E2: Energy use 46 E3: Aternative energy sources 49 E4: Fared gas 51 Biodiversity and ecosystem services 53 E5: Biodiversity and ecosystem services 54 Water 57 E6: Fresh water 59 E7: Discharges to water 63 Loca environmenta impact 65 E8: Other air emissions 66 E9: Spis to the environment 68 E10: Waste 71 E11: Decommissioning 74 Section 5 77 Heath and safety issues and indicators Heath and safety issues and indicators: 78 an overview Workforce protection 79 HS1: Workforce participation 80 HS2: Workforce heath 82 HS3: Occupationa injury and iness incidents 84 Product heath, safety and 87 environmenta risks HS4: Product stewardship 88 Process safety and asset integrity 90 HS5: Process safety 91 ii

5 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Section 6 95 Socia and economic issues and indicators Socia and economic issues and indicators: an overview 96 Community and society 97 SE1: Loca community impacts and engagement 98 SE2: Indigenous peopes 100 SE3: Invountary resettement 102 SE4: Socia investment 104 Loca content 106 SE5: Loca content practices 107 SE6: Loca hiring practices 109 SE7: Loca procurement and 110 suppier deveopment Appendix A: Detaied guidance on 131 deveoping a reporting boundary Appendix B: Practica guidance on 139 impementation of a materiaity process Appendix C: Summary of key changes 145 since 2010 and mapping against the GRI G4 Guideines Appendix D: Measurement units and 157 conversion factors (from IOGP) Appendix E: References and 161 source materias Appendix F: Gossary 167 Human rights 112 SE8: Human rights due diigence 114 SE9: Human rights and suppiers 116 SE10: Security and human rights 117 Business ethics and transparency 118 SE11: Preventing corruption 120 SE12: Preventing corruption invoving 121 business partners SE13: Transparency of payments to 122 host governments SE14: Pubic advocacy and obbying 124 Labour practices 125 SE15: Workforce diversity and incusion 127 SE16: Workforce engagement 128 SE17: Workforce training and deveopment 129 SE18: Non-retaiation and workforce 130 grievance system 1

6 IPIECA API IOGP Improving our transparency A foreword from the oi and gas industry associations Brian Suivan, IPIECA Executive Director Jack N. Gerard, API President and CEO Michae Enge-Jensen, IOGP Executive Director We are peased to introduce the third edition of the Oi and Gas Industry Guidance on Vountary Sustainabiity Reporting (hereinafter the Guidance ). IPIECA, the goba oi and gas industry association for environmenta and socia issues, the American Petroeum Institute (API) and the Internationa Association of Oi & Gas Producers (IOGP) have been providing sustainabiity reporting guidance for the industry since This third edition marks over ten years of sharing, assessing, debating and consensus buiding for our three associations. The update was undertaken recognizing that industry sustainabiity reporting is continuousy progressing, with issue areas that mature and deveop at different paces. To maintain continuity, the revisions are not intended to effect extensive changes to the 2010 Guidance, but to address feedback received from subject matter experts, both within and outside the industry, as we as improvements in reporting practices. IPIECA, API and IOGP beieve that it is essentia to continue providing this robust industry-deveoped framework to hep companies shape the structure and content of their sustainabiity reporting, particuary for new reporters. Recent years have been characterized by an evoution in existing frameworks on vountary sustainabiity reporting, the emergence of new vountary initiatives and mandatory sustainabiity reporting requirements in some countries. These varying expectations and different definitions of how and what companies shoud report have ed to chaenges for many oi and gas companies. The membership of our three associations incudes companies that are eaders in sustainabiity reporting, as we as new reporters. This revision brings together their coective weath of technica expertise and refects the reporting chaenges that some companies continue to face. The industry s commitment to this project is evidenced through the substantia participation in the update, as noted in the Acknowedgements on page 6. EXPANDING ENGAGEMENT The third edition refects feedback and improvements in reporting practices from many sources within and outside the industry. As in 2010, we engaged an externa Stakehoder Pane of eading experts to advise us on both the process and the content of the Guidance. We retained the same individuas and organizations from the 2010 Pane where possibe, and added an additiona member representing a human rights perspective. We hed a diaogue session in Apri 2014 to provide the Pane with information on uptake and feedback for the second edition, discuss drivers for the update, share our future pans and ambitions, and review improvement opportunities under consideration. We ooked cosey at materiaity, how companies are identifying and addressing the impacts of their business and communicating the main sustainabiity issues they face, and how this process coud be improved. 2

7 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING The Stakehoder Pane engagement for the 2015 update resuted in comprehensive outcomes incuding: ROGER HAMMOND ( ) We woud ike to recognize the contribution of Roger Hammond, the founder of Living Earth Foundation, into the deveopment of the second edition of the Guidance. In his roe as a member of the Stakehoder Pane, Roger provided key insights into sustainabiity issues which ed to significant improvements. We continue to vaue the Roger Hammond, Living Earth inputs he provided, as we as the work he undertook with the industry more broady through Living Earth. new guidance on strategic reporting for each of the 12 sustainabiity issues; this is intended to hep companies report information on their management approach and strategies to address the sustainabiity issue and its reated impacts this extends reporting beyond key performance indicators and numerica responses, for exampe, in reation to cimate change mitigation, adaptation and strategy; expanded guidance on materiaity that aims to hep companies identify and prioritize impacts and issues, incuding a new appendix to provide practica guidance on impementation of a materiaity process; and new guidance on reporting across the vaue chain and ife-cyce considerations to hep ensure that a reevant business activities are addressed when reporting on materia sustainabiity issues. ENCOURAGING CONTINUOUS IMPROVEMENT THROUGH THIS UPDATE The oi and gas sector continues to provide essentia energy for society s deveopment. Our member companies aso recognize that managing sustainabiity impacts associated with producing energy is an important responsibiity, incuding addressing the chaenges associated with cimate change risks, human rights and operating in remote and sensitive areas of the word. The Guidance continues to cover a range of sustainabiity issues reevant to the oi and gas industry, based on industry consensus. It aows companies to seect from reated indicators that offer a choice on the depth and detai to be communicated. By providing fexibiity and consistency, the Guidance aims to serve both new and experienced reporters whie avoiding the pitfas of formuaic reporting. The Guidance remains vountary and does not set minimum requirements or predetermine stakehoder requests. Instead, we encourage a consistent how-to approach, with companies determining what to report based on a materiaity process and stakehoder expectations. Key changes within the 2015 update incude: a new issue area on water, with comprehensive updates to two water indicators; a new indicator covering panning and execution of decommissioning activities; aignment of the Socia and economic section with the United Nations Guiding Principes on Business and Human Rights; upgrade of a range of reporting eements across the three categories within each indicator, common, suppementa and other refecting improved maturity and consistency of reporting by companies; and additiona or improved reporting eements for nine of the existing indicators. For a more detaied ist of changes see Appendix C. LOOKING AHEAD Our industry wi continue to address mutipe sustainabiity chaenges as it seeks to provide the energy essentia for societa deveopment. Throughout this journey, communication and engagement with stakehoders wi be essentia. It is our hope that the Guidance wi continue to support the momentum we see within our industry to pubish sustainabiity information. Our aim is that the Guidance, as the primary industry reporting framework, supports companies across the goba oi and gas industry to improve the quaity and consistency of their sustainabiity reporting. IPIECA, API and IOGP wi continue to encourage our members and others in the industry to report on their performance in addressing sustainabiity issues. Our associations pan to continue supporting our member companies through sharing good practices, and deveoping and maintaining our guidance on sustainabiity reporting as evidenced through this update. 3

8 IPIECA API IOGP Joint statement of the Independent Stakehoder Pane Matthias Beer, F&C Asset Management Tom Defgaauw, Independent Margaret Jungk, UN Working Group on Business and Human Rights Judy Kuszewski, Independent, Pane Chair Janet Ranganathan, Word Resources Institute Trevor Rees, Living Earth Robin Sandenburgh, IFC To improve externa engagement as part of the Guidance revision process for both the second and third editions, the IPIECA Reporting Working Group (RWG) convened a Pane made up of independent stakehoders with expertise in sustainabiity practices reating to the oi and gas industry. As knowedgeabe members of the reporting community, the Pane represented views of typica report reader groups: business and industry; environmenta and community-oriented NGOs; investors; UN bodies; and mutiatera institutions. At the onset of this engagement, the Pane was asked to assess the quaity, credibiity and effectiveness of the revision process and to provide ideas for improvement. Through ongoing communications during the revision process, incuding a face-to-face diaogue in 2014, the Pane provided candid, significant and chaenging input on the RWG s proposed updates to the second edition. For the RWG s initia update proposas and the fina draft, the Pane provided high-eve feedback and detaied suggestions, which were a reviewed and most were incorporated as improvements within this third edition. The foowing is the joint statement from the Independent Stakehoder Pane. We are peased to offer our comments on this third edition of IPIECA s sustainabiity reporting guidance. Our roe as a pane has been to offer our guidance to IPIECA as experts and stakehoders in reation to the industry s sustainabiity impacts. Our purpose in doing this has been two-fod: first, to hep ensure that the new edition of this sustainabiity reporting guidance adequatey captures the sustainabiity andscape, from impacts to risks and opportunities, reevant to the oi and gas sector and its stakehoders; and second, to hep ensure that the guidance is designed to produce transparent, honest and informative reports that advance sustainabiity strategy and practice. At a technica eve, the updates to the guidance have been thoughtfu and highy competent, responsive both to stakehoders recommendations and to wider trends in sustainabiity practice and reporting. We are especiay peased to see significant improvements in particuar to the sections on water, biodiversity and ecosystem services and human rights, a of which hep bring IPIECA s guidance more cosey in ine with internationa best practice in reporting. We aso wecome the improvements to the guidance on how to describe sustainabiity issues and impacts in reports beyond measurement protocos and indicators. The new guidance is more consistent and specific in terms of how reporters are asked to discuss the nature and significance of issues, how they reate to the company s strategy, vision and future pans, and their genera approach to managing the issues. We hope this improvement wi resut in reports that are cearer and more strategic, and that enabe greater accountabiity over time. The guidance has aso improved with respect to the process of reporting. This incudes identifying and prioritizing reported content using the principe of materiaity. Whie the materiaity guidance is technicay robust, it wi not in itsef 4

9 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING guarantee that companies wi impement it as intended. We encourage companies to invest in high quaity stakehoder engagement across the many aspects of their operations to ensure that the concerns of those most affected by the company s operations are invoved in reporting decisions. There are areas in which we woud have preferred the guidance to have gone further. We beieve the future sustainabiity of the oi and gas sector wi be strongy infuenced by three interconnected factors: 1) society s need to imit goba average atmospheric temperature rise to two degrees above preindustria eves; 2) rapidy faing prices for cean energy aternatives; and 3) the transition to eectric vehices. As a resut, stranded assets may pose a significant risk to both the economic vaue and performance of the industry in the near future. Whie the guidance makes reference to this chaenge, we fee it coud have advanced the state of reporting by strengthening recommendations on the risk management approaches that companies are impementing to anticipate this chaenge. Oi and gas companies face other risks to their viabiity. Operating in regions that are insufficienty democraticay mature eads to confict, socia strife, bribery and corruption. We expect companies to acknowedge these risks and demonstrate how their operations fit into that wider human perspective. We hope that future editions of the guidance wi inspire reporting in that direction. We woud prefer the guidance to give cearer instruction to reporters on how their reports might be improved in the future, and what woud constitute a path of progress. The framework s emphasis on common, suppementa and other reporting eements might drive a degree of conformity, but may do so on the basis of the owest common denominator rather than encouraging eadership in reporting. We regret that there are severa significant areas in which the pane s comments and suggestions in 2010 have not been addressed. These remain important and shoud be addressed with urgency: Greater emphasis on targets: targets are essentia for driving performance and creating a basis for accountabiity and trust among stakehoders. The 2015 Guidance does itte to advance the setting and reporting of targets and progress against them compared with the 2010 version. The absence of minimum reporting standards: the Guidance does not estabish any basic requirements for what woud constitute an acceptabe sustainabiity report for an IPIECA member company. Today, as in 2010, members are free to choose whether or not they wi report at a. We encourage IPIECA to do more to encourage and measure members uptake of the Guidance, and provide assurance that vountary reporting is making a materia difference. This incudes ensuring that members: produce pubic sustainabiity reports; use the IPIECA reporting Guidance as the basis for their reports; and report a common reporting eements at a minimum. The time has come to move beyond sustainabiity reporting as a vountary exercise driven by idiosyncratic corporate circumstances, towards a sector that recognizes its responsibiity to account for its activities and performance, and to defend its strategies and insti confidence and trust among stakehoders through robust reporting to a minimum agreed eve through this Guidance. Utimatey, technica reporting chaenges cannot take pace in a vacuum without the cear support of company eadership. We therefore encourage IPIECA to strengthen its roe in driving change within the oi and gas sector by harnessing the voice of CEOs and board eve eaders to chart a vision for the industry s key sustainabiity chaenges. Now, more than ever, this eadership voice is required to enabe the industry to reconcie the twin chaenges of energy security and cimate change, whie managing and mitigating a broad range of increasingy compex sustainabiity risks. 5

10 IPIECA API IOGP ACKNOWLEDGEMENTS The information contained in this document was deveoped jointy under the auspices of IPIECA, API and IOGP. It represents the work of a Reporting Working Group (RWG), composed of 80 representatives from 28 companies and 4 trade associations. The document benefitted significanty from the input and review of a Stakehoder Pane, which met formay with the RWG in Apri 2014 and aso contributed throughout the process. IPIECA, API and IOGP woud aso ike to thank the organizations and individuas that responded during the pubic consutation period in December The comments received were of substantia vaue to the revision. Particuar thanks are given to Tamara Bergkamp, from the Goba Reporting Initiative (GRI), for her contribution to the mapping document between the Guidance and GRI G4 (pages ). In addition to input from many technica groups within IPIECA, API and IOGP, experts from the foowing companies contributed substantia persona effort to the Guidance update: Anadarko BG Group BP Chevron ConocoPhiips Eni ExxonMobi Hess Husky Energy Maersk Oi Nobe Energy Petrobras Repso Schumberger She Statoi Tota For the 2015 edition, the IPIECA Secretariat project manager was Heen Murphy. Consutant support was provided by Bi Boye (IPIECA senior associate) and Nige Jones (design). Photographs reproduced courtesy of the foowing: cover (upper eft, ower eft and ower right) and pages 11, 15, 29, 39, 58, 65, 66 (bottom), 70, 77, 90, 95, 100, 102 and 104 (top): Shutterstock.com; pages 13, 16, 18, 23, 27, 49, 53, 54, 57, 63, 66 (top), 79, 84, 87, 89, 103, 114, 119, 125 and 127: istockphoto.com; cover (centre eft) and page 106: BP; page 107 (bottom): Chevron; page 34: Larry Lee Photography/Corbis; cover (bottom centre) and pages 25, 85, 97, 98, 104, 107 (top) and 112: ExxonMobi Corporation; pages 36, 80 and 110: Marathon Oi. 6

11 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Section 1 Setting the context: why report? 7

12 IPIECA API IOGP Section 1 Setting the context: why report? Section 1 Setting the context: why report? The oi and gas sector is a fundamenta part of today s word, providing essentia energy and raw materias for goba deveopment. A dynamic and innovative business, the industry constanty seeks to adapt to new situations and chaenges. It invests not ony in the search for new oi and gas, but aso in faciities, infrastructure, technoogy, oca communities, heath and safety, and the environment. The sector continuay examines opportunities to meet growing energy demand around the word, whie seeking to mitigate adverse impacts of its activities as we as to address the potentia risks associated with cimate change. Not surprisingy, many peope and organizations wordwide want to understand the oi and gas sector s business and participate in diaogue with companies on the effects of their activities the impacts, benefits, risks and trade-offs. In addition to annua reports on financia performance and other communication initiatives, sustainabiity reporting aso known as corporate citizenship, corporate responsibiity or environmenta, socia and governance (ESG) reporting is an important way for companies in the sector to engage with stakehoders and hep foster informed diaogue and understanding. Oi and gas companies have been among the pioneers of sustainabiity reporting and have provided eading exampes of good reporting practices. This Guidance has been deveoped to share good practice across the industry and to encourage companies, both current and new reporters, to keep their stakehoders informed about their performance. The Guidance represents industry consensus on the most prevaent sustainabiity issues and indicators, and aims to support continuous improvement of sustainabiity reporting and performance across the sector. BENEFITS OF REPORTING Reporting can bring companies recognizabe business benefits. Through communication on its most important sustainabiity issues, a company s report becomes a reiabe source of information for its stakehoders. By transparenty describing its biggest chaenges, reporting underpins stakehoder engagement and represents the company s vaues in action. For oi and gas companies, reporting provides a robust patform for describing how strategic goba issues such as cimate change and energy are being addressed through ong-term pans and current initiatives. The report can aso expain how the company is managing the socio-economic impacts and environmenta, heath and safety risks of operating in different ocations. Once pubished, this information enabes further communication and engagement with stakehoders. The ong-term benefits of reporting incude: enhanced business vaue as investor confidence grows in response to evidence that the company is managing important risks and positioning itsef to take advantage of emerging opportunities; improved operations as empoyees deveop a deeper understanding of a company s sustainabiity vaues and performance indicators provide insight to support continuous improvement; strengthened reationships as oca community eaders, civi society representatives, government officias and reguators, and other key stakehoders earn how the company responsiby manages sustainabiity issues; and enhanced trust and credibiity as customers, suppiers and the wider society understand the company s brand, operations and products. For many companies, sustainabiity reporting is ony one of the channes used to engage stakehoders. For exampe, a company may aso produce an annua report for its sharehoders, ESG fiings for investment funds and research houses, an integrated report for providers of capita, statutory stock market fiings in different countries, and reguar pubications for empoyees, customers or communities. Generating a sustainabiity report using a consistent, robust 8

13 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING process aso provides reiabe, verifiabe information and data that can underpin other reports and communications. ABOUT THE GUIDANCE This third edition of the Guidance repaces the second edition pubished in December This revision is based on industry experience, feedback on the 2010 document, and significant insights and suggestions from an independent pane of stakehoders with expertise in the sector and sustainabiity reporting (see pages 4 5). The Guidance aims to assist oi and gas companies in deveoping and enhancing the quaity and consistency of their sustainabiity reporting. It is designed for use by any oi and gas company operating nationay, regionay or internationay. The Guidance deiberatey provides choices, not ony for experienced reporters, but aso to enabe new reporters or smaer companies to focus on their most important issues at a eve appropriate to their business and stakehoders. It recognizes that whie some reporters are mutinationa pubic corporations, others may be state- or privateyowned companies, where oca reporting taiored to individua stakehoders may be more important than aggregated reporting at the goba eve. The Guidance may aso serve as a reference to hep readers of company reports, incuding onine information channes, to understand the basis for reporting in the oi and gas sector. USING THE GUIDANCE The Guidance is a reference too aimed at heping company sustainabiity managers, communications professionas and environmenta, heath and safety or socio-economic speciaists to deveop corporateeve reporting for interna and externa stakehoder audiences. It can be used to report performance to different audiences in different ways for activities in a singe country, for arge projects or for a singe operation. The Guidance is designed to offer fexibiity in support of new reporters, who may initiay focus on a imited number of key sustainabiity issues, geographica ocations or specific audiences, and then, over time, graduay increase coverage of their reporting. This Guidance is vountary. It does not set minimum requirements or predetermine stakehoder needs. Instead, it encourages companies to make informed choices on what is important for reporting by engaging with their stakehoders and understanding their needs. Then, to support these choices, reporters can incude reevant data and information that benefit from the consistency of industry consensus on the issues, indicators and reporting eements detaied in the Guidance. With effort focused primariy on those issues of significance to the individua company and its stakehoders, reporting time and cost can be better managed. The Guidance provides two types of assistance by heping companies decide: how to report, by describing a process for reporting; and what to report, by providing options for deveoping the content of the report. Process In Section 2, companies are encouraged to empoy a stepwise process for reporting by: setting the context for the report by outining the company s high-eve vision and strategy, together with governance and management systems; determining the issues to incude by using a materiaity process that identifies the compete set of issues of reevance to both the company and its stakehoders; and seecting indicator data to be coected within the company s reporting boundary and incorporated into the narrative. Section 1 Setting the context: why report? 9

14 IPIECA API IOGP Section 1 Setting the context: why report? The objective of each step is to buid transparent and concise reporting as part of stakehoder engagement. The process heps the company to verify which issues and indicators are not materia and thus avoid unnecessary and time-consuming reporting which can obscure the reevant issues. Content Sections 3 to 6 provide direction on the content of a typica oi and gas industry report. The Guidance provides a set of performance indicators appropriate to sustainabiity issues in the industry. Each indicator provides a choice of reporting eements depending on the depth or accuracy required (i.e. depending on the materiaity of the issue for the company). The reporting eements incude measures that are common, being the most estabished and consistent across the industry today. Section 3 provides guidance (incuding on reporting boundaries and data normaization) that is broady appicabe to the performance indicators provided in Sections 4, 5 and 6, covering (respectivey) environmenta, heath and safety, and socia and economic issues. The breadth and depth of the reporting content may vary significanty between companies depending on the extent of business activities and reated impacts across the vaue chain, as we as the materiaity of sustainabiity issues to the company and its stakehoders. Listed beow are severa basic components that are commony incuded within an oi and gas sustainabiity report or website: CEO statement: this introductory statement from the company s most senior executive emphasizes the importance of reporting to the company, provides stakehoders with a strategic overview and context for the sustainabiity issues, and highights performance chaenges and progress for the reporting year. Addressing cimate change risks: this issue continues to be regarded as the sector s primary ong-term environmenta issue, and companies typicay provide information on their position, strategy and actions reated to the issue, as we as discosure of greenhouse gas (GHG) emissions and other performance indicators. Managing risks of accidents: the oi and gas industry has inherent hazards throughout the vaue chain that must be responsiby managed to prevent events that coud potentiay resut in harm to peope, damage to the environment, and socio-economic impacts. Companies typicay describe their systems to manage safety and reated risks, and openy discose their annua performance record incuding any significant incidents. Loca impacts and benefits: oi and gas companies often operate in paces where their activities can have significant benefits, at community or nationa eve, but may aso have oca impacts which affect peope or the environment. In addition to describing corporate poicies and processes, reported content can draw attention to operations in deveoping countries or sensitive environments, where issues may incude respect for human rights, transparency of payments to host governments, access to fresh water, or protection of biodiversity. Reporting process: companies generay expain their reporting process, incuding how stakehoders are engaged, how issues are prioritized for reporting, how information is prepared and vaidated, and whether any nationa or internationa reporting guideines are used. Whie the Guidance addresses many other components of reporting content, the stakehoders engaged during the deveopment of this edition have highighted these five components as basic expectations. Referencing the Guidance Companies who use the process and/or the content sections are encouraged to reference the Guidance, acknowedging IPIECA, API and IOGP, since doing so demonstrates a company s efforts to report consistenty by appying oi and gas industry good practice. Within their reports, companies may wish to incude an index of the Guidance indicators used, which woud signa that their reporting meets the intent of the indicator description and foows at east one reporting eement. 10

15 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Section 2 The reporting process: how to report 11

16 IPIECA API IOGP Section 2 The reporting process: how to report Section 2 The reporting process: how to report This section provides the foundation for good practice through sound principes and a sixstep reporting process. GENERAL REPORTING PRINCIPLES The foowing genera reporting principes 1 provide constructive concepts for consideration as companies deveop content for sustainabiity reporting: Reevance: The reported information shoud appropriatey refect the sustainabiity issues of the company and meet the needs of stakehoders both interna and externa to the company. Transparency: Information shoud be reported in a cear, understandabe, factua and coherent manner, and shoud faciitate independent review. Transparency incudes discosure of the processes, procedures, assumptions and imitations affecting report preparation. Consistency: For reports to be credibe, information-gathering processes and definitions must be systematicay appied. Consistency in what is reported and how it is reported enabes meaningfu review of a company s performance over time, and faciitates comparison internay and with peer companies. Competeness: Information shoud be incuded in a manner that is consistent with the stated purpose, scope and boundaries of the report. Accuracy: Information shoud be sufficienty precise to enabe intended users to understand the reevance of information with a suitabe eve of confidence. Figure 1 The sustainabiity reporting process The five principes isted were drawn from the reporting principes stated within The Greenhouse Gas Protoco (WRI/WBCSD, 2004) and their use has evoved here to provide wider appicabiity for this Guidance. These principes have aso been adapted for specific appication in other IPIECA/API/IOGP documents, incuding the Petroeum Industry Guideines for Reporting Greenhouse Gas Emissions (2011). 12

17 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING PROCESS OVERVIEW The pubication of a sustainabiity report, or onine content, is generay the resut of interna corporate processes combined with externa diaogue. Athough each company wi have its own approach, Figure 1 iustrates how stakehoder engagement underpins six typica process steps, which are discussed in detai in the rest of this section. ENGAGING STAKEHOLDERS Stakehoder engagement has an important roe throughout the reporting process. Stakehoder viewpoints and diaogue can hep to ensure that the report is reevant, accessibe and credibe to externa audiences. Feedback on the competed report can provide vauabe insight to improve future reports and to initiate diaogue on issues. Thus, as an integra part of the reporting process, companies coud consider proactivey soiciting stakehoder views at different stages: Starting out: stakehoder opinion on the company s vision and strategy, governance, management pans and approach, reevant issues and performance can be gathered directy through diaogue or indirecty through media artices, pubic reports and surveys. During production: stakehoders can be invited to comment on reporting expectations or to review drafts. Stakehoder input can aso hep to confirm the reevance of the proposed content. Post-pubication: stakehoders can be given opportunities to review the competed report, indicating how they might make use of it, and what they woud ike to see in the future. Section 2 The reporting process: how to report 13

18 Section 2 The reporting process: how to report IPIECA API IOGP Many channes exist to further engage stakehoders on the report, incuding focus groups, surveys, panes, web forums and socia networking. It is important to take care to ensure consistency with the primary messages contained in the report. The process of reporting and reated engagement is typicay annua, providing a periodic opportunity for stakehoders to assess progress over time. Reported information may be provided in different formats, from standaone printed reports to internet-accessibe formats that can aow a greater eve of detai, timey updates and onine feedback. Identifying the priority stakehoders for engagement on reporting can be a chaenge for companies, and different approaches can be used to do this. Figure 2 describes a simpe anaysis technique known as stakehoder mapping. Figure 2 Stakehoder mapping Positive Keep these stakehoders informed and give them the opportunity to input Low Reationship with company Wiingness to engage Understand issues and expore ways to engage (incuding via third parties) Wiingness to engage Reationship with company Negative 14 Activey maintain and buid direct reationships and understand how these stakehoders can hep outreach to others Activey deveop insight into these stakehodersõ views and expore ways to engage directy (or via third parties) High Companies often find it usefu to prioritize the diverse range of stakehoders, who may be interested in their sustainabiity report or particuar aspects of it, to ensure that they have considered a important audiences and perspectives. The range of stakehoders may, for exampe, incude investors, campaigners, academics, businesses, thought-eaders, oca communities, Indigenous Peopes, customers, government representatives, reguators, empoyees, contractors and suppiers. Stakehoders may be categorized into broad groups (e.g. community, government, NGO, investor and workforce) to guide further engagement. The mapping may consider the expressed opinions of the stakehoders, the nature of their reationship with the company and the nature of current or previous engagement activities.

19 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Step 1: Articuate vision and strategy A sustainabiity report shoud set out how a company s sustainabiity priorities are integrated into its overa vision and business strategy. These priorities shoud cover both current operationa issues, such as heath and safety, environmenta compiance, socia/cutura requirements and abour practices, as we as onger-term considerations, such as cimate change risks or access to new energy resources. Section 2 The reporting process: how to report DEFINE SUSTAINABILITY Reports generay describe a company s understanding of what sustainabiity, corporate responsibiity or corporate citizenship means to their company, and indicate the main impications and opportunities for its core oi and gas businesses. For exampe, a company may wish to discuss how its ong-term success depends on suppying necessary products and services; but at the same time, how it recognizes the need to respect and contribute to the communities where it operates and to safeguard the environment and cutura heritage. Such a statement of intent heps to set the scene for describing the company s forward vision and strategy. REVEAL VISION A company s vision statement can ook to the sustainabiity opportunities and chaenges of suppying energy into the future. The vision wi often be presented in the context of existing corporate vaues, principes and poicy commitments with reference to: quaity of products; safety and reiabiity of operations; care for the environment and communities; engaging stakehoders; respect for others and their rights; and innovation and pioneering soutions. EXPLAIN STRATEGY A company can expain how its strategy and pans create vaue for its sharehoders by means of its current performance and in that context describe its principa sustainabiity issues and its approach to addressing them. The high-eve vision and strategy are often set out in an executive management or chairman s etter at the opening of the report. This introduction to the report serves to demonstrate top-eve persona commitment to sustainabiity and invovement in eading the business to achieve the company s vision and strategy. The introduction is aso an opportunity to show how management is taking responsibiity for any difficut chaenges, decisions or diemmas faced by the company, and to set out how these wi be addressed, for exampe, through new investments, initiatives or goas. The description of the strategy can be deveoped further throughout the report content or on the company website with more detai as appropriate. 15

20 IPIECA API IOGP Section 2 The reporting process: how to report Step 2: Describe governance and management systems Having articuated the vision and strategy, it is important for companies to report on the roe of the board and/or executives with regard to sustainabiity-reated governance and management systems. OUTLINE BOARD GOVERNANCE The report can describe how the board functions, how often it meets and whether specific board members are associated with sustainabiity issues or are members of a reated subcommittee, which may incude independent advisers. The report can aso discuss the roe of the most senior executives and how they manage the business, incuding engaging with stakehoders and integrating sustainabiity considerations into decision making. Because the detais reated to governance and accountabiity do not typicay change on an annua basis, companies may provide such information on their website and have the sustainabiity report refer the reader to the reevant web content. However, when changes occur reated to governance, the company shoud consider whether these have impications reevant to the sustainabiity report (Step 3) and the potentia need to provide prominent coverage of the effects of the changes. DETAIL MANAGEMENT SYSTEMS Robust management systems ensure that the company s vaues, principes and poicy commitments are consistenty appied by management across the company. The status, impementation and effectiveness of such management systems are usuay addressed in a sustainabiity report. Companies typicay state which systems are estabished, refer to major changes as appropriate in their printed sustainabiity report, and may provide more detais about the systems on their website. If reevant, companies shoud expain how they have appied, within their management systems, internationa standards or guidance, e.g. Internationa Standards Organization (ISO) guidance such as the ISO 9000, ISO or ISO series of documents, nationa pubications based on the Occupationa Heath and Safety Advisory Services (OHSAS) standard, or guidance from associations such as IOGP or API. Such management systems aso underpin the continuous improvement cyce of panning, execution, monitoring and review. The monitoring step of this process is generay based on performance indicators, many of which can be incuded in the company s sustainabiity report. Figure 3 shows how the use of management system information provides a foundation that compements and underpins the indicator information in a report. 16

21 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Figure 3 Using management systems to support reporting Management systems appy across a aspects of sustainabiity and demonstrate how companies are appying an integrated approach to managing operationa activities with the potentia to impact peope or the environment. This approach aso recognizes the common characteristics of many sustainabiity issues and their strategic integration into business management processes. Thus, a company may describe its management systems within its report, whie aso referring throughout to risks or chaenges that are being addressed through specific standards or practices within the system, and discose the resuting progress and performance. The figure shows the ten eements which are underpinned by the four fundamentas within the IOGP-IPIECA operating management system framework (IOGP/IPIECA, 2014). Section 2 The reporting process: how to report Because management systems do not change frequenty, companies may often describe their systems on their website and the annua sustainabiity report can then cross-reference such information. Detais may incude: key eements of the system; accountabiity and resources for its deivery; areas of operation, activities and issues covered; risk assessment, mitigation and management processes; processes for achieving continuous improvement, incuding goa-setting, measurement, benchmarking, training and performance review; and approaches to meeting compiance with appicabe externa requirements, standards or guideines. Specific exampes or short case studies can be incuded to demonstrate how the company s management system is appied in practice. For instance, a company might expain how its system ensures that managers are accountabe for assessing environmenta and socia impacts and communicating mitigation pans with neighbouring community stakehoders before starting major projects in new ocations. 17

22 IPIECA API IOGP Section 2 The reporting process: how to report Step 3: Determine and prioritize materia issues for reporting Given the array of issues that a sustainabiity report might address, it is hepfu to have a simpe and transparent process to determine what to incude in the report. Aigned with the sections on Genera reporting principes (page 12) and Engaging stakehoders (pages 13 14), a company shoud aim to make its report reevant to its users and provide them with compete and transparent information. Most companies use a materiaity process to identify and prioritize sustainabiity issues. This process heps drive the seection of an appropriate set of supporting indicators to provide information on how these materia issues are being addressed. A materiaity assessment ensures that the company is being responsive to the issues of concern to its stakehoders whie avoiding excessive or unnecessary reporting. MATERIAL ISSUES Materia issues for sustainabiity reporting are those that, in the view of both the company s management and its externa stakehoders, affect the company s performance or strategy and/or inform stakehoder assessments or decisions about the company. Management can then articuate in the report why these issues are important and how they address the issues. Materiaity for sustainabiity reporting wi often differ from financia reporting where a threshod such as a percentage of revenue often determines whether information is discosed. USE A SIMPLE PROCESS Companies shoud estabish a simpe process to identify those sustainabiity issues that warrant incusion in their report. In practice, a reguar (typicay annua) review is inked to the company s sustainabiity reporting cyce. Toos for judging materiaity for sustainabiity reporting vary and a company needs to determine its own process. As iustrated in Figure 4, there are typicay four stages to the annua materiaity cyce: 1. Identify materia issues: as a first action, a company shoud gather interna and externa inputs to generate a ist of materia issues that the company may address in its reporting. For exampe, interna inputs can incude information on the company s risks, potentia impacts, management strategies and performance. Externa inputs can incude information from stakehoder engagement, the media and other forms of feedback. Certain risks and their associated impacts such as those associated with cimate change and safety, are ikey to remain materia and be treated prominenty every year in the sustainabiity report, with trends over time documented using a group of consistent indicators. The materiaity process can aso identify new short-term issues, such as major events or changes, or specific aspects of ongterm issues that may be more significant in a particuar year. Section 3 of the Guidance (page 29) introduces 12 issues that are commony materia to companies in the oi and gas industry and can provide a starting point for new reporters. 18

23 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Figure 4 Defining materiaity Figure 5 Prioritizing materia issues Section 2 The reporting process: how to report 2. Prioritize materia issues: a company shoud then prioritize the identified issues to determine which shoud be incuded in the report, as we as their reative prominence. The prioritization takes into account the issue s significance to the company and significance to its stakehoders. Most companies use a set of consistent criteria such as the potentia for impact on the environment or the impact on a company s icence to operate to judge the significance of its issues. A simpe matrix (see Figure 5) is often used to visuaize the prioritization and to highight which materia issues need to have greater emphasis, supporting evidence or detaied narrative in the report. 3. Confirm issue coverage: before pubication, a company shoud confirm that the content of the report successfuy covers the priority materia issues and that their presentation is sufficienty detaied, appropriate to their priority, and appropriatey baanced and transparent. This can be done by doubechecking against the ist of materia issues and the associated indicators recommended by IPIECA and other reporting frameworks, and by having interna and externa stakehoders review the draft. This is aso a good test that the reporting principes are being met, particuary the principes of reevance, transparency and competeness. A good practice is to undertake this stage as part of report assurance (see Step 6). 4. Review materiaity process: a company shoud periodicay seek feedback on the sustainabiity report from both interna and externa stakehoders to determine whether the report adequatey covered the issues of importance to stakehoders. This feedback refects the effectiveness of the materiaity process, e.g. whether the appropriate amount of information was provided. This feedback process often takes pace when engaging with stakehoders to gain input for the next year s report. 19

24 IPIECA API IOGP Section 2 The reporting process: how to report See Appendix B for further guidance on the practica impementation of the materiaity process. REFLECT THE MATERIALITY PROCESS IN REPORTS It is good practice to describe a company s materiaity process in its sustainabiity reporting and the outcomes of the process in terms of a description or ist of the key issues identified, with an indication of any significant changes since the previous report. As described in Section 3, the report shoud then put the priority issues into the context of sustainabiity for the company and convey why the issues are important in terms of factors such as business strategy and impacts. The materia issues that make up the core content of the company s reporting aso provide the framework for the company to report its performance supported by reevant quantitative and quaitative indicators appropriate to each key issue as described in Step 4 and in Sections 4 6. Figure 6 Sustainabiity issues The word issue is used in this Guidance as a broad term to group types of sustainabiity aspects, incuding risks, impacts and benefits, reated to the ife cyce and vaue chain of a company s activities. Figure 6 iustrates the inter-connecting socia, economic and environmenta dimensions of sustainabe deveopment as we as the types of sustainabiity topics that can be considered when determining materia issues for incusion in a sustainabiity report. The figure is not intended to be comprehensive but it provides an overview of the most significant issues commony associated with the oi and gas industry, as described in Sections 3 6 of this Guidance. 20

25 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Step 4: Seect indicators and coect data INDICATOR SELECTION Identification of a company s materia issues for reporting shoud inform the seection of indicators. Section 3 of the Guidance introduces 12 issue categories that are ikey to be reevant to many oi and gas companies for reporting, aong with 34 performance indicators for use by companies, as appropriate, to demonstrate how the issues are being addressed. Whie companies are encouraged to report in accordance with these defined indicators, to enhance comparabiity across the oi and gas sector, companies may aso customize indicators or deveop additiona measures to improve reporting on key issues. Focused engagement with interna and externa stakehoders prior to reporting can provide usefu eary feedback on indicator seection. Beow are some factors to consider when seecting indicators: Indicators for ong-term issues need to be reported consistenty every year, particuary to track trends in performance against continuous improvement objectives and to provide comparabiity within and between companies. Other issues may have emerged or increased in importance over a short period. The company may decide to suppement previousy used indicators with new measures to improve discosures on its associated performance. In some instances, a significant or compex issue wi reate to more than one of the issue categories, for instance with socia, economic, heath, safety and environmenta dimensions, and invove reporting against a variety of different indicators. Step 5 provides two exampes of reporting on these types of issues Research and technoogy, and Impacts on communities. DATA COLLECTION Having seected indicators, the next stage is to determine what quantitative data and quaitative information wi be coected within the company. The prominence that the company decides to give a materia issue in its report wi hep to guide the depth and breadth of data or information coected. For each indicator provided in Sections 4 6, a choice of reporting eements is provided that may be appicabe to the company s operations, and which define the types of information or data that can be coected: Common reporting eements provide performance measures that are we estabished across the industry and are a good starting point for new reporters or for those seeking comparabiity. Suppementa reporting eements provide aternate or additiona choices of measures that provide more depth or different approaches. Other reporting eements provide further reporting options through ess-estabished compementary measures, or emerging practices. Section 2 The reporting process: how to report 21

26 IPIECA API IOGP Section 2 The reporting process: how to report Having defined and determined the quantitative data and quaitative information to be coected, the company shoud request the data internay, supported by appropriate guidance and definitions. Requests for information shoud be timey: business and operationa organizations and functions need a reasonabe opportunity to coect data and verify its accuracy. Once received, data can be consoidated on a corporate basis and reviewed for competeness within the reporting boundary. (For detaied guidance on the reporting boundary and on data management, such as estabishing baseines, see Section 3 and Appendix A.) Figure 7 iustrates the practica appication of Steps 3 and 4. Figure 7 Issue materiaity and seection of reporting indicators The seection of issues and indicators for reporting is informed by Steps 3 and 4 of the reporting process. This exampe fow chart provides a practica iustration of appying these two steps. * If the indicator choice within the Guidance is not suitabe, use other recognized guidance or deveop in-house measures. 22

27 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Step 5: Anayse data and incorporate into narrative A sustainabiity report aims to demonstrate, through quantitative and quaitative evidence, that a company is systematicay appraising and responsiby managing its sustainabiity performance. A major step in the reporting process is to anayse the indicator data and incorporate the resuts into a narrative that describes performance progress within the context of the sustainabiity issues. Section 2 The reporting process: how to report PUTTING RESULTS INTO CONTEXT Providing context through narrative requires a company to think strategicay about how it communicates materia issues and reevant indicator data. A report can hep to expain the significance of a company s performance by carifying: how the resuts are reevant to the company s operations; their significance in the context of historic or recent trends and/or in reation to prior expectations of performance, such as continuous improvement objectives; the nature of impacts on reevant stakehoders; the opinions of stakehoders or other credibe third parties on those impacts; the effect of existing strategy and management on resuts; how the resuts may compare to reevant industry benchmarks or averages; and strategic responses, goas or essons earned. The exampe on Research and technoogy, on page 24, iustrates incorporation of indicator data into narrative where it is important to provide context for a strategic issue. EXPLAIN PROGRESS AGAINST GOALS Supported by the indicator information and data, the narrative can pot progress against the company s pans to achieve it s goas, together with expanations for variations in reated performance. Continuous improvement is a cornerstone of management systems and is generay based on a cyce of panning, impementing, measurement (using indicators) and assessment, which resuts in reguary updated improvement pans at the oca eve. Objectives, targets and other information can be reported to demonstrate progress, for exampe: quantitative targets based on outcomes, such as reduction of emissions or incidents; quantitative or quaitative objectives in terms of inputs, such as competion of management system initiatives by a panned date; annua progress measured against a commitment to continuous improvement; or case studies providing evidence of programmes panned across a specified period. 23

28 IPIECA API IOGP Section 2 The reporting process: how to report BALANCED REPORTING It is important to meet the principes of transparency and competeness by discosing any significant shortfas, probems and incidents that have been faced by the company during the reporting period. Whie there may be ega or other constraints in terms of detaied discosure, a report shoud nevertheess aim to present a baanced picture of the company s chaenges as we as achievements. A report that tends to convey ony good news is unikey to be seen as credibe, reasonabe or sufficient in its coverage. When reporting chaenges, the company shoud aso take the opportunity to ook forward by demonstrating how it is earning and adapting to improve its future performance. RECOGNIZE COMPLEX ISSUES In some instances, a materia issue may refect severa socia, environmenta or other dimensions and invove reporting against a variety of different indicators. These mutifaceted topics are often associated with specific events or activities, such as an exporation project in an environmentay and sociay vunerabe ocation. The exampe on EXAMPLE: RESEARCH AND TECHNOLOGY The oi and gas industry has a ong history of innovation, investing in research and deveopment of new technoogies to produce, refine and manufacture energy and other products for society. Within company reports, it is important to ook to the future in terms of how research and technoogy can address sustainabiity chaenges. Describing a company s strategy and current efforts to provide advanced technica soutions heps to demonstrate a company s intent to reduce environmenta or other impacts whie providing improved benefits that enhance socio-economic deveopment. Whie many of the issues described in this Guidance can benefit from innovative approaches, a high priority is technoogica advances to address the risks of cimate change, often with reated benefits for other issues, such as air quaity, access to fresh water and waste minimization. Exampes of advanced technoogy approaches within the industry incude: combining heat and power units to reduce energy consumption; reformuating gasoine and diese for increased fue efficiency and reduced emissions; investing in non-fossi fue aternative energy suppies; improving energy efficiency within the vaue chain, incuding measures that provide options to reduce consumer fue use and reated emissions; reducing faring through improved gas management; researching and pioting viabe carbon capture and storage processes, incuding sequestration in deep geoogica aquifers; manufacturing advanced pastics and other materias to make cars ighter, stronger and more efficient; partnering with vehice manufacturers to deveop fue ces and other energy sources; and deveoping sustainabe biofues, incuding researching the feasibiity of second-generation biofues. Other technoogies may focus on a company s footprint on ecosystem services and marine or terrestria biodiversity. Exampes incude using more environmentay friendy chemicas in fied operations, driing technoogy that requires a smaer surface footprint, or brush cutters that eave roots undisturbed. Innovation can aso benefit the heath, safety and webeing of peope, in the workforce or oca communities. This incudes managing the risk of hazards that coud harm empoyees and contractors in the pant, but aso of transport safety, particuary for road vehices. 24

29 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Impact on communities (beow) iustrates the types of narrative and indicators that may be reported for such a compex issue. EMPLOY CASE STUDIES Case studies can be a particuary powerfu way to communicate how a company engages with stakehoders and approaches sustainabiity chaenges in the everyday conduct of its business. Putting indicator data in the context of rea-word operationa chaenges iustrates how a company can work effectivey to manage and integrate sustainabiity performance into its operations. The exampe on Working in remote ocations (page 26) shows how case studies can be buit on specific indicator information to ink a company s goba approach to addressing issues at the oca eve. Section 2 The reporting process: how to report EXAMPLE: IMPACT ON COMMUNITIES Oi and gas company activities can be very arge undertakings in physica and economic terms. They may bring many benefits for host communities. They may aso invove a range of impacts reating to heath and safety, economic, socia and/or environmenta concerns. Reporting companies need to baance reporting at a corporate eve with attention to particuar oca situations. (See Working in remote ocations on page 26). A company s materiaity appraisa (Step 3) wi usuay identify the specific ocations that warrant detaied coverage. Some aspects that reporters may wish to consider incude: corporate poicies or programmes with respect to communities, incuding specific objectives and engagement activities (Section 6, SE1 SE4); descriptions of oca context and particuar impacts regarding the oca environment or cutura resources, community heath and safety, and oca socioeconomic circumstances, supported by indicators such as: - Loca hiring practices, and Loca procurement and suppier deveopment (Section 6, SE6, SE7); - Preventing corruption (Section 6, SE11); - Human rights (Section 6, SE8 SE10); - Biodiversity and ecosystem services (Section 4, E5) and Fresh water (Section 4, E6); and - Other air emissions, Spis to the environment, Discharges to water and Waste (Section 4, E7 E10); oca engagement, concerns and expectations, and strategies to address them; and independent reviews or essons earned regarding community impacts. 25

30 IPIECA API IOGP Section 2 The reporting process: how to report EXAMPLE: WORKING IN REMOTE LOCATIONS The oi industry increasingy works in remote ocations, often in deveoping countries or in sensitive environments. In such areas of the word, sustainabiity issues can be particuary important and care must be taken to respect ecosystem services and the rights of oca communities or indigenous peope. The materiaity of issues in such circumstances can be significant for stakehoders at a oca eve. In such cases it is more appropriate to deveop narrative using a case study that demonstrates how corporate strategy and vaues are appied to the specific circumstances in the remote ocation. For exampe, a case study to describe activities in a ocation where there are risks of impacting freshwater avaiabiity and affecting community reationships might provide: the strategy behind the company s activities and an overview of the sustainabiity risks for the remote ocation; the high-eve corporate strategy for operating in water-stressed regions, and company approaches to managing community impacts and engagement, supported by indicators (Section 4, E6 and Section 6, SE1); an expanation of the oca water-stress risks, management pans and progress to minimize the environmenta impact of fresh water used by the operations; a description of the successes, chaenges and outcomes of the oca community engagement (Section 6, SE1), stating any future commitments made by the company; and stakehoder or expert third-party opinion and/or data that provides additiona perspective. INCORPORATING FINANCIAL DATA Another usefu approach is to incorporate seected financia and operating information to provide business context when reporting on sustainabiity issues. Typicay these data are aready pubicy avaiabe and shoud be drawn from a company s annua financia report to ensure consistency. In a sustainabiity report, basic financia and operating information see Tabe 1 for suggested items can appear as highights or in a summary data tabe. Athough financia data are generay reported at the goba eve, it can hep to report seected information at a nationa or regiona eve. Companies shoud aso consider reporting any arge acquisitions or divestments in the reporting year if the changes materiay affect the size and scae of the company. Tabe 1 Typica financia and operating information data Tota revenues Operating expenses Tota taxes paid Profit after tax Capita expenditure Number of empoyees Number of countries of operation Tota production (upstream) Tota throughput (downstream) 26

31 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Step 6: Provide assurance Incusion of information to provide assurance on the content of sustainabiity reports is a common practice. Assurance processes provide an opinion regarding the quaity of reported information and can emphasize appication of the Genera reporting principes (page 12). Companies generay have their own interna assurance mechanisms, but externa assurance, in addition, can enhance the perceived credibiity of a sustainabiity report. Externa assurance tends to take the form of audit-based verification or third-party commentary. Both methods can coexist in a singe report, but they are distinct processes. Audit-based verification typicay focuses on quantitative information, incuding data systems and interpretation. These audits are commony undertaken by accountancy and consuting firms, and are typicay seen as a forma approach. Audit-based verification may aso seek to test materiaity processes or assess quaitative statements or caims reated to commitments, vision and strategy, or governance and management systems. This approach may incude assurance against specific standards, such as: The Internationa Standard on Assurance Engagements (ISAE 3000, revised in 2015), which is provided by the Internationa Audit and Assurance Standards Board (IAASB), part of the Internationa Federation of Accountants (IFAC). This standard covers the professiona procedures undertaken by an assurance provider and is binding on IFAC members, incuding major accounting and consuting firms. A choice of two eves of assurance is provided imited is a higheve review, whie reasonabe is a more rigorous, in-depth process in which the auditors provide an opinion that the data are reiabe. The AA1000 Assurance Standard, which was deveoped by the Institute for Socia and Ethica AccountAbiity, evauates and provides concusions on the nature and extent of adherence to the AA1000 Accountabiity Principes of Incusivity, Materiaity and Responsiveness and, if desired, the quaity of pubicy discosed information on sustainabiity performance. AA1000 aso provides options for the type and eve of assurance that may be obtained under the standard. Third-party commentary ranges from statements by reputabe experts in particuar areas, to the use of a stakehoder pane or incusion of academic, non-governmenta organization (NGO) or community comments. The statements may incude views on management performance, progress and recommendations. They may aso provide an opinion on whether the report incudes the most reevant and materia issues, but generay do not comment on the reiabiity or accuracy of information or data. It is important for companies to expain in their sustainabiity report how they achieve assurance, e.g. through interna or externa audits, or through third-party review and any other suppementary approaches. Section 2 The reporting process: how to report 27

32 Section 2: The reporting process This page intentionay eft bank

33 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Section 3 Issues and indicators: what to report 29

34 IPIECA API IOGP Section 3 Issues and indicators: what to report Section 3 Issues and indicators: what to report The six-step process outined in the previous section advised companies on deveoping the content of a sustainabiity report. This section provides generic advice on data management and normaization, and introduces the detaied guidance on issues and indicators for reporting, which is set out in the foowing three sections of the Guidance. VALUE CHAIN The Guidance is intended to be appicabe across the entire spectrum of the oi and gas industry s activities, from extraction and transformation of natura resources to suppy of energy and other essentia products to customers gobay. At the company eve, this spectrum is referred to as the vaue chain, a concept that conveys the extent of business activities. The diagram beow sets out exampes of the diverse range of vaue chain activities that may be pursued by an integrated company operating across the upstream, midstream and downstream industries within the oi and gas sector. It shoud be noted that whie some arge integrated mutinationa companies may pursue many of these activities, other sector companies wi ony cover some activities. Many activities in the vaue chain reate to conventiona oi and gas operations: from exporation and production, through refining, petrochemicas and distribution, with the fina stage being marketing and suppy of products to customers. This Guidance therefore provides industry-specific coverage of the common environmenta, heath and safety, and socia and economic issues reevant to upstream and downstream activities. Many companies do not operate across the entire vaue chain, and therefore, the processes in Section 2 of the Guidance can be appied to confirm which activities and issues are reevant for reporting. Stakehoders wi have greater eve of interest and scrutiny, and often specific concerns, reated to the potentia short- and ong-term impacts of new activities and technoogies. Exampes of current interest incude hydrauic fracturing for shae gas, heavy oi processing Figure 8 Typica activities in the oi and gas industry vaue chain 30

35 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING incuding oi sands, and biofues production from pant materias. Whie the issues and indicators in the Guidance are sufficienty genera to cover emerging activities and issues in the oi and gas industry, companies engaging with stakehoders on their materiaity assessments may concude that such issues need to have higher priority and prominence, even when the activities do not yet represent a significant proportion of their business. LIFE-CYCLE CONSIDERATIONS Companies shoud consider ife-cyce benefits and impacts reated to their activities and products through the vaue chain. A company s activities at a singe ocation may span four or more decades starting with access and eary exporation for oi and gas, through faciity deveopment and production/manufacturing operations, unti eventuay operations cease and the faciities are decommissioned. A company s products aso go through a ife cyce of benefits and impacts. For exampe, a wes to whees concept can be appied to transport fues to examine the cimate change and other environmenta risks of a singe product such as gasoine within the entire vaue chain. A ifecyce approach, incuding information from a ife-cyce anaysis, can hep to ensure that a report is compete in terms of the issues covered, and aso infuence materiaity considerations in prioritizing issues within the reporting cyce. In this third edition of the Guidance, an additiona oca environmenta impacts indicator on Decommissioning (E11) has been incuded to increase coverage of ifecyce aspects in reports. OVERVIEW OF ISSUES AND INDICATORS Sections 4, 5 and 6 introduce sustainabiity issue and indicator categories reevant to the oi and gas industry environmenta; heath and safety; and socia and economic as shown in Tabe 2 on page 32. Each category was represented by a technica working group of industry experts (i.e. representatives from oi and gas companies and associations). These individuas brought together years of experience on deveopment of sustainabiityreated metrics. The seection of issues and indicators was a consensus process using the knowedge of the working groups and input from stakehoders inside and outside the industry, incuding the Stakehoder Pane. Coectivey, the three categories cover 12 sustainabiity issues that are prevaent for the oi and gas industry and are therefore ikey to be materia for reporting by many oi and gas companies. Section 2 outined a materiaity process that heps determine which issues are reevant to an individua company and its stakehoders. A company may decide that severa or a of the issues in Tabe 2 are materia for reporting, and may aso identify additiona materia issues or sub-issues which are not covered in this Guidance but are specific to the company s activities or operationa ocations. Sections 4, 5 and 6 aso introduce the 34 performance indicators, using definitions that are specific to this Guidance and the oi and gas industry. Tabe 2 on page 32 shows how the indicators have been grouped within the 12 issues. For ease of use, each indicator is associated with an issue, and is presented using a standard indicator tempate which is provided at the end of this section. Any one performance indicator may provide information reevant to severa issues, and some indicators may reate to a three categories. Users of the Guidance shoud keep in mind the potentia for any indicator to be reevant to severa issues simutaneousy. Within the subsequent sections, the Guidance provides an introduction to each issue to hep companies construct their report narrative. Where overaps exist between the issues, companies may choose to combine aspects under a singe incusive narrative. Section 3 Issues and indicators: what to report 31

36 IPIECA API IOGP Section 3 Issues and indicators: what to report Tabe 2 Issue and indicator categories ISSUE Environmenta issues (Section 4) Cimate change and energy Biodiversity and ecosystem services Water Loca environmenta impact Heath and safety issues (Section 5) Workforce protection Product heath, safety and environmenta risks Process safety and asset integrity Socia and economic issues (Section 6) Community and society Loca content Human rights Business and transparency Labour practices INDICATOR E1: Greenhouse gas emissions E2: Energy use E3: Aternative energy sources E4: Fared gas E5: Biodiversity and ecosystem services E6: Fresh water E7: Discharges to water E8: Other air emissions E9: Spis to the environment E10: Waste E11: Decommissioning HS1: Workforce participation HS2: Workforce heath HS3: Occupationa injury and iness incidents HS4: Product stewardship HS5: Process safety SE1: Loca community impacts and engagement SE2: Indigenous peopes SE3: Invountary resettement SE4: Socia investment SE5: Loca content practices SE6: Loca hiring practices and performance SE7: Loca procurement and suppier deveopment SE8: Human rights due diigence SE9: Human rights and suppiers SE10: Security and human rights SE11: Preventing corruption SE12: Preventing corruption invoving business partners SE13: Transparency of payments to host governments SE14: Pubic advocacy and obbying SE15: Workforce diversity and incusion SE16: Workforce engagement SE17: Workforce training and deveopment SE18: Non-retaiation and grievance system 32

37 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING ISSUE REPORTING In this Guidance, the Introducing the issue pages in Sections 4, 5 and 6 incude Guidance on reporting the issue to hep companies convey why each materia issue is important and how the issue is being addressed. This can incude a description of the issue in terms of business strategy, risks and benefits as we as discosing the nature of actua and/or potentia impacts reated to the issue. The Guidance recommends that reports outine how issues and the chaenges of associated impacts are addressed in terms of the company s genera approach to the issue and appicabe poicies, management systems, objectives and other measures specific to the issue. This aso provides the opportunity for a company to be more forward ooking in describing how specific sustainabiity issues are integrated within future strategies and pans, incuding future investment in initiatives and technoogies to generate improvements in benefits or reductions in impacts. Each Introducing the issue page aso incudes a section on Recommended indicators for this issue. This summarizes the quantitative data and quaitative information that may be empoyed to report the company s annua performance in managing the issue, in aignment with the broader issue description and strategic context. INDICATOR REPORTING ELEMENTS The Guidance provides reporting eements within each indicator to hep new reporters get started whie providing enhanced comparabiity for more mature reporters. When using reporting eements, reporters are encouraged to foow the genera reporting principes of competeness and accuracy by incorporating information consistent with the indicator scope and reporting boundary, and by describing the reported information with as much specificity as possibe. When reporting on Tabe 3 Definitions of reporting eement terms Common reporting eements Measures for tracking performance progress that are we estabished across the industry and offer a starting point for new reporters, as we as greater comparabiity for existing reporters and report readers. Suppementa reporting eements Aternate or additiona measures that have been appied successfuy by some reporters and provide more depth or different approaches to describe how an issue is being addressed. Other reporting eements Less-estabished compementary measures, or emerging practices, that provide further options to deveop a company s report. compex issues, an externa view may provide additiona insight and support expanations. Quantitative and quaitative reporting Reporting eements can be either quantitative or quaitative, which provides further options for reporting. Quantitative information is reported as a number with a dimensiona unit or numerica index that can be used to show performance trends over time against a baseine. Quaitative information reporting uses narrative descriptions about a company s approach to address aspects of an issue, often by describing a company s poicies, procedures or actions, evidenced by exampes or case studies. Many indicators are we suited to quantitative measurement, e.g. environmenta emissions or discharges, or numbers of safety incidents, and they typicay have common reporting eements with numeric outcomes. However, socia and economic indicators do not aways end themseves to quantification and the common Section 3 Issues and indicators: what to report 33

38 IPIECA API IOGP Section 3 Issues and indicators: what to report EXAMPLE: SPILLS TO THE ENVIRONMENT AND PROCESS SAFETY This exampe demonstrates the appicabiity of common, suppementa, and other reporting eements, through two indicators Spis to the environment (E9) and Process safety (HS5). These indicators are aso exampes that provide primariy quantitative, but aso quaitative, information for reporting. Loss of containment is one of the most critica risks for the industry to manage due to the potentia for inadvertent environmenta impacts or harm to peope. Reease of hydrocarbon iquids to and or water an oi spi can resut in significant poution or contamination. Reease of ight hydrocarbon gases or iquids, if ignited, may cause a fire or exposion resuting in serious injuries, fataities, damage to property and/or emissions to the atmosphere. The industry is aware of these risks and ensuring the safety of operations is frequenty stated as the highest priority for companies. Athough mitigation of these risks is better today than decades ago, risk is aways present. In recent years, severe accidents have drawn attention to the potentia consequences of major incidents. For oi and gas companies and their stakehoders, the indicators E9 on Spis to the environment and HS5 on Process safety are very ikey to be materia environmenta and safety issues for reporting, and are supported by primariy quantitative reporting eements. Whie E9 is we estabished, HS5 is a new addition to the Guidance that has been recenty introduced across the industry to track process safety (asset integrity) events resuting from gas or iquid oss of containment. structures, and affiiations for an effective response to spis and other emergencies. Some companies, having assessed the materiaity of oi spi risks (Section 2), may use one or more of the suppementa reporting eements to report in more detai. This coud incude reporting the hydrocarbon recovered from spis, separate reporting for spis to soi and to water, or reporting hydrocarbons spis by business activity (e.g. refining, production, etc.). The common reporting eements of HS5 are based on a recommended practice pubished by API and IOGP, which defines how to record the number and frequency of significant process safety events resuting from oss of primary containment. Companies may choose to extend their reporting by aso incuding ess significant process safety events using the suppementa reporting eement. Companies with extensive operations transporting high voumes or a wide range of products may consider giving even greater emphasis in their reporting to oi spis or process safety. For both indicators, companies can consider a range of options suggested under other reporting eements, such as more quaitative or eading measures of performance. The first two common reporting eements of E9 refect estabished practice in the industry to report spi prevention strategies and processes, as we as the number and tota voume spied of a hydrocarbon spis (greater than one barre) that reach the environment. A third common eement encourages quaitative discussion of impacts and response actions for significant spis, as determined by the company. A fourth common eement seeks a description of company emergency preparedness and response programmes, pans, organizationa 34

39 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING reporting eements are generay quaitative. Often indicators have both quantitative and quaitative eements, offering fexibiity to reporters, which can be hepfu when information may be more meaningfu at a oca or nationa eve (rather than at the goba, corporate-wide eve on which most reports are constructed). The exampe on Spis to the environment and Process safety on page 34 iustrates one appication of the reporting eements. A company may initiay appy a quantitative indicator in a more quaitative fashion, based on the maturity of the company s data coection process. For instance, companies may start out by describing operationa performance through the use of anecdota exampes, oca case studies or imited data gathered for a subset of operations. In time, these anecdota descriptions may converge into a more compete, objective and quantitative index for measuring performance or assessing impacts. DATA MANAGEMENT In seecting reevant indicators, companies shoud pay attention to the foowing chaenges in data coection and management: Reporting boundaries: having seected an appropriate set of indicators and reporting eements, consistency in coecting quantitative or quaitative data for incusion in the report is important. Cear definitions of what aspects of the company s hodings and operations are to be incuded or excuded from the data coection need to be estabished. These definitions are normay referred to as the company s reporting boundaries. These may differ for different indicators but shoud be consistent from year to year and between the organizationa units of the company. Defining the reporting boundary is an important consideration. An indicator s scope may often require data from a compex range of organizationa entities engaged in different commercia arrangements, such as joint ventures. Normaization of quantitative data requires consistency between the indicator data and normaization factor to achieve comparabiity over time. (See Data normaization on page 36). In Sections 4, 5 and 6 of the Guidance, boundary-reated information is incuded in the Scope section for each indicator. However, companies are encouraged to define and document an overa boundary for coecting sustainabiity data. A number of protocos exist for setting boundaries. For exampe, both IPIECA and GRI have protocos for GHG emissions, and IOGP has specific practices for upstream reporting of safety and environmenta data. Appendix A sets out a three-step process intended to hep companies define practica boundaries for their sustainabiity reporting. This process promotes consistency within reports, supports comparabiity between companies and faciitates inter-company benchmarking (athough benchmarking of performance wi usuay require more expicit and detaied standardization of boundaries for individua indicators). Estabishing baseines: many companies estabish baseines to maintain data consistency and to track performance over time. This faciitates interna performance monitoring and decision making and heps demonstrate progress towards goas from a designated starting point or base year. The seection of a reference year shoud take into account the quaity of historica data and the frequency and/or significance of unusua events. When a company acquires or divests assets, resuting discontinuities in data can make performance trends difficut to interpret. In such cases, incorporating baseine adjustments woud hep the report reader in understanding the data. Such adjustments need to be ceary documented and communicated to ensure transparency. Section 3 Issues and indicators: what to report 35

40 IPIECA API IOGP Section 3 Issues and indicators: what to report Consistent reporting periods: Reporting companies are encouraged to pubish reports on a reguar schedue. Typicay, reporting in the oi and gas sector is annua, based on caendar years. Information quaity: Reporting companies are encouraged to describe how quantitative data and/or quaitative information are produced using management protocos for coection and review of information. Companies shoud provide appropriate information on data quaity in terms of its source, how it was assessed and the degree of confidence in its accuracy. Data consoidation: companies can report performance data at varying eves of aggregation, ranging from individua sites or faciities to nationa/regiona ocations and to goba coverage for the entire corporation. Companies shoud determine aggregation eves for reporting on issues and, if appropriate, these eves shoud aso aow for normaization based on categories of business activity, such as those provided in Tabe 4 on page 37. It is often usefu, for exampe, to separate upstream (i.e. exporation and production) activities from downstream activities. Exporation and production activities can be defined by reference to the annua updated IOGP guidance on coection of safety and environmenta data. Downstream activities may be considered to encompass a other activities of the company; however, to enabe a more meaningfu interpretation of performance, it is often necessary to separate specific downstream activities. (See Data normaization, beow.) Regiona breakdowns of data can aso provide important insights on operating performance and differences between companies. Appendix A provides guidance on approaches to data consoidation with respect to reporting boundaries. DATA NORMALIZATION Interna and externa users of sustainabiity performance resuts are generay interested in two types of indicator data presentation: Absoute quantities are vaues presented to refect the fu magnitude or size of an output, input, vaue or resut. Such vaues can typicay be expressed using a physica unit of measurement reated to weight, voume, energy or financia vaue. In genera, absoute quantities can be expressed in units of measurement that are readiy convertibe. (See Appendix D, Measurement units and conversion factors.) Normaized quantities are reative vaues presented as ratios between two absoute quantities of the same or different kind. Typicay, indicator data are the numerators of the ratio, and a suitabe normaization factor is seected as the denominator. Normaized quantities aow comparisons of indicator data between operations of different size, and faciitate comparisons of simiar products or processes. These ratios hep compare the performance of one company, business unit or organization to those of another. Normaized indicators can provide information on the efficiency of an activity, on the reative intensity of an output (e.g. energy intensity) or on the reative quaity of a vaue or achievement. Companies report normaized performance indicators for a number of reasons, incuding: tracking performance over time; comparing performance between simiar business operations within the company; and benchmarking performance with other companies. 36

41 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Reporting performance based on both absoute and normaized quantities is good practice and can provide a more compete and baanced representation of sustainabiity performance and progress. However, it is not aways appropriate to normaize data, especiay where there is no we-defined reationship of scae between the absoute quantities and the normaization factors. Thus, reporting normaized data can present a chaenge because different normaization factors are needed for different activities and for different purposes. In genera, companies shoud normaize performance indicators in ways that aign with business decision making and in ways that aow cearer communication of performance to stakehoders; for exampe by reporting normaized data separatey for oi and gas production activities versus refining or petrochemica operations. Normaization factors vary based on specific indicators. For exampe, for safety and heath indicators the absoute quantity of workforce occupationa injuries and inesses can aso be reported as the normaized rates of injuries or inesses by using the number of hours worked by the workforce as a normaization factor. Environmenta performance indicators are typicay normaized using absoute quantities of reated outputs (e.g. emissions per unit production from a process). Since the reative magnitude of these outputs can vary substantiay for different oi and gas processes or products, for some key metrics it can be hepfu for companies to report normaized environmenta data for each business activity separatey, so that performance can be more meaningfuy evauated. Recommended normaization factors are provided in Tabe 4. Section 3 Issues and indicators: what to report Tabe 4 Recommended normaization factors for environmenta performance data Oi and gas industry activity Exporation and production (upstream) Refining Transportation and terminas Pipeine Marketing (retai) Marine Petrochemicas Normaization factor We head production of crude oi, condensates, natura gas iquids and dry gas (incuding fared gas and gas used for fue but excuding gas reinjected into the reservoir) on an operated basis Note: equity share GHG emissions may be normaized using net export production on an equity share basis, as in financia reporting. Refining throughput of crude oi and other feedstock Product deivered or termina throughput Pipeine throughput Motor fue saes Cargo voume transported Petrochemicas production 37

42 IPIECA API IOGP Section 3 Issues and indicators: what to report STANDARD ISSUE AND INDICATOR FORMAT For ease of reference, each issue and indicator described in Sections 4, 5 and 6 is organized using the tempate beow: For each issue: Introduction to the issue: a short description of the issue, incuding why it may be materia for companies to report. Guidance on reporting the issue: intended to hep companies report information on management approach and strategy to address the issue and its reated impacts. Recommended indicators for the issue: brief overview of the indicators recommended to support reporting on the issue. For each indicator within an issue: Description: briefy conveys the overa intent of the indicator, in particuar for the common reporting eements. Purpose: provides the reasoning behind the use of the indicator, incuding its potentia reevance to a company in the oi and gas industry. Scope: describes the indicator and reporting eements in terms of appicabiity with any reevant quaifying information; a separate ist of aspects that are out of scope may aso be provided. Reporting basis: defines measurement units (if appicabe), and data consoidation/boundary considerations. Definition of terms: offers a short specific gossary that carifies terms specific to the indicator. Reporting eements: numbered (C1, C2, S1, etc.) and summarized in a tabe: Common reporting eements (C) Suppementa reporting eements (S) Measures for tracking performance progress that Aternate or additiona measures that have are we estabished across the industry and offer been appied successfuy by some reporters a starting point for new reporters, as we as and provide options for more depth or different greater comparabiity for existing reporters and approaches to describe how a materia issue is report readers. being addressed. Other reporting eements (O) Less-estabished compementary measures, or emerging practices, that provide further options to deveop a company s report. References: internationa standards and/or industry guidance on sustainabiity issues, and hep with sourcing and compiing data 38

43 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Section 4 Environmenta issues and indicators 39

44 IPIECA API IOGP Environmenta issues and indicators Section 4 Environmenta issues and indicators Section 4 Environmenta issues and indicators OVERVIEW The oi and gas industry recognizes that its operations have potentia impacts on the environment. Some of the environmenta impacts may have heath, safety, socia and/or economic impications. Companies in the industry generay have systematic processes in pace to manage and reduce environmenta impacts. This section provides direction on narrative and strategic reporting on four environmenta issues ikey to be materia for companies: cimate change and energy, biodiversity and ecosystem services, water and oca environmenta impact. These four issues are supported by eeven indicators (see tabe beow) which describe the environmenta systems, progress and performance of company operations. Consoidation and normaization of environmenta data For environmenta indicators, a company generay consoidates performance data for operated assets by appying the reporting boundary operationa approach, except for greenhouse gas (GHG) emissions where both the operationa approach and the equity share approach may be appied (Appendix A). Indicators for spis, emissions, energy use and wastes can be expressed as absoute and/or normaized quantities. Absoute measures provide information on the scae of reeases at the corporate, regiona or oca eve. Normaized quantities faciitate comparisons among simiar operations of different sizes either over time or between different ocations (Section 3). Because of the varying prices of oi and gas, normaization based on the monetary vaue of outputs is not recommended. Instead, environmenta data shoud be normaized based on physica outputs such as production or throughput (Tabe 4, Section 3). Care is required to account for the differing nature of specific operations. Emissions from oi production, for exampe, vary depending on the need for enhanced oi recovery techniques and whether associated gas produced with the oi is fared or captured for sae. Simiary, refining emissions depend on the type of crude oi processed and the mix of products produced. One approach to deaing with process and/or feedstock differences is to normaize data using a weighted measure of production or throughput. A good exampe is Soomon Associates Equivaent Distiation Capacity, which factors in the compexity of a refinery s processes. Summary of environmenta issues and indicators Issue Indicator Page number Cimate change and energy E1: Greenhouse gas (GHG) emissions 42 E2: Energy use 46 E3: Aternative energy sources 49 E4: Fared gas 51 Biodiversity and ecosystem services E5: Biodiversity and ecosystem services 54 Water E6: Fresh water 59 E7: Discharges to water 63 Loca environmenta impact E8: Other air emissions 66 E9 Spis to the environment 68 E10: Waste 71 E11: Decommissioning 74 40

45 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Cimate change and energy Introducing the issue: Cimate change and energy The chaenges and risks posed by cimate change require effective goba action, whie access to affordabe and reiabe energy remains essentia for economic and socia deveopment. Oi and gas products wi ikey account for a high proportion of goba energy demand for decades to come. At the same time, companies have a continuing roe to pay in improving energy efficiency and in deveoping new technoogies to minimize GHG emissions How the oi and gas industry may be impacted by, and can contribute to addressing, the risks associated with cimate change is compex. This aso refects a word with many regiona differences in terms of environmenta, socia, poitica, technoogica and economic chaenges. As such, companies may eect to report on cimate change risks and management within the context of their own business and its operations. GUIDANCE ON REPORTING THE ISSUE The foowing ist suggests topics for consideration that a company may wish to incude within the narrative of sustainabiity reporting 2 : 1. Cimate change positions, poicies or principes, incuding corporate views on the significance of cimate risk, how these risks shoud be addressed and principes for sound poicy. 2. Responsibiities and accountabiities for managing cimate change risks, incuding the frequency of review with executives of the company. 3. Stakehoder engagement approaches through pubic advocacy and obbying (Section 6, SE14) with reguators, poiticians, consumers, pubic poicy forums and trade associations, as we as other vountary initiatives. 4. Impications of shifting energy suppy/demand and cimate poicy to company s asset base, business performance and vaue, incuding a view on the future use of non-hydrocarbon energy sources. 5. Corporate risk management approaches and how these approaches appy to managing cimate change risks may incude commentary on investment evauation and risk management approaches such as scenario panning and/or proxy cost of carbon usage, and may aso incude a description on the approach to ensuring the resiience of faciities and operations to protect against the physica impacts of cimate change. 6. Emissions mitigation strategies, programmes, initiatives and activities, incuding commentary on historica performance and panned activities to, e.g. improve energy efficiency, reduce faring, increase use of cogeneration, sequester carbon and/or improve the efficiency of the use of the company s products. 7. GHG reguatory compiance approaches, incuding participation in emission trading schemes and the use of offsets. 8. Research and deveopment activities directed towards reducing GHG emissions in oi and gas sector operations as we as from hydrocarbon derived product use, incuding company interna and externa activities. 9. Historica performance data incuding GHG emissions, energy use and fared gas. 10. Assurance approach for appicabe data covered in cimate sustainabiity reporting. RECOMMENDED INDICATORS FOR THIS ISSUE The four indicators recommended beow are common to many companies. Of these, GHG emissions (E1) metrics are the most widey reported across the oi and gas industry and are based on we-estabished protocos. Energy use (E2) and Fared gas (E4) metrics are indicators of natura resource use, and are aso directy associated with GHG emissions; they are aso reated to oca environmenta impacts (e.g. see E8). Aternative energy sources (E3) is an indicator that enabes reporting on company investments in identifying and providing aternative and/or renewabe soutions. Section 4 Environmenta issues and indicators 2 The evoving and compex andscape of cimate change reporting has ed IPIECA to deveop a framework, which supports companies in considering what topics to report on by covering these 10 areas in greater detai. Reeased in 2015 as a Piot, it is intended that this document wi be provided as fina guidance in

46 IPIECA API IOGP Environmenta issues and indicators Cimate change and energy E1: Greenhouse gas emissions Section 4 Environmenta issues and indicators E1: Greenhouse gas (GHG) emissions DESCRIPTION Report quantity of GHG emissions, incuding carbon dioxide and methane, from combustion and other processes. PURPOSE Greenhouse gases are generated by most petroeum industry operations and contribute to aggregate goba atmospheric GHG concentra - tions. This indicator demonstrates how companies track and manage their GHG emissions. SCOPE The foowing scope summarizes key aspects of the IPIECA/API/IOGP Petroeum Industry Guideines for Reporting Greenhouse Gas Emissions which are recommended for accounting and vountary reporting of GHG emissions in the petroeum industry and shoud be referred to for detaied guidance on this indicator. Oi and gas companies shoud consider incuding, if significant, the seven species of greenhouse gases isted by the Intergovernmenta Pane on Cimate Change (IPCC): carbon dioxide (CO 2 ); methane (CH 4 ); nitrous oxide (N 2 O); hydrofuorocarbons (HFCs); perfuorocarbons (PFCs); suphur hexafuoride (SF 6 ); and nitrogen trifuoride (NF 3 ). For oi and natura gas operations, CO 2 and CH 4 are usuay the most significant components of GHG emissions. N 2 O is emitted in very sma quantities from the combustion of fossi fues and its GHG contribution may be insignificant compared to CO 2. Depending on the company s operations, the other greenhouse gases HFCs and PFCs used in refrigeration, and SF 6 used in eectrica equipment and sometimes as a tracer in pipeines may or may not make a substantia contribution reative to the tota GHG emissions from a company s operations. NF 3, added by the IPCC in 2013, is normay associated with emissions from manufacturing in the eectronics industry and is therefore not expected to be significant for oi and gas company reporting. For each isted GHG determined by the company to be a significant contributor to tota emissions, it is good practice to report annua emissions in metric tonnes and/or the CO 2 equivaent (CO 2 e) of each GHG, where the CO 2 e is cacuated in accordance with pubished goba warming potentia (GWP) factors. Note that the preferred source for GWP factors is the IPCC s Fourth Assessment Report (2007) 3. GHG emissions from a company business activities shoud be incuded: combustion emissions (e.g. fue use in gas compression, power generation, heating, coke burn); faring (primariy CO 2 ) and venting (primariy CH 4 ); process emissions (e.g. vesse oading, tank storage and fushing, gyco dehydration, suphur recovery units, hydrogen production); 3 The 2010 version of the Guidance recommended use of the GWP factors in the IPCC s 1995 pubication, Second Assessment Report (SAR). This recommendation has been revised to use of the GWP (100-year time horizon) factors from the IPCC s 2007 pubication, Fourth Assessment Report (AR4) that, inter aia, increases the GWP for methane from 21 to 25, which is of significance for this indicator. In 2013 the IPCC issued its Fifth Assessment Report (AR5) with further modifications to GWP factors incuding methane, for which two revised, aternative, factors of 28 or 34 are provided, depending on whether carbon-cyce feedbacks are taken into account. Because of this additiona compexity, and because nationa and internationa inventories have generay not yet taken into account the GWP factors in AR5, this Guidance recommends use of the AR4 factors in order to maintain consistency in reporting with prior data and transparency on performance. The recommendation of which IPCC GWP factors to use for sustainabiity reporting wi continue to be reviewed. It is good practice for companies to state the source of GWP factors used to report GHG emissions in their reports. 42

47 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Cimate change and energy E1: Greenhouse gas emissions fugitive emissions of GHG gases (incuding piping and equipment eaks); and non-routine events (e.g. pipeine maintenance, gas reeases, equipment maintenance). GHG emissions estimates shoud incude significant stationary and mobie sources from company business activities. Stationary sources shoud incude equipment at we sites, production faciities, refineries, chemica pants, terminas, fixed site driing rigs and office buidings. Mobie sources shoud incude marine vesses transporting products, tank truck feets, mobie driing rigs, and moveabe equipment at driing and production faciities. The GHG Protoco, a partnership between the Word Resources Institute and the Word Business Counci on Sustainabe Deveopment (WRI/WBCSD), cassifies GHG emissions as either Direct or Indirect based on three broad scopes. Scope 1 emissions are defined as Direct GHG emissions resuting from equipment or other sources owned (party or whoy) and/or operated by the company. Where an operation purchases energy aready transformed into eectricity, heat or steam, the GHGs emitted to produce this energy are reported as Indirect GHG emissions from imported energy (Scope 2 emissions). For increased carity when reporting direct (Scope 1) GHG emissions, GHG emissions associated with energy sod to others can be reported separatey as Direct emissions from exported energy. Companies may report Other indirect emissions (Scope 3) reated to the vaue chain of their activities (see page 30). Of the 15 categories of Scope 3 emissions defined by The GHG Protoco, Use of sod products is the most reevant in reation to the oi and gas industry. Whie there are a variety of methodoogies (both reguated and vountary) for estimating consumer emissions and such data may be more comprehensivey reported by governments on a societa basis (e.g. by country, region, etc.), companies may provide estimates of emissions reated to product use in their reports. As an aternative, companies may provide appicabe product voumes (such as oi and gas production, refined products, retai saes, etc.) to enabe stakehoders to estimate emissions using their preferred methodoogy. The common reporting eements (see page 45) are based on reporting direct GHG emissions and indirect GHG emissions associated with purchased energy (Scope 1 and 2); the suppementa reporting eements aow for more detaied reporting on direct GHG emissions and provide for reporting indirect GHG emissions reated to consumer use of products (Scope 3). Based on current practice, the foowing are not typicay incuded by companies in their GHG emissions reporting: ozone-depeting gases such as chorofuorocarbons (CFCs) and hydrochorofuorocarbons (HCFCs), since these are not among the GHG species isted by the IPCC; and CO 2 sod as product, used for enhanced oi recovery, or sequestered (e.g. via carbon capture and sequestration). REPORTING BASIS Emissions are reported quantitativey at the company eve as CO 2 e (refecting the goba warming potentia of a of the GHG species) and as emissions of the individua gases expressed in mass and/or CO 2 e. Measurement units are: GHG emissions (direct or indirect): metric tonnes CO 2 equivaent (where CO 2 e = the sum of the emissions for each GHG species mutipied by its respective GWP reative to CO 2, in metric tonnes); and Section 4 Environmenta issues and indicators 43

48 IPIECA API IOGP Environmenta issues and indicators Cimate change and energy E1: Greenhouse gas emissions Section 4 Environmenta issues and indicators GHG species (i.e. when reporting individua gases): metric tonnes and/or metric tonnes CO 2 equivaent (where CO 2 e = the product of metric tonnes of the GHG species of interest by its GWP reative to CO 2 ). Companies shoud aso ceary identify the specific GHG species incuded in their emission estimates and the GWP for each species. Companies that choose to report on GHG emissions reated to consumer use of oi and gas products (Scope 3) shoud carify the types of product (such as crude oi, gas or other production, fues and other refinery outputs, direct retai saes, etc.) seected as a basis for the methodoogy used to estimate the emissions and aso the source of emission factors appied, e.g. reports of the IPCC. Data shoud be consoidated within the company s reporting boundary using either the operationa or the equity share approach, or both approaches (Appendix A), and can consider the aternative financia approach. Reporting boundaries and these data consoidation approaches are defined and discussed in detai in Chapter 3 of the IPIECA/API/IOGP Petroeum Industry Guideines for Reporting Greenhouse Gas Emissions. Companies shoud ceary state the consoidation approaches used. In genera, emissions shoud be reported annuay together with data from past years to show performance trends. The company may state a base year against which performance is being assessed. It is aso good practice to indicate the basis for the methodoogy used to report Scope 1, 2 or 3 emissions data (e.g. the GHG Protoco, IPIECA/API/IOGP or other). DEFINITION OF TERMS Direct GHG emissions: tota GHG emitted from sources at a faciity owned (party or whoy) and/or operated by the company. Direct GHG emissions correspond to Scope 1 emissions as defined by the GHG Protoco. Indirect GHG emissions from imported energy: GHG emissions that occur at the point of energy generation (owned or operated by a third party) for eectricity, heat or steam imported (i.e. purchased) for use on site by the reporting entity. Indirect GHG emissions from imported energy correspond to Scope 2 emissions as defined by the GHG Protoco. Direct GHG emissions from exported energy: GHG emissions reated to production of energy in the form of eectricity, heat or steam exported (i.e. sod) by the reporting entity to a faciity owned or operated by a third party. This is a subset of direct GHG emissions. GHG intensity: GHG emissions divided by the appropriate normaization factor for the business segment. This metric can be usefu in comparing performance within a company s business segments (e.g. within production or within refining or power generation). See Section 3 for additiona information on normaization. Direct GHG emissions from cogeneration: GHG emissions reated to production of eectricity and steam in cogeneration (simutaneous production of power and usefu heat). This subset of direct GHG emissions typicay resuts in a reduction of GHG emissions from a pubic utiity. Other indirect emissions: correspond to Scope 3 emissions as defined by the GHG Protoco. They represent indirect emissions that are not Scope 2 emissions and that are not the direct resut of a company s activities. Exampes incude emissions from the manufacture of purchased raw materias (such as hydrogen or stee), emissions from third-party vesses or vehices transporting company products or empoyees, or emissions from customer use of the company s fue products. 44

49 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Cimate change and energy E1: Greenhouse gas emissions Reporting eements Common reporting eements C1 Direct GHG emissions (Scope 1), reported using the company s preferred approach (operationa, equity share or other) to incude: Direct CO 2 Direct CH 4 Direct other gases (if significant). C2 Indirect GHG emissions reated to imported energy, reported separatey from direct emissions, using the same approach (Scope 2). C3 GHG emissions and/or intensity, reported by business activity (e.g. oi and gas production, refining). Suppementa reporting eements S1 Direct GHG emissions (Scope 1), reported using both operationa and equity share approaches. S2 Indirect GHG emissions reated to consumer use of oi and gas products (Scope 3). Aternativey, provide appicabe product voumes (such as oi and gas production, refined products, retai saes, etc.) to enabe stakehoders to estimate emissions using their preferred methodoogy. Section 4 Environmenta issues and indicators Other reporting eements O1 Breakdown of major source categories for both CO 2 and CH 4 emissions (e.g. combustion [stationary], faring, venting, process, product transport). O2 Emissions reated to activities of specia interest (e.g. oi sands) can be noted separatey if these represent a substantia portion of the company s GHG profie. O3 Separatey report substantia direct GHG emissions associated with the cogeneration of heat and power. O4 Separatey report substantia direct GHG emissions reated to the generation of energy exported. O5 Report other Scope 3 categories of indirect GHG emissions as isted within the GHG Protoco (noting that companies may have chosen to report indirect emissions reated to consumer use of products as a suppementa reporting eement). References 1. API Compendium of Greenhouse Gas Emission Estimation Methodoogies for the Oi and Natura Gas Industry IPCC Second Assessment Report Cimate Change 1995: The Science of Cimate Change IPCC Changes in Atmospheric Constituents and in Radiative Forcing (Chapter 2), in Cimate Change 2007: The Physica Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmenta Pane on Cimate Change (2007) [Soomon, S., D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L. Mier (eds.)]. Cambridge University Press IPIECA/API/IOGP Petroeum Industry Guideines for Reporting Greenhouse Gas Emissions WRI/WBCSD The Greenhouse Gas Protoco: A Corporate Accounting and Reporting Standard (The GHG Protoco, Revised Edition, March, 2004) IPCC Cimate Change 2013: The Physica Science Basis. Working Group I Contribution to the Fifth Assessment Report of the Intergovernmenta Pane on Cimate Change. Chapter 8: Anthropogenic and Natura Radiative Forcing. 45

50 IPIECA API IOGP Environmenta issues and indicators Cimate change and energy E2: Energy use Section 4 Environmenta issues and indicators E2: Energy use DESCRIPTION Report tota quantity of energy consumed in oi and gas operations or other business activities. PURPOSE Energy use is an indicator of resource use and is typicay associated with the generation of GHGs and other air emissions. Energy-reated emissions to the atmosphere are aggregated within Indicators E1, GHG emissions and E8, Other air emissions. SCOPE Reporters shoud state the tota energy consumed to operate their faciities and equipment. This incudes the direct energy produced and used by operations, any direct energy exported, as we as energy associated with the import of eectricity, heat and steam. To refect resource use, energy is reported as primary energy (i.e. the energy content of the hydrocarbon fues or other sources used to produce the energy utimatey consumed by the company s operations). Direct energy resuts from sef-generation of mechanica power, eectricity, heat or steam on the company s operating sites, as we as in office buidings, marine vesses, trucks, or other stationary or mobie equipment under the operationa contro of the reporting company. Exampes of energy-consuming equipment incude boiers, fired heaters, waste incinerators, gas turbines, gas engines and diese engines. Direct energy use is a measure of the energy content of the fues or other energy sources used to produce the power or heat generated directy at the faciity. Direct energy shoud refect combustion of fues, whether produced by the company or purchased. Energy from fue combustion shoud be determined as foows: Preferred: cacuated based on the fue voume consumed and the fue energy content of the fues used to generate the required energy. Cacuation may be carried out by tota fue consumed if the same fue is used by a energy sources, or by source if fue types vary. Use of ower heating vaue is recommended because this refects the amount of useabe energy consumed and its use wi promote a consistent reporting basis. Use of upper heating vaue in pace of ower heating vaue wi increase the reported energy consumption by up to 10%. Aternative: estimate based on the design energy consumption specifications associated with various processing equipment, augmented with runtime or throughput information if avaiabe. On-site generation of soar or wind eectric power or other non-combustion energy sources shoud be incuded and cacuated simpy from the eectricity generated by these sources. Exported energy is the subset of the direct primary energy sod or otherwise exported from the faciity for use by others. It incudes energy osses from the company s own power generation equipment. This indicator quantifies energy use reated to oi and gas operations and, therefore, excudes exported energy not avaiabe to support onsite operations. As a consequence, companies with significant export contributions from power pants or cogeneration pants may choose to report energy use reated to generation of exported power separatey to provide a cearer picture of overa resource use. 46

51 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Cimate change and energy E2: Energy use Imported energy shoud refect the energy content of the fues that the suppier uses to produce eectricity, heat or steam imported by the company. This approach is used to refect the use of primary energy resources. For exampe, imported energy derived from a therma power generation pant woud be the energy content of the fue combusted by the provider to produce the eectrica power received by the company s faciity. Imported energy accounts for the efficiency oss during the transformation of fue combusted at the power pant into eectricity, heat or steam. Imported energy is cacuated by using the purchased records of eectricity, heat or steam, and then using efficiency factors to convert back to the energy content of the fues or energy sources. For purchased eectricity, the imported eectricity is converted to an estimate of the energy actuay used by appying a oca grid factor that refects the average therma efficiency (i.e. energy content of the fue versus energy produced) for the mix of eectrica generation faciities providing eectricity to the oca eectrica grid. For purchased heat or steam, efficiency factors can typicay be obtained from the suppier. In the absence of efficiency or grid factors, incuding specific information from the energy provider, it is possibe to use pubished grid factors such as those provided by the API Compendium (API, 2009) the US EPA E-GRID factors or other sources avaiabe in the country of operation. Aternativey, it may be necessary to use pubished conversion factors and information on the type of generating unit suppying the energy. In the absence of oca or regiona information, the foowing efficiency factors can be used for combustion-based energy sources: energy content of the fue used to generate the eectricity = eectricity purchased/ received in gigajoues (GJ) divided by 0.38; energy content of the fue used to generate the steam = steam purchased/received in GJ divided by 0.8. The factors provided are conservative vaues to account for efficiency osses during generation and transportation of power but do not refect the efficiency of the most recent power generation technoogy. If eectricity imported comes soey from non-combustion and nonnucear generation (e.g. wind, hydroeectric, wave, tida power) there is no need to appy a grid factor; simpy report the imported energy purchased. Tota energy use reported shoud incude direct energy and imported energy but excude exported energy to quantify energy consumed by a company s oi and gas operations. OUT OF SCOPE The energy content of fared or vented gas shoud be excuded from tota energy use estimates. Athough these do refect oss of energy resources, they do not refect energy use required for production or manufacturing of products. These resource osses are covered by a separate metric, E4, Fared gas. REPORTING BASIS Report in gigajoues (one British Therma Unit [BTU] = 1055 joues; 1 kiowatt-hour (kwh) = gigajoues). Energy data shoud be consoidated within the company s reporting boundary using the operationa approach (Appendix A). Section 4 Environmenta issues and indicators 47

52 IPIECA API IOGP Environmenta issues and indicators Cimate change and energy E2: Energy use Section 4 Environmenta issues and indicators DEFINITION OF TERMS Tota energy use: direct energy + indirect energy exported energy. Direct energy: energy resource consumption by the faciity or its equipment expressed as the primary energy needed to produce the power or heat required. This incudes the energy content of sef-generated and purchased fue consumed, as we as the energy from other renewabe (e.g. wind, soar) and non-renewabe sources, but excudes the energy content of fared or vented gas. Imported energy: amount of primary energy required to produce purchased power, most typicay as eectricity, heat or steam. Exported energy: amount of direct primary energy exported for use by others, most typicay as eectricity, heat or steam. Energy intensity: tota energy use divided by the appropriate normaization factor for the business segment (e.g. production voume, refinery throughput). See Section 3 for guidance on normaization. Reporting eements Common reporting eements C1 Tota energy use. Suppementa reporting eements S1 Exported energy (if power generation for export represents a significant contribution to energy profie). S2 Energy intensity by business activity (e.g. oi and gas production, refining). S3 Initiatives and progress towards improving energy efficiency and consuming ess energy. For exampe, many companies are producing energy on site and using combined heat and power (CHP, aso known as cogeneration) pants to improve energy efficiency. Other reporting eements O1 Progress in managing energy consumption through use of energy-use indices, comparing current energy use per unit product produced to a historica reference point. O2 For refineries and chemica pants, indices that account for faciity-specific infrastructure and operation conditions can be used to provide comparabiity of energy performance. Soomon Associates Energy Intensity Index, for exampe, is used for faciity-specific anaysis of refinery energy performance. Companies may wish to report on trends in these or other indices to track progress of energy-use management. O3 Report on what a company does to promote efficient customer use of energy. References 1. API Compendium of Greenhouse Gas Emission Estimation Methodoogies for the Oi and Natura Gas Industry IPIECA/API/IOGP Petroeum Industry Guideines for Reporting Greenhouse Gas Emissions Internationa Organization for Standardization ISO 50001:2011: Energy management systems Requirements with guidance for use IPIECA Guideines for impementing ISO energy management systems in the oi and gas industry. 48

53 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Cimate change and energy E3: Aternative energy sources E3: Aternative energy sources DESCRIPTION Report on company research, pans or current initiatives reated to aternative or renewabe energy sources. PURPOSE To meet future goba energy demand, a variety of commerciay viabe energy sources, combined with energy efficiency, wi be needed. This indicator faciitates reporting of company activities in research, deveopment, suppy and/or use of non-fossi fue energy, particuary aternative and renewabe energy resources. REPORTING BASIS This indicator can have both quaitative and quantitative aspects as we as incude exampes to iustrate appication of the indicator at the oca eve. When reporting aternative/renewabe energy production, the preferred unit is gigajoues and data shoud be consoidated within the company s reporting boundary using the operationa approach (Appendix A). Section 4 Environmenta issues and indicators SCOPE Reporting of a company s pans and activities may incude information such as: research and deveopment of aternative/renewabe energy sources; production of aternative/renewabe energy, either for interna use or sae; if producing aternative energy from mutipe sources, a breakdown by source; and if producing biomass or biofue energy, a breakdown by source and discuss associated materia issues such as ife-cyce assessment of carbon reductions (considering a carbon emission inputs and outputs from initia production through transportation, storage and eventua use on an energy equivaent basis), direct and indirect and-use changes, water use, impact on air quaity, food and socia issues. Where appropriate, discuss third-party certification systems. 49

54 IPIECA API IOGP Environmenta issues and indicators Cimate change and energy E3: Aternative energy sources Section 4 Environmenta issues and indicators DEFINITION OF TERMS Aternative energy: energy derived from non-fossi fue sources. Nucear energy, whie it is a non-fossi fue, is typicay not incuded as an aternative fue. Renewabe energy: energy sources that are constanty renewed by natura processes. These incude non-carbon technoogies such as soar energy, hydropower and wind, as we as technoogies based on biomass. Life-cyce anayses are required to assess the extent to which biomass-based technoogies may imit net carbon emissions. Biofue: fue produced from organic matter produced by pants. Exampes of biofues incude acoho (from fermented sugar), back iquor from the paper manufacturing process, wood, and pam and soybean oi. Biomass: tota dry organic matter or stored energy content of iving organisms. Biomass can be used for fue directy by burning it (e.g. wood), indirecty by fermentation to an acoho (e.g. sugar) or extraction of combustibe ois (e.g. soybeans). Reporting eements Common reporting eements C1 Discuss approach to aternative/ renewabe energy, incuding descriptions of reevant operations activities, investment pans or research and deveopment projects and activities, broken down by type of energy source. Suppementa reporting eements S1 Discuss management of environmenta and socia issues surrounding any research, deveopment and production of biofue energy. S2 Amount of aternative/renewabe energy produced for sae. S3 Amount of aternative/renewabe energy produced for interna company use. Other reporting eements O1 Companies are encouraged to discuss their outook on the suppy and demand for renewabe/aternative energy, and its impications for sustainabiity. O2 Report on use of aternative/renewabe energy sourced from third parties, such as renewabe energy purchased from a utiity suppier. O3 Athough nucear energy is not typicay considered to be an aternative fue, companies with activities in nucear energy production may describe their activities and separatey report nucear energy produced or used. References 1. IPIECA Cimate Change: A Gossary of Terms (Fifth edition) 50

55 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Cimate change and energy E4: Fared gas E4: Fared gas DESCRIPTION Report the quantity of hydrocarbon gas fared to the atmosphere from operations. PURPOSE The fared gas indicator is a measure of natura gas resource consumption and contributes to GHG emissions and other gaseous emissions that impact the oca environment. SCOPE Gas fare systems are an essentia safety mechanism in many petroeum operations. Fares can, for exampe, safey combust gas reeased from pressure reief vaves and other safety systems during pant upsets, gas reeased from various process or storage equipment, non-marketabe gas or unusabe gas. Sources and situations that may feed gas into fare systems can incude but are not imited to: pressure reief vave systems used to prevent overpressure of equipment; emergency depressurizing systems used for safe pant management; operations during pant start-ups and shutdowns; tank storage overhead vapours (e.g. fiing and breathing osses); gyco dehydrators; soution gas from separators or fash tanks at crude oi batteries, terminas or other production faciities; we testing, especiay at newy-dried wes in frontier areas; we competion and cean-up operations where faring is necessary for we bore and reservoir cean-up; bow-down and pigging operations on gas gathering or other pipeine systems; bow-downs of vesses, piping, gas compressors or other equipment during maintenance; and vesse and tank truck oading emissions (e.g. vapours dispaced during oading of tankers or trucks). Companies shoud report as fared gas the tota quantity of hydrocarbon gas sent to operationa fare systems at a faciity. This shoud incude routine faring operations as we as any nonroutine faring events. Reported fared gas shoud incude purge gas, piot ight fue and assist gas, if these are substantia reative to the tota quantity fared. Data on insignificant quantities of fared gases are not generay coected or reported. Cacuation of fared gas shoud be based on the composition of the gas stream invoved and, if significant, shoud excude the quantity of non-hydrocarbons, such as carbon dioxide (CO 2 ), water, hydrogen (H 2 ) and nitrogen (N 2 ). In the absence of measured gas composition data, engineering estimates shoud be appied. For most petroeum industry operations, venting of hydrocarbons represents a minor resource use and reated emissions are effectivey covered by Indicator E1, GHG emissions, and by the voatie organic compounds (VOC) metric under Indicator E8, Other air emissions. If gas venting is substantia, companies shoud separatey report the quantity of vented hydrocarbon gas. REPORTING BASIS Report quantitativey using units of metric tonnes of hydrocarbons fared. Reporting in units of mass is encouraged because this provides a more consistent and comparabe measure of product oss. When reporting on a voume basis use standard cubic metres (Sm 3 ) or aternativey standard cubic feet (SCF), which is commony used in industry operations and Section 4 Environmenta issues and indicators 51

56 IPIECA API IOGP Environmenta issues and indicators Cimate change and energy E4: Fared gas Section 4 Environmenta issues and indicators may be better understood by some audiences. When reporting voume, specify units used and the temperature/pressure bases for the standardization. Fared gas data shoud be consoidated within the company s reporting boundary using the operationa approach (Appendix A). Data shoud be consoidated for a operationa activities which contribute significanty to the company s tota fared gas. Companies shoud determine significance (see Gossary) in terms geographic ocations/regions. DEFINITION OF TERMS Fared gas: tota mass (or voume) of hydrocarbon directed to operationa fare systems, wherein the hydrocarbons are consumed through combustion. Reporting eements Common reporting eements C1 Quantity of hydrocarbon gas fared from operations. Suppementa reporting eements S1 Separatey report hydrocarbon gas fared for each reevant business activity (e.g. oi and gas production, refining). Other reporting eements O1 Contribution of faring to the company s tota GHG emissions in CO 2 e. O2 Indicate geographic ocations/regions of significant faring. O3 Reporting faring by type can convey the causes of faring and indicate areas for operationa improvement. For exampe, faring can be spit between routine causes (e.g. norma operations, we testing) and non-routine causes (e.g. pant start-ups and shutdowns, pressure safety vave reeases, emergency depressurization). O4 Describe fare reduction activities incuding sustainabe reduction improvements versus short-term operationa fuctuations. O5 Separatey report vented gas if hydrocarbon venting represents a substantia portion of a company s resource use. References 1. API Compendium of Greenhouse Gas Emission Estimation Methodoogies for the Oi and Natura Gas Industry IPIECA/API/IOGP Petroeum Industry Guideines for Reporting Greenhouse Gas Emissions US EPA Compiation of Air Poutant Emission Factors, Voume I: Stationary Point and Area Sources, AP-42. Fifth Edition (GPO ), January 1995, with Suppements A and B (1996), C (1997), D (1998), E (1999) and F (2000). US EPA Office of Air Quaity Panning and Standards. 52

57 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Biodiversity and ecosystem services Introducing the issue: Biodiversity and ecosystem services Biodiversity is the variabiity among iving organisms, incuding diversity within species, between species and of ecosystems 4. Biodiversity quaity and richness are the basis of the integrity and effective working of ecosystems, and thereby underpin a the services they provide, the so-caed ecosystem services, and the benefits that peope derive from ecosystems 5. Onshore and offshore oi and natura gas activities interact with the environment wherever such companies operate in the word. These activities can depend on ecosystem services and have the potentia to cause direct and indirect impacts on biodiversity and ecosystem services (BES). Timey identification and appropriate management of operationa dependencies and potentia impacts on BES provide the basis for effective mitigation of associated potentia risks as we as BES conservation opportunities. Typicay, oi and gas companies incorporate the identification and assessment of BES considerations into their environmenta (and socia) management systems, e.g. through Environmenta, Socia and Heath Impact Assessments (ESHIAs). Companies may aso deveop strategies and pans to ensure that BES management is impemented throughout the asset ife cyce of their operations (incuding the suppy chain), foowing the principe of the mitigation hierarchy. GUIDANCE ON REPORTING THE ISSUE Companies shoud report on how strategies and pans are put in pace company-wide, with impementation at asset eve, to mitigate operationa dependencies and potentia impacts on BES, as we as to capture potentia opportunities for BES enhancement. When reporting externay at the company eve, quaitative and/or quantitative information may describe the company s overa performance on BES issue management, strategic decisions or positions, and targets for continuous improvement. Companyeve information can be supported by key performance indicators (KPIs), focused typicay on processes and overa progress, rather than oca effects or outcomes. Site-eve BES reporting shoud provide quaitative and/or quantitative information, internay and externay, on activity effects and associated mitigation action outcomes at the oca eve, e.g. as outined in a Biodiversity Action Pan (BAP). Such measures aim to systematicay improve site-eve operationa practices through continuous improvement in BES-specific issue management at the site eve, and can aso inform company-eve indicators. RECOMMENDED INDICATORS FOR THIS ISSUE This BES guidance focuses on company-eve indicators that can cover the description of the management approach for BES, how BES aspects are incorporated into environmenta management systems. This narrative can be supported by quantitative measures of the company s goba BES performance, such as the percentage of operations where BAPs have been impemented in sites with BES impacts and risks. Case studies can provide practica exampes of impementation of the company s BES strategies and mitigation pans at the site eve. Section 4 Environmenta issues and indicators 4 UN Convention of Bioogica Diversity, Miennium Ecosystem Assessment,

58 IPIECA API IOGP Environmenta issues and indicators Biodiversity and ecosystem services E5: Biodiversity and ecosystem services Section 4 Environmenta issues and indicators E5: Biodiversity and ecosystem services DESCRIPTION Report on how the company addresses biodiversity and ecosystem services (BES) aspects to ensure that operationa dependencies and potentia impacts are appropriatey mitigated, associated potentia risks are effectivey managed and potentia opportunities for BES enhancement are identified. PURPOSE Oi and gas industry activities have the potentia to cause direct and indirect impacts on BES. This indicator encourages companies to describe their approach to assessing and managing impacts and dependencies foowing the principe of the mitigation hierarchy. The associated potentia risks, management approaches and conservation opportunities vary geographicay and with the type of activity/operation being conducted. Consequenty, the materiaity of issues and aspects associated with reporting of this indicator can vary significanty between companies. SCOPE Using narrative based on poicy statements and commitments, companies shoud describe their strategy, pans and overa outcomes for ensuring that BES aspects are integrated into operations throughout the asset ife cyce. Case studies can be incuded in the narrative as practica exampes of impementation. Reporting of this indicator wi vary across the industry depending on activities and their ocations, and therefore the majority of reporting eements are suppementa. Companies can provide coverage on: BES approach: how BES considerations are incorporated into environmenta management systems (EMS) or integrated within heath, safety and environment (HSE) management systems. Exampes at business unit or asset eve may be usefu to iustrate how the company addresses assessment and management of potentia BES impacts, risks and opportunities from panned activities reated to the terrestria, freshwater and marine environments and oca communities. BES Action Pans/Biodiversity Action Pans (BAPs): operations where BES Action Pans/BAPs stand-aone or integrated into other action or broader management pans, e.g. Environmenta Management Pans (EMP) have been impemented in areas determined by the company to have BES or biodiversity risks. The basis or criteria for the associated sensitivity determination shoud be incuded, and shoud consider primary, secondary and/or cumuative impacts. Companies can describe the intended outcomes of the pans, incuding effectiveness of mitigation actions and how continuing chaenges are being addressed. BES engagement: how oca community and stakehoder BES concerns are assessed, evauated as a measure of environmenta 54

59 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Biodiversity and ecosystem services E5: Biodiversity and ecosystem services sensitivity, documented and addressed in biodiversity conservation/action panning. BES adaptive management: operating areas where adaptive management of impacts on biodiversity and/or ecosystems is in pace. Case study exampes demonstrate the practica appication of the company-wide approach to BES and adaptive management processes or poicies at the site eve. Effectiveness of the BES Action Pan/BAP: effectiveness of the verification process and/or mitigation actions based on assessment of ongoing BES Action Pan/BAP resuts. Section 4 Environmenta issues and indicators DEFINITION OF TERMS Adaptive management: the process of measuring, monitoring and reporting the resuts of current management practices and using those resuts to modify management and operationa practices to improve future biodiversity performance. BES Action Pans/Biodiversity Action Pans (BAPs): A set of future actions that wi ead to the conservation or enhancement of BES/biodiversity. Biodiversity: the UN Convention on Bioogica Diversity (1992) defines biodiversity as the variabiity among iving organisms within species, between species and between ecosystems. Biodiversity quaity and richness are the basis of the integrity and effective working of ecosystems and thereby underpins a services they provide, i.e. the so-caed ecosystem services the benefits that peope derive from ecosystems (Miennium Ecosystem Assessment, 2005). Dependencies: these are the ecosystem services that the project or operation reies on to compete the work/run the business, e.g. water, aggregates, storm/food protection, water discharge treatment etc. Ecosystem services: the Miennium Ecosystem Assessment (2005) defines ecosystem services as the benefits (direct and indirect) that peope obtain from ecosystems. The Assessment defines four categories of ecosystem services: provisioning services (products obtained from ecosystems such as fresh water or timber); reguating services (ecosystems contro of natura processes such as cimate, disease, water fows and poination); cutura services (recreation, aesthetic enjoyment); and supporting services (natura processes such as nutrient cycing that maintain other services). Ecosystem: a dynamic compex of pant, anima and microorganism communities and their non-iving environment interacting as a functiona unit (Miennium Ecosystem Assessment, 2005). They incude, but are not imited to, cora reefs, tundra, wetands, forests, grassands and farmands. Mitigation hierarchy: a too which aims to hep manage biodiversity risk, and is commony appied in Environmenta Impact Assessments (EIAs). This too incudes a hierarchy of steps for which the order of preference is: - Avoid; - Reduce; - Restore, and - Offset (in some cases where significant residua biodiversity impacts remain). Operating area: an area where business activities take pace with potentia to interact with the adjacent environment. Geographicay, the term operating area may encompass an area of any size with a unifying environmenta and/or operating feature (e.g. patform, fied, watershed, habitat). 55

60 IPIECA API IOGP Environmenta issues and indicators Biodiversity and ecosystem services E5: Biodiversity and ecosystem services Section 4 Environmenta issues and indicators REPORTING BASIS Quaitative information incuding exampes to iustrate appication of the indicator at the oca eve. This may be supported by some Reporting eements quantitative data, which shoud be consoidated within the company s reporting boundary using the operationa approach (Appendix A). Common reporting eements C1 Describe the company s management approach (poicy, strategy, pans and outcomes), in addressing biodiversity and ecosystem services (BES) aspects. Suppementa reporting eements S1 Describe how mitigation of dependencies and potentia impacts of panned activities, management of associated potentia risks and identification of enhancement opportunities reated to BES is integrated into the company s HSE management systems. S2 The percentage of BES sensitive operating areas (as determined by the company) where BES Action Pans/Biodiversity Actions Pans (BAPs) have been impemented. Incude the criteria used to determine sensitivity and any appicabe metrics. S3 Expanation of how community and stakehoder concerns are assessed, evauated and addressed. S4 Exampes or case studies of operating areas where adaptive management of impacts on biodiversity and/or BES is in pace. S5 Describe effectiveness of mitigation actions, verification processes for BES Action Pans/BAPs and monitoring data and/or actions based on assessment of ongoing resuts. Other reporting eements None References 1. Connick et a A Biodiversity and Ecosystem Services Management Framework for the Oi and Gas Sector. Society of Petroeum Engineers. doi: / ms 2. Energy and Biodiversity Initiative (EBI) guideines and products IPIECA An Ecosystem Approach to Oi and Gas Industry Biodiversity Conservation IPIECA/IOGP A Guide to Deveoping Biodiversity Action Pans for the Oi and Gas Sector ISO. Environmenta Management Systems (ISO ), especiay section Landberg et a Weaving Ecosystem Services into Impact Assessment: A Step-by-Step Method. Technica appendix Version 1, Miennium Ecosystem Assessment Ecosystems and human we-being: synthesis. Washington, DC: Isand Press. ISBN UN United Nations Convention on Bioogica Diversity WBCSD, Meridian Institute, Word Resources Institute Corporate Ecosystem Services Review: Guideines for Identifying Business Risks and Opportunities Arising from Ecosystem Change Version 2.0 (January 2012). 56

61 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Water Introducing the issue: Water Water is an essentia ecosystem service for human deveopment, providing for the needs of individuas and ecosystems as we as meeting the demands of agricuture and industry. With popuation growth and continuing economic deveopment, demand on freshwater suppies is ikey to intensify. As a resut, the need for effective freshwater management throughout the vaue chain is essentia, both in terms of the voumes of fresh water withdrawn or consumed, and of protecting the quaity of existing water resources. These factors, combined with increased societa awareness of freshwater suppy, demand and water quaity, are drivers of materiaity for pubic reporting by many companies, particuary those with operations in ocations where water stress and scarcity is recognized. Whie goba figures show that freshwater consumption by industry (incuding the oi and gas industry) is much ess than in other sectors such as agricuture, municipa water suppy and thermoeectric power generation (AQUASTAT: FAO, 2012), water is an integra eement in most oi and gas operations. However, growing demand for freshwater resources and a reduction in freshwater suppies due to natura factors, such as drought, human-induced factors or infrastructure constraints, can, in some oca areas, chaenge or exceed the capacity of the physica suppy and/or the supporting suppy infrastructure. This can create physica, reguatory and reputationa chaenges for the oi and gas industry in terms of access to water. The importance of water-reated risks for the industry has driven companies and other stakehoders to focus on water technoogy deveopment, improved water management, utiization of aternative water sources and the deveopment of coective soutions. Additionay, the nexus between energy and water is gaining significance as countries ook to increase energy suppies (incuding biofues) that may require greater access to sources of water. As a potentiay significant oca user and producer of water, the oi and gas industry is vunerabe to water disruption in its operations and vaue chains. Section 4 Environmenta issues and indicators 57

62 IPIECA API IOGP Environmenta issues and indicators Water Section 4 Environmenta issues and indicators Introducing the issue: Water (continued) GUIDANCE ON REPORTING THE ISSUE Whie the demand for freshwater suppies is a goba issue, it argey has a oca impact, and potentia soutions need to take into account oca constraints and the reguatory framework. Therefore, in addition to corporate eve reporting, companies shoud assess whether a significant number of the company s faciities are impacted by oca water stress/scarcity. If so, it is then appropriate to add narrative to the report to describe both the company s overa approach to water management and to demonstrate responsibe stewardship approaches to managing water demands and discharges in reevant operationa ocations, especiay in paces where water stress is recognized. Depending on the reporting company s activities and ocations, water management may address freshwater access and use, the treatment of wastewaters, processes invoving produced water from resource extraction, and the use of brackish or saine water. The narrative description shoud carify the types of activities where water management is significant, such as invovement in nonconventiona extraction from shae or oi sands, or investments in aternative or renewabe energy sources such as biofues. The description of a company s approach to water management can demonstrate how the issue is integrated within its management systems and the importance of water as a resource within its business strategy. The report may aso highight progress or outcomes from stakehoder and reguatory engagements, risk assessments, resource efficiency pans, impementation activities, performance evauations and management reviews. When reporting performance, water management can be amenabe to quantitative measures from aggregated totas to water consumption intensity metrics. However, the associated potentia impacts may be highy ocaized for instance, reated to operations in areas of freshwater stress and scarcity so case studies can be beneficia when reporting on this issue. (See the exampe on Working in remote ocations in Section 2, page 26). RECOMMENDED INDICATORS FOR THIS ISSUE The two key areas of environmenta concern are increasing quantities of fresh water withdrawn and water quaity issues (UNEP, 2013). Therefore in this guidance, there are two indicators that support reporting on this issue. Indicator E6 focuses on management of fresh water as a resource whie E7 focuses on managing oca environmenta impacts when treated effuents containing hydrocarbons are discharged into water bodies. Companies may aso wish to report performance data reated to other types of water, such as produced water or desainated water, if significant to their operationa activities. 58

63 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Water E6: Fresh water E6: Fresh water DESCRIPTION Report quantity of fresh water withdrawn or consumed by oi and gas operations and summarize actions taken to manage identified risks associated with freshwater use. PURPOSE Freshwater management is important wherever freshwater resources are constrained due to imited suppies or extensive use. Water management can infuence water avaiabiity for the oca environment, socio-economic deveopment and future demands. SCOPE A common reporting eement recommends reporting the tota voume of fresh water withdrawn by a company either directy from freshwater sources (e.g. akes, ponds, groundwater aquifers, streams and rivers) or taken from municipa freshwater suppies or other water utiities. Some business operations may return significant amounts of fresh water, treated as necessary to the appropriate freshwater standards, back to the same source or to a different freshwater source. A second common eement recommends reporting fresh water consumed (Figure 9), which is the amount of fresh water withdrawn ess fresh water returned. Companies are encouraged to report both fresh water withdrawn and consumed, subject to the avaiabiity of the required data, as this gives a more compete picture of sustainabiity performance trends. The foowing types of water shoud be excuded from the reported quantities: fresh water, used for once-through cooing water, returned unchanged (excuding therma effects) into the same source or a different freshwater body ocated in the same catchment in which the fresh water was withdrawn; produced water from exporation and production operations; water provided from another faciity within the company, which has aready been counted by that faciity; storm water discharged (if not harvested for freshwater site use); and fresh groundwater extracted soey for remediation or to contro the migration of contaminated groundwater. Whie the excusions above refer to freshwater reporting, particuary the common and suppementa reporting eements, these other types of water are covered by severa of the other reporting eements and can be incuded in reporting if impacts are significant to a company s management of water. Section 4 Environmenta issues and indicators Figure 9 Cacuation of fresh water consumption 59

64 IPIECA API IOGP Environmenta issues and indicators Water E6: Fresh water Section 4 Environmenta issues and indicators If fresh water used for once-through cooing water is not returned to the same water source or another freshwater body, it is a consumptive use, is not excuded, and shoud be incuded in freshwater withdrawas. As potentia impacts are ikey to be ocaized and more significant in areas where the fresh water environment is stressed or suppy is scarce, a suppementa reporting eement encourages companies to provide additiona information on operations in such ocations. REPORTING BASIS The voume of fresh water shoud be reported in cubic metres (m 3 ) and consoidated within the company s reporting boundary using the operationa approach (Appendix A). Reports shoud incude exampes and/or case studies to iustrate appication of the indicator at the oca eve. Companies shoud determine significance (see Gossary) when addressing the other reporting eement on management of other types of water (O7). References 1. AQUASTAT website. FAO s goba water information system. Food and Agricuture Organization of the United Nations, Rome AWS The AWS Internationa Water Stewardship Standard (Version 1.0) CEO Water Mandate. 2014a. Driving Harmonization of Water-Reated Terminoogy CEO Water Mandate. 2014b. Corporate Water Discosure Guideines: Toward an Common Approach to Reporting Water Issues CDP IPIECA Goba Water Too for Oi and Gas IPIECA The biofues and water nexus. Guidance document for the oi and gas industry IPIECA Efficiency in water use. Guidance document for the upstream onshore oi and gas industry IPIECA The IPIECA Water Management Framework for onshore oi and gas activities IPIECA Identifying and assessing water sources: Guidance document for the onshore oi and gas industry IPIECA Review of water risk toos. Guidance document for the oi and gas industry UNEP GEO-5 for Business: Impacts of a Changing Environment on the Corporate Sector UNESCO Word Water Assessment Programme (WWAP 2008 data). 60

65 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Water E6: Fresh water DEFINITION OF TERMS Fresh water: the definition varies in accordance with oca statutes and reguations. Where it is not defined by oca reguations, fresh water is defined for reporting purposes as non-brackish water and may incude drinking water, potabe water, water used in agricuture, etc. The tota dissoved soids (TDS) concentration of this water type is up to 2000 mg/. Fresh water withdrawn: the voume of fresh water removed from sources (incuding surface water, groundwater, harvested rainwater and municipa water suppies) and taken into the boundaries of the reporting company for use. Fresh water returned: the voume of fresh water discharged from a faciity (directy or via a third party) into the same source or a different freshwater source but in the same catchment/watershed. It is recommended that the discharge vaue is corrected by subtracting the amount of water which was not originay part of the fresh water withdrawn. Exampes incude coected storm water, or any groundwater from remediation activities (uness used in the faciity as a source of fresh water). Fresh water that is discharged to a different source that is a non-freshwater suppy, body or aquifer shoud not be considered fresh water returned. Fresh water consumption: the difference between fresh water withdrawn and fresh water returned. Fresh water withdrawa intensity: the ratio between freshwater withdrawa and a defined unit of production (for exampe barres of oi for upstream operations and crude oi throughput for downstream/refining operations, and product specific for petrochemica operations). Can be cacuated by dividing the voume of fresh water withdrawn by the output or voume of product created. Fresh water consumption intensity: the ratio between freshwater consumption and a defined unit of production (for exampe barres of oi for upstream operations and crude oi throughput for downstream/refining operations, and product specific for petrochemica operations). Can be cacuated by dividing the voume of fresh water consumed by the output or voume of product created. Water repaced: water sourced from a non-freshwater body that has repaced an existing freshwater source to reduce freshwater withdrawa and/or consumption. Water reused/recyced: water that has been used more than once in a process or used in other processes, with treatment as appropriate, to reduce freshwater withdrawa. Note that the terms reused and recyced are simiar and not differentiated for this indicator. If reused/recyced water is reported quantitativey, the reported voume shoud equa the reduction in the voume of freshwater withdrawn that resuted from the reuse/recycing. Reduction in fresh water withdrawn or consumed: a decrease in fresh water withdrawn or consumed in the reporting year due to panned actions, projects or measures to repace or reuse/recyce water. Freshwater reductions shoud be sustainabe in future years and can ony be aggregated over mutipe years when referenced against the tota change in fresh water withdrawn or consumed in the same period. Water stress/scarcity: when reporting quaitative and quantitative water stress and scarcity information, the definition or indicator of stress and scarcity shoud be defined by the company. There is no one measure of stress and scarcity that is universay accepted. Many toos and modes have been deveoped that map stress and scarcity. IPIECA has ooked at a range of these toos in the 2014 pubication Review of water risk toos, and does not make any specific recommendation to companies on which one to use. Exampes of definitions that can be used incude: - The Fakenmark Water Stress Indicator, as used in the IPIECA Goba Water Too for Oi and Gas (2011). This is an avaiabiity indicator to define stress and scarcity mapped on a country and watershed eve. - The CEO Water Mandate (2014a) has recenty deveoped quaitative definitions of water stress and scarcity drawing on approaches and commentary from organizations such as the Aiance for Water Stewardship, CDP and the Water Footprint Network. These are broad definitions: scarcity is reated to the physica avaiabiity of water whie stress incudes avaiabiity, quaity and accessibiity. Section 4 Environmenta issues and indicators 61

66 IPIECA API IOGP Environmenta issues and indicators Water E6: Fresh water Section 4 Environmenta issues and indicators Reporting eements Common reporting eements C1 Report tota voume of fresh water withdrawn. C2 Report tota voume of fresh water consumed. Suppementa reporting eements S1 Report freshwater consumption per unit of production, the freshwater consumption intensity, by business activity (e.g. oi and gas production, refining). S2 Report freshwater withdrawa per unit of production, the freshwater withdrawa intensity, by business activity (e.g. oi and gas production, refining). S3 Report percentage of operations ocated in water-stressed or scarce areas, detaiing how the percentage was derived. S4 Report freshwater withdrawas reated to once-through cooing water, not incuded in the common reporting eements. Other reporting eements O1 Report tota reduction in fresh water withdrawn or consumed due to water reduction measures, or water repaced or recyced/reused within the boundaries of the reporting company. O2 Report separatey the voume of water recyced from an externa source, such as a third-party effuent treatment pant, taken into the boundaries of the reporting company, as an aternative to fresh water withdrawn from surface or groundwater sources or purchased as potabe water. This is often termed recaimed water. O3 Report freshwater withdrawa as a percentage of tota water withdrawn. O4 Report the percentage of freshwater withdrawa or consumption ocated in water-stressed or water-scarce areas, detaiing how the percentage was derived. O5 Report the tota voume of fresh water returned to the freshwater environment. O6 Provide quantitative and quaitative information on operations ocated in water-stressed or water-scarce areas or other ocations where potentia water management risks have been identified, incuding: voumes of water withdrawn and/or consumed from sources such as municipa water suppies or other water utiities, and surface water, incuding water from akes, ponds, streams, rivers and aquifers; the voume of fresh water (treated as necessary) returned to the freshwater environment; the freshwater withdrawa or consumption intensity (as described in suppementa reporting eements) for the ocation; the water management practices being adopted; describe how freshwater withdrawas have been avoided or minimized; and describe community and stakehoder engagement activities in reation to water management and the environment. O7 Describe how other types of water, if significant, are managed. Other types of water may incude produced water, process waste water, storm water or desainated water. Descriptions may incude: water treatment; water reused/recyced (indicating use by the company or others); and/or returned to the environment by destination (e.g. types of water environment, irrigation, evaporation ponds, deep wes), indicating water voumes if appropriate. O8 Provide information on company use of fresh groundwater extracted for remediation or to contro the migration of contaminated groundwater. 62

67 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Water E7: Discharges to water E7: Discharges to water DESCRIPTION Report quantities of discharges to a surface water environment from oi and gas operations. PURPOSE Discharges to water are controed to reduce the potentia for environmenta impacts on oca water quaity. The oi and gas industry handes arge quantities of produced water, process waste water and storm water, a of which are normay treated to remove contaminants before being discharged, in compiance with reguatory requirements. Actua environmenta risk or impact is subject to oca environmenta conditions: arger discharges in some water environments may have ower risk than smaer discharges in other environments. SCOPE For the oi and gas industry, the key concern associated with discharges from operations of produced water, process waste water or storm water is ow-eve concentrations of oi, grease and other hydrocarbons within water that is returned to the environment. This indicator is therefore primariy focused on reporting the amount of hydrocarbon present in aqueous phase discharges to surface water, incuding the sea, rivers, akes or other waterways. Depending on the company s operationa activities and the materiaity of the issue, a company may aso extend the scope to separatey report the amount of other substances which are discharged in water streams managed by a company. Management (reuse, recycing or disposa) of waste streams (such as sats, brines, ois, sudges or other contaminants) separated from water prior to its discharge shoud be reported under Indicator E10, Waste. Companies may wish to address this indicator together with Indicator E6, Fresh water, under the overa issue of water management. This indicator excudes: spis, incuding hydrocarbons, chemicas and/or oi-based driing fuids and cuttings (incuded under E9, Spis to the environment); spis of driing and production chemicas (incuded under E9, Spis to the environment); quantities of hydrocarbon discharged to third-party treatment faciities; and quantities of hydrocarbon associated with a once-through cooing water withdrawa returned unchanged, excuding therma effects. Section 4 Environmenta issues and indicators 63

68 IPIECA API IOGP Environmenta issues and indicators Water E7: Discharges to water Section 4 Environmenta issues and indicators REPORTING BASIS Report discharge data in metric tonnes of hydrocarbons (oi and grease) or other substances reported. Quantities may aso be expressed in terms of average concentrations (in mg/ or ppm). Discharge data shoud be consoidated using the reporting boundary operationa approach (Appendix A) and, where appropriate, companies can incude exampes to iustrate appication of the indicator at the oca eve. Measurements shoud be made using test methods required or approved by oca reguatory authorities (or equivaent appicabe standards). DEFINITION OF TERMS Produced water: water that is brought to the surface during the production of hydrocarbons incuding formation water, fow-back water and condensation water. Process wastewater: water associated with operations that comes into contact with hydrocarbons or other chemicas. Storm water: precipitation faing on (or run-off fowing across) a site that is coected and discharged from point source outets (e.g. pipes, coection ditches, storm sewers). Discharges: intentiona reeases from a faciity into a water body, typicay through a permitted outet after treatment. Surface water environment: fresh or saine surface water bodies, incuding rivers, akes, wetands, seas or oceans. Surface water excudes water in the atmosphere or groundwater. Reporting eements Common reporting eements C1 For upstream faciities, report quantity of hydrocarbons (in metric tonnes) in produced water and process waste water discharged to surface water. C2 For refineries and other oi and gas processing faciities, report quantity of hydrocarbons (in metric tonnes) discharged to surface water from process waste water and storm water. Suppementa reporting eements S1 Report separatey the quantity of substances other than hydrocarbons (in metric tonnes) discharged to surface water from oi and gas faciities. Other measures may incude chemica oxygen demand (COD), suphides, ammonia, phenos and tota suspended soids (TSS), or nonaqueous driing fuids discharged). Other reporting eements O1 Discuss efforts to manage discharges within oca water environments where there is greater potentia for environmenta impacts or benefits, with case studies and exampes as appropriate. O2 Describe community and stakehoder engagement activities in reation to management of discharges to water. O3 Expain trends in discharged quantities with respect to operating conditions affected by fied age. 64

69 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Loca environmenta impact Introducing the issue: Loca environmenta impact The operations of the industry exporation, production, refining, marketing and transport of oi and gas can resut in other impacts on the oca environment, in addition to those addressed in the sections on Biodiversity and ecosystem services (pages 53 56) and Water (pages 57 64). As a resut, companies appy systematic toos to: assess environmenta impacts; mitigate risks of poution or contamination through contro technoogies; continuousy reduce the impact of emissions and waste streams; respond effectivey to incidents, such as marine spis, and decommission assets at the end of their operating ife cyce in an environmentay sound and safe manner. This has aso resuted in improved and more consistent indicators, which have benefited from industry benchmarking. The appication of robust environmenta management system (EMS) and performance indicators enabes the industry to demonstrate continuous improvement in reducing its impacts to the environment. RECOMMENDED INDICATORS FOR THIS ISSUE The four indicators in this section focus on aspects of oi and gas operations that have potentia to create regiona or oca impacts on air, water and and, whie recognizing that other indicators previousy covered, such as fared gas, biodiversity, fresh water and discharges to water, can aso be significant in terms of their impact on the oca environment. The first of the four indicators, E8, asks companies to report the quantities of emissions to the atmosphere from oi and gas operations. The second, E9, ooks at systems impemented to prevent spis to the environment as we as quantifying spis once they occur. The third indicator, E10, asks companies to report quantities of waste disposed that resut from operations, and the fina indicator, E11, asks companies to describe their approach to the panning and execution of decommissioning activities. Section 4 Environmenta issues and indicators GUIDANCE ON REPORTING THE ISSUE Issues reating to the oca environment can be materia for corporate reporting. Because these environmenta impacts are ocaized, the chaenges wi not be the same across a company s operating areas. Reguation of the oca environment is fairy mature in some oca and nationa jurisdictions, but is ess so in others. Therefore, companies shoud seect reporting eements through which they can describe their responses to the chaenges they face in different areas. Quaitative information can be usefu here, such as case studies, other forms of oca reporting, or quantitative data that refects aspects or sensitivities reated to specific ocations. 65

70 IPIECA API IOGP Environmenta issues and indicators Loca environmenta impact E8: Other air emissions Section 4 Environmenta issues and indicators E8: Other air emissions DESCRIPTION Report quantities of emissions to the atmosphere from oi and gas operations. PURPOSE Air emissions from oi and natura gas operations may contribute to oca or regiona impacts such as regiona haze or acid rain that can affect human heath or damage fora and fauna or cutura heritage sites. Reduction in air emissions by industry can contribute to improvements in air quaity. SCOPE Significant emissions reeased to the atmosphere from oi and natura gas operations shoud be reported by emissions type. The specific substances incuded in each emission type are detaied in the definition of terms or as specified by the oca reguatory agency. Types of emissions that may be of significance for many oi and gas companies incude: voatie organic compounds (VOCs); oxides of suphur (SO x ) ; oxides of nitrogen (NO x ), excuding N 2 O; particuate matter (PM); ozone-depeting substances (ODS); and other reguated air emissions. This scope does not incude CO 2 and methane, which are reported within Indicator E1, GHG emissions. Approved or required methods of estimation and cacuation of air emissions vary by oca reguatory standards and by faciity permit requirements. The performance data for this indicator shoud refect the approved oca methodoogies under which the company s faciities are operating. REPORTING BASIS Report quantitative emission data in metric tonnes (SO x reported as SO 2, and NO x reported as NO 2 ). Air emissions data shoud be consoidated within the company s reporting boundary using the operationa approach (Appendix A) and, if appropriate, incude exampes to iustrate appication of the indicator at the oca eve. Companies shoud determine significance (see Gossary) when considering types and ocation of emissions. 66

71 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Loca environmenta impact E8: Other air emissions DEFINITION OF TERMS Due to air poution reguations at nationa, regiona and oca eves, the specific compounds reguated in each emission type may vary sighty between jurisdictions. Therefore, the foowing definitions are provided as a guide for reporting: Oxides of nitrogen (NO x ): incudes the tota of nitric oxide (NO) and nitrogen dioxide (NO 2 ) expressed as NO 2 equivaent and excudes nitrous oxides (N 2 O). Oxides of suphur (SO x ): incudes suphur dioxide (SO 2 ) and suphur trioxide (SO 3 ) expressed as SO 2 equivaent. Voatie organic compounds (VOCs): organic compounds, excuding methane, which vaporize in the atmosphere and may participate in photochemica reactions. VOCs shoud be defined in accordance with reguatory requirements where a oca reguatory agency has defined measures for specific compounds. The company shoud specify which species are incuded in the reporting (e.g. non-methane VOC, non-methane-ethane VOC ) and quaify if there are ocations where a oca reguatory agency has defined specific compounds. Particuate matter (PM): a compex mixture of extremey sma partices and iquid dropets. PM is made up of a number of components, incuding acids (such as nitrates and suphates), organic chemicas, metas, and soi or dust partices. Definitions depend on oca reguations and are frequenty based on partice size (e.g. PM 10 or PM 2.5 ). Companies shoud specify which PM metric they are reporting. Ozone-depeting substances (ODS): incudes haons, CFCs, HCFCs and methy bromide (reporting suggested where quantities emitted may be of interest). Whie ODS are not produced by oi and gas activities, they may be used for refrigeration, gas processing, fire suppression and other purposes. Section 4 Environmenta issues and indicators Reporting eements Common reporting eements C1 Report tota emissions, by type: voatie organic compounds (VOCs); oxides of suphur (SO x ); and/or oxides of nitrogen (NO x ). Suppementa reporting eements S1 Report tota emissions, by type, if significant: particuate matter (PM); ozone-depeting substances (ODS); and/or other air emissions with a company-wide impact. S2 Report emissions with regiona and/or business activity breakdown, where reevant. Other reporting eements O1 Companies are encouraged to report case studies, or other forms of oca reporting or data that address significant impacts at regiona, nationa and/or oca eves. O2 Identify operations in areas of poor air quaity and discuss air management practices. O3 Discuss the company s approach to technoogies that address air quaity, such as reducing combustion emissions in operations or improving fue products. References 1. CONCAWE Air Poutant Emission Estimating Methods for E-PRTR Reporting by Refineries. Report 1/ US EPA AP-42 standards, or the EMEP/EEA Emission Inventory Guidebook. 67

72 IPIECA API IOGP Environmenta issues and indicators Loca environmenta impact E9: Spis to the environment Section 4 Environmenta issues and indicators E9: Spis to the environment DESCRIPTION Describe systems impemented to prevent spis to the environment and quantify spis incuding detais of any significant spis and response measures undertaken. PURPOSE Upstream and downstream activities, incuding transportation of oi using pipeines, marine vesses, road tankers and raicars, pose a risk of accidenta spis of oi or other materias that can poute water, contaminate soi, harm species and affect iveihoods. This indicator measures the number and voume of spis (unintended reeases) of materias that coud ocay impact the environment, communities or cutura heritage. SCOPE The most estabished industry measure is to report the number and voume of hydrocarbon spis greater than one barre (bb) that reach the environment. (For reference, 1 bb = 42 US gaons or 159 itres; for soids, convert mass to voume in barres, for exampe, using 159 kg or simiar defaut vaue for weight of materia.) The voume reported shoud represent the tota estimated amount spied that reached the environment. It shoud not be reduced by the amount of such hydrocarbon subsequenty recovered, evaporated or otherwise ost. In addition to reporting spis that reach the environment, companies may choose to report separatey the number and voume of spis whether or not the spi reached the environment. Thus, tota spis woud incude reeases hydrocarbon and/or nonhydrocarbon materias from primary containment (e.g. spis that reach the environment, pus spis that are contained within impermeabe secondary containment). This indicator provides further insight on operationa performance and reiabiity. Companies shoud incude reeases from: operations, incuding but not imited to reeases from above-ground and beowground faciities or from company-owned and operated transport; and events outside operationa contro, incuding but not imited to sabotage, earthquakes and extreme weather events. Leakage over time, above ground or underground, is counted once at the time it is identified. Companies may report spis to soi and water separatey. A spi that quaifies as a spi to both soi and water shoud be reported as a singe spi to water, with the voume propery apportioned to soi and water. The foowing shoud be excuded from the reported data: once previousy reported, spied materias in the environment from historica osses (i.e. historica or past eakage/spis that reached the environment from tanks, pipes or other vesses, but not associated with a current reease); and hydrocarbons in produced water discharges or otherwise permitted discharges (i.e. waste water effuents etc.), which are incuded in Indicator E7, Discharges to water. In the absence of anaytica data, reporting companies may choose to estimate the hydrocarbon content of spis of oi-water mixtures (e.g. oi water emusions, tank bottoms), stating the scope or basis of the estimate. If reporting spis with both hydrocarbon and non-hydrocarbon components, companies shoud report a singe hydrocarbon spi with the voumes propery apportioned. 68

73 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Loca environmenta impact E9: Spis to the environment If reevant, companies may separatey report spis of other materias, incuding chemicas. For chemica spis invoving: miscibe soutions, the spi voume is based on the tota voume of materia spied; and insoube mixtures, the spi voume is based on the voume of the chemica constituent. When reporting significant chemica spis, incude a description of the nature of the substance spied and any associated risks REPORTING BASIS Report the number of spis greater than one barre (42 US gaons or 159 itres) and the voume of these spis in barres (bb) or cubic metres. Oi spi data shoud be consoidated within the company s reporting boundary using the operationa approach (Appendix A) and incude exampes to iustrate appication of the indicator at the oca eve. Companies shoud determine significance (see Gossary) when considering reporting by type or ocation, or for individua spis. Section 4 Environmenta issues and indicators DEFINITION OF TERMS Spi to the environment: any unintended reease of iquids or soids associated with current operations, from primary or secondary containment, into the environment. Environment: surface water, soi, groundwater, and ice-covered surface whereby: - soi incudes surfaces (e.g. soi, sand, sits, shes, grave) not designated as impermeabe secondary containment, as we as the underying sediments and groundwater resources; - surface water incudes creeks, rivers, ponds, seas, oceans, etc. but excudes ponds, pits, basins, etc. in pace on company property for purposes of hydrocarbon containment/treatment; - spis to snow- or ice-covered surfaces are cassified based on the surface beow the snow or ice; and - spis to standing rainwater are cassified as a spi to soi. Hydrocarbon iquids: crude oi, condensate and petroeum-reated products containing hydrocarbons that are used or manufactured, such as: gasoine, residuas, distiates, asphat, jet fue, ubricants, naphthas, ight ends, bige oi, kerosene, aromatics, refinery petroeum-derivatives, non-aqueous driing fuids (NADFs). Incudes: - biofues, regardess of percentage mixture with petroeum-based materias (if 100% methano or ethano it woud be a chemica spi); and - the oi fraction of oi/water mixtures (e.g. emusions, production fuids). Non-hydrocarbon materias: materias such as chemicas, aqueous-based driing fuids, produced water and other process-reated non-hydrocarbons. Exampes of chemicas incude methano, ethano, ketones, methy tertiary buty ether (MTBE), suphuric acid, caustic, moten suphur, stimuation acid, brine, dry sats, uncured or powdered cement. Excuded are spis of inert soid materias such as pastic peets, soid suphur, barium suphate, bentonite or cured soid concrete as we as treated or untreated waste water. Containment: primary containment is the vesse, pipe, barre, etc. designed to keep a materia within it; secondary containment is an impermeabe, non-eaking physica barrier specificay designed and maintained to keep spied materias from contacting the soi or water (e.g. high-density poyethyene (HDPE) iners, engineered cay iners, asphat, concrete). Earthen berms do not count as secondary containment uness they are engineered to be sufficienty impermeabe to prevent spied oi from contaminating underying soi and/or groundwater. Recovered hydrocarbons: the spied hydrocarbons removed from the environment through short-term spi response activities. This does not incude onger-term remediation of the spi site. Oi which evaporates or burns shoud not be incuded in recovered voumes. This voume provides an indication of the effectiveness of immediate oi spi response measures. 69

74 IPIECA API IOGP Environmenta issues and indicators Loca environmenta impact E9: Spis to the environment Section 4 Environmenta issues and indicators Reporting eements Common reporting eements C1 Describe strategies and risk-based processes to prevent accidenta reeases of hydrocarbons/other materias to the environment. C2 Number and voume spied of hydrocarbon spis > 1 bb reaching the environment. C3 For spis of significance, determined by the company, describe impacts and response actions. C4 Describe emergency preparedness and response programmes, pans, organizationa structures and affiiations for an effective response to spis and other emergencies. Suppementa reporting eements S1 Voume of hydrocarbon recovered. S2 Tota number and voume spied (bb) of hydrocarbon spis > 1 bb from primary containment. S3 Separatey report hydrocarbon spis to soi and to water (number and voume spied). S4 Separatey report hydrocarbon spis by business activity (e.g. E&P, refining, chemicas). Other reporting eements O1 Report number and voume of spis of non-hydrocarbon materias (incuding chemicas, produced water or other materias) to soi and to water. O2 Report spis with ower threshods (< 1 bb) where smaer spis are significant to certain activities or ocations. For exampe, marketing and transportation can have more sma spis than other operations. O3 For significant spis, report the definition of significance, the identified causes of the spis and the key essons earned from investigations. O4 Discuss significant impacts on the environment, as a resut of spis, in quaitative terms, particuary from arger reeases or from a sma reease into a sensitive environment. O5 Separatey report significant hydrocarbon spis from product transportation by third parties, incuding the definition of significance used for this category of spi. 70

75 54 Environmenta issues and indicators Loca environmenta impact E10: Waste OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING E10: Waste DESCRIPTION Report quantities of waste from oi and gas operations. PURPOSE Effective waste management practices are integra throughout operations to hep minimize ocaized risks to the environment, communities or cutura heritage, to enhance resource utiization, and to potentiay reduce costs. Waste is not defined consistenty wordwide and its management often varies with oca conditions. This indicator is used recognizing that an important way of reducing waste impacts is to minimize the generation of waste, and that effective waste management is an aspect of operationa efficiency. SCOPE Report the quantity of hazardous waste disposed, incuding both on-site and off-site disposa. Companies may report separatey the quantities of non-hazardous waste disposed, and of waste reused, recyced or recovered. The company shoud ceary state the basis for its reported data. Sources that shoud be incuded are: wastes from operationa activities; wastes from the immediate response and cean-up of a spi; and wastes from repacement or upgrade of existing faciities (e.g. during the rebuiding of a retai service station). Excuded from the scope are: wastes from the remediation of historica contamination at active sites; wastes from the remediation of inactive or abandoned properties; wastes from the construction of new faciities upon greenfied sites; wastes generated by contractors during maintenance of their own equipment, or any materias brought onto site and eventuay disposed of as surpus by the contractor; driing muds and cuttings; mine taiings 6 ; and produced water and waste water. If a reguatory authority defines any of these outof-scope materias as hazardous or some equivaent term and they are disposed of as defined above, they shoud be reported accordingy as hazardous waste. Separate reporting of waste from unusua or high-voume events may enabe stakehoders to better understand year-to-year fuctuations. Exampes of events that can ead to short-term fuctuations in waste generated incude shutdowns and periodic maintenance activities in downstream operations and, in upstream operations, some driing operations that generate high voumes of aqueous wastes. The waste streams incuded in separate reporting shoud be ceary described. In areas of the word where no waste infrastructure exists, waste may need to be safey stored on-site for an extended period of time before fina disposa or a recovery option can take pace. Companies shoud report separatey the quantity of waste in such storage if the amount is significant to the overa company tota of waste reported. Simiary, companies shoud expain the incusion of arge one-off disposas of stored waste in their reported numbers. REPORTING BASIS Report mass of waste in metric tonnes. Waste data shoud be consoidated within the company s reporting boundary using the operationa approach (Appendix A). Section 4 Environmenta issues and indicators 6 Companies may choose to report these wastes separatey as noted in Other reporting eements on page

76 IPIECA API IOGP Environmenta issues and indicators Loca environmenta impact E10: Waste Section 4 Environmenta issues and indicators It may not be practica to account for a waste from operations. If a company has adopted an interna de minimis reporting threshod, by which a faciity does not track waste information, it is good practice to discose the de minimis threshod and indicate the significance to the company s data indicating if, for exampe, routine waste from marketing operations is beow an estabished de minimis eve. It is usefu to measure or estimate quantities of wastes (both hazardous and non-hazardous) using methods required or recommended by reguatory agencies or authorities. The method of measurement and estimation seected shoud be stated. Recommended methods incude: direct measurement of quantity on site; direct measurement by transporters at the point of shipping or oading (consistent with shipping papers); direct measurement of quantity by waste disposa contractor at the point of waste disposa or by transporters, at the point of shipping or oading; and engineering estimates or process knowedge. DEFINITION OF TERMS Waste: materia (soid or iquid) intended to be disposed of, reused, recyced or recovered either on-site or offsite that is the resut of company operations. Incudes domestic waste and other discarded materia from offices and commercia (e.g. retai) activity. It does not incude reguated or authorized water discharges such as effuent from water treatment pants or produced water from oi and gas production. Hazardous waste: waste that is defined as hazardous, toxic, dangerous, isted, priority, specia or simiar term per an appicabe country, reguatory agency or authority. Non-hazardous waste: industria wastes resuting from company operations, incuding process and oi fied wastes (soid and iquid) disposed either on-site or off-site. Incudes industria waste and other office, commercia (e.g. retai) or packaging-reated wastes. Excudes hazardous waste as defined above. Disposa: any waste management option, either on-site or off-site, cassified as disposa by an appropriate reguatory agency or authority, or in cases where such cassification is absent, any waste management that does not meet the definition of reused, recyced and recovered wastes (e.g. and fiing or burning without energy recovery). Temporary storage is not considered disposa. Reused, recyced or recovered wastes: wastes from an industria or commercia (e.g. retai) process that are not disposed of, but are reused (e.g. used as a raw materia for another process) or recovered for beneficia use. The term Reused, recyced or recovered materias is equivaent and may be preferred to aign reporting with oca reguatory definitions. Exampes may incude: cataysts sent for recamation; sudge used for fue; reused construction materias; recovered used oi and sovents; recyced scrap meta; drums, paets and packaging returned or reused; pastic, gass or paper reused or reprocessed; and uncontaminated earthen materias used as fi. 72

77 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Loca environmenta impact E10: Waste Reporting eements Common reporting eements C1 Tota quantity, in metric tonnes, of hazardous waste disposed. Other reporting eements Suppementa reporting eements S1 Tota quantity of non-hazardous waste disposed. S2 Waste recyced, reused or recovered. O1 Report separatey quantities of waste by waste streams and by business. O2 Report separatey quantities of waste stored and awaiting treatment prior to disposa or recycing. O3 In addition to reporting quantities of waste disposed, companies may wish to aso report waste generated, prior to recyce, reuse or recovery measures. O4 Report separatey wastes excuded from routine reporting: e.g. wastes from remediation activities at either active and/or inactive sites, waste associated with unusua activities such as arge one-time construction projects, or arge-voume wastes such as dri mud and cuttings, or mine taiings. O5 Describe efforts to minimize the generation of waste and improve on company waste management practices. Section 4 Environmenta issues and indicators References 1. European Pariament. Directive 2008/98/EC on Waste. (19 November 2008). eur-ex.europa.eu/lexuriserv/lexuriserv.do?uri=oj:l:2008:312:0003:0003:en:pdf 2. IOGP Guideines for waste management with specia focus on areas with imited infrastructure. IOGP Report 413. (Rev. 1.1 September 2008; updated March 2009). 73

78 IPIECA API IOGP Environmenta issues and indicators Loca environmenta impact E11: Decommissioning Section 4 Environmenta issues and indicators E11: Decommissioning DESCRIPTION Describe the company s approach to panning and execution of decommissioning activities (incudes abatement, demoition, remediation and recamation). PURPOSE Companies pan and undertake activities to decommission assets at the end of their operating ife cyce. The pans for such projects are detaied and often invove reguators and other stakehoders. Effective pans address potentia environmenta impacts and aso hep to ensure that decommissioning activities are safe and compiant with reguations. Whie the technica compexity and potentia impacts of onshore versus offshore decommissioning wi vary depending on the type, scae and geographic ocation of the assets, as we as ecosystem and socio-economic considerations, the overa goas are the same with respect to protecting the environment and the safety of the workforce. SCOPE The company s overa management approach may incude descriptions of estabished poicies, standards, processes, practices or procedures. Information on the company s approach to decommissioning can incude panned resources (finance, abour), recycing and/or reuse of materias, asset disposition, safety, security and engagement with communities and/or oca authorities. Pans for decommissioning reate to the panned cosure and/or retirement of assets at the end of their operationa ife cyce. Whether onshore or offshore, decommissioning panning is normay reguated, with governments and industry working to ensure that provisions are set aside for pans that meet defined standards for environmenta protection, protect cutura heritage resources and address societa expectations. At the suppementa reporting eve, companies can provide the number, geographic ocation, description and progress status of any significant decommissioning projects currenty under way, individuay or by type. Discussion may aso consider intended outcomes and any pans for disposition of the asset for beneficia end use. Companies may focus on arger singe projects such as the decommissioning of entire faciities, e.g. onshore or offshore oi and gas production rigs, refineries, gas processing pants or arge-scae terminas. Aternativey, companies may coectivey describe the different types of decommissioning activities undertaken, which coud incude smaer assets, such as fue terminas, we sites, service stations or mobie and/or foating equipment. REPORTING BASIS Companies shoud carify the terminoogy used and the types of assets covered by their approach. For reporting at the suppementa eve, companies shoud determine which projects are significant for reporting based on the scae, ocation, type and potentia impact of current decommissioning activities (incuding abatement, demoition, remediation and recamation). The determination can be supported by assessment of materiaity of the issue to the company and its stakehoders, in terms of financia scae or environmenta/socia impact (see Appendix B). 74

79 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Environmenta issues and indicators Loca environmenta impact E11: Decommissioning DEFINITION OF TERMS Assets: an identifiabe resource that is owned or controed by the company. Typicay, an asset is a faciity or group of faciities, and may comprise and or sea acreage, buidings and engineered structures (e.g. refineries, production rigs or patforms, chemica faciities, process pant, wes, pipeines, terminas, eectrica distribution systems, roads, retai outets, offices or supporting infrastructure). Decommissioning: a forma process to permanenty remove an asset after active service, with due regard for potentia impacts on the environment. The term decommissioning is intended to incude the foowing activities: - Abatement: safe remova of hazards such as asbestos, PCBs (poychorinated biphenys), hydrocarbon, or H 2 S from an asset. - Demoition: a process and activities surrounding remova of an asset. - Remediation: a process that reduces or eiminates potentia impacts in areas of and or water in order to restore environmenta conditions to acceptabe eves with reference to reguatory or company standards as appropriate. - Recamation: the restoration of disturbed ands to simiar pre-deveopment condition, other economicay productive use, or natura or semi-natura habitat. Section 4 Environmenta issues and indicators Reporting eements Common reporting eements C1 Report the company s management approach, for panning and execution of decommissioning activities for: offshore assets; and onshore assets. Suppementa reporting eements S1 Provide the number, ocation, status and brief description of significant decommissioning and remediation projects. S2 Describe technoogy and research initiatives reated to decommissioning and remediation. Other reporting eements O1 Report the tota financia provision made by the company for decommissioning offshore and/or onshore projects. References 1. IOGP Decommissioning of offshore concrete gravity based structures (CGBS) in the OSPAR maritime area/other goba regions. IOGP Report 484, November IOGP Offshore pipeine decommissioning. IOGP Report 258, August IOGP Decommissioning remediation and recamation guideines for onshore E&P sites. IOGP Report 242, October

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81 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Section 5 Heath and safety issues and indicators 77

82 IPIECA API IOGP Heath and safety issues and indicators Section 5 Heath and safety issues and indicators Section 5 Heath and safety issues and indicators OVERVIEW The oi and gas industry undertakes activities that are intrinsicay hazardous, for exampe, containment of fammabe hydrocarbons at eevated temperatures and pressures, work at heights and in confined spaces, or heicopter transfers to offshore faciities. The heath and safety risks reated to these hazards have to be managed systematicay across a company s activities, incuding seismic and driing projects, faciity operations, maintenance, construction, and marine and road transport. Companies are encouraged to report on their overa approach to managing heath and safety risks, incuding panned initiatives and measures to improve performance. Management systems (see page 16) have been successfu in mitigating heath and safety risks and reducing the number of incidents. An important aspect of these systems is continuous improvement that is assessed by monitoring performance using indicators. The most common types of heath and safety incidents occur in the workpace, and therefore, three of the five indicators focus on protection of the workforce, incuding measurement of incidents that can provide essons for the future. Less frequent, but potentiay more severe, are faiures of pant integrity or product-reated hazards to third parties. Process safety (HS5) is an indicator that addresses the potentia for serious oss-of-containment events, whie the Product stewardship indicator (HS4) reports on measures to manage product-reated risks. Heath and safety reated incidents can have mutipe connections to environmenta, economic and socia issues, and indicators, which are covered in Sections 4 and 6 of the Guidance. The five indicators strike a baance between providing quantitative agging data, on the outcomes and consequences of heath and safety risks, and quaitative eading information that focuses on the systems in pace to continuousy improve performance and reduce risk. Summary of heath and safety issues and indicators Issue Indicator Page number Workforce protection HS1: Workforce participation 80 HS2: Workforce heath 82 HS3: Occupationa injury and iness incidents 84 Product heath, safety and HS4: Product stewardship 88 environmenta risks Process safety and asset integrity HS5: Process safety 91 78

83 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Heath and safety issues and indicators Workforce protection Introducing the issue: Workforce protection The oi and gas industry has ong experience in deaing with heath and safety risks. Athough significant progress has been made and rates of serious incidents have been reduced, accidents or inadvertent exposures sti occur. These can resut in fataities, severe injuries or inesses. The primary impact is on empoyee or contractor members of the workforce engaged in routine or non-routine tasks (athough third parties can be affected, for exampe, through road-traffic accidents). Providing adequate protection to a members of the workforce continues to be an important priority for the management of oi and gas companies. Workforce protection wi remain a materia issue for reporting in the ong term. A company s record on this issue is often used as a barometer of how we a company is managing its operations. Section 5 Heath and safety issues and indicators GUIDANCE ON REPORTING THE ISSUE Within the oi and gas industry, companies have we estabished management systems and supporting processes in pace to address heath and safety risks. These incude key processes for preventing unintended events from occurring, incuding interventions, and for earning when incidents and near misses occur. It is good practice, when reporting on this issue, to incude an overview of these systems and processes, and describe recent or panned enhancements, initiatives and campaigns to improve performance. Reporting can aso incude process improvements, investments in equipment to protect individuas and the integrity of the pant, as we as human factor aspects that aim to infuence workforce behaviours and overa organizationa cuture. Companies may aso report on their processes with respect to operations and projects that make substantia use of contracted resources. This can incude how the company s management system addresses aspects such as training and competency assessment, contro of work, protective equipment, and other measures to maintain and improve heath and safety performance reated to contracted activities and personne. RECOMMENDED INDICATORS FOR THIS ISSUE The most estabished indicator across the industry is the record of injuries and inesses that are investigated to provide systematic earning on how to prevent incidents from recurring. The indicators on workforce participation and workforce heath refect onger-term inputs to ensure that peope are aware of risks and take steps with management to improve contros to prevent injury and iness. The three indicators address heath and safety risks reated to empoyees as we as contractors and others that form the workforce of a company. When discussing the workforce, particuary in quantitative terms, companies shoud carify the extent to which empoyees, contractors and others are incuded in the information or data reported for each indicator. The guidance in Appendix A, on deveoping a reporting boundary, can hep to carify reporting. 79

84 IPIECA API IOGP Heath and safety issues and indicators Workforce protection HS1: Workforce participation Section 5 Heath and safety issues and indicators HS1: Workforce participation DESCRIPTION Describe heath and safety management programmes and processes to faciitate participation of the workforce at a eves in heath and safety diaogues. PURPOSE Participative programmes that bring together managers, operators and others within the wider workforce can enhance cooperative attitudes and cuture, which in turn contributes towards identifying and addressing potentia heath and safety probems and ensuring management system effectiveness. SCOPE Describe the structure of heath and safety programmes and processes to faciitate active workforce invovement in heath, working environment and safety improvements, and consutations. Incude in the discussion how these programmes or processes are integrated into the overa heath and safety management system and how participation of the workforce at a eves is encouraged. Contractors within the workforce often have their own heath and safety participation programmes that are the direct responsibiity of their empoying company s management. Consideration shoud be given to describing the interactions between company participation programmes with those of the contractors and business partners with operating activities on company sites. Companies are encouraged to report on those programmes and processes that support invovement of the workforce in continuous improvement of heath and safety performance. Description of the workforce participation programmes and processes typicay incude some of the foowing: Poicy and programme deveopment, depoyment and improvement. Heath and safety orientation and training. Management and eadership interfaces outining how senior management encourages the workforce to identify concerns and participate in heath and safety initiatives. Review of heath and safety performance at the asset eve. This may incude discussions on progress towards continuous improvement objectives as part of the asset s management system approach. Faciitation of management system effectiveness by consuting with the workforce on heath and safety matters, incuding feedback mechanisms (e.g. workforce heath and safety steering committees, management of change consutation, heath and safety surveys). Risk assessments participation and representation, incuding Hazard and Operabiity (HAZOP) and Project Hazards Anayses (PHA). Reguar joint participation of workers and managers in company heath and safety programme, e.g. behaviour-based safety 80

85 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Heath and safety issues and indicators Workforce protection HS1: Workforce participation programmes, site and activity observations, job safety anaysis meetings, and responsibiities for a to identify and respond to workpace risks. This shoud incude steps to ensure workforce incusion thereby preventing segmentation, discrimination or excusion. REPORTING BASIS The eading indicator is quaitative and reportabe at a goba eve, and may be supported by oca case studies and, where avaiabe, quantitative data on extent of programmes. The workforce incudes both company empoyees and contractors. Quantitative workforce data shoud be consoidated within the company s reporting boundary using the workforce approach (Appendix A). Section 5 Heath and safety issues and indicators Reporting eements Common reporting eements C1 Describe the company s approach to managing workforce participation in heath and safety diaogues. Other reporting eements Suppementa reporting eements S1 Provide case studies on specific activities at the faciity eve that iustrate the appication of the management approach (e.g. oca workforce participation programmes, verification processes, outcomes or actions based on assessment of resuts). O1 Discuss coverage of programmes and the extent to which contractors are incuded. References 1. ILO Report of the Director Genera: Decent Work. Internationa Labour Organization 87th session, Geneva, June ILO Tripartite Meeting on Promoting Socia Diaogue and Good Industria Reations from Oi and Gas Exporation and Production to Oi and Gas Distribution. Internationa Labour Organization, Geneva, May

86 IPIECA API IOGP Heath and safety issues and indicators Workforce protection HS2: Workforce heath Section 5 Heath and safety issues and indicators HS2: Workforce heath DESCRIPTION Describe programmes and processes for identifying and addressing significant workforce heath issues, especiay at the community and country eve. PURPOSE Understanding the workforce heath profie heps identify opportunities for improving workforce heath and the company s business performance through an effective heath programme. SCOPE This indicator provides a group of measures that focus on the potentia heath risks in the workpace but can aso incude heath issues in the communities where businesses are ocated. Sources of information may incude oca pubic heath officias, absenteeism data, benefit caims, and cinic and incident data. Diaogue with workforce is an effective method for obtaining an understanding of opportunities for improvement (see Workforce participation, HS1). Occupationa heath programmes and processes to support a Heath Management System (HMS) and heath performance indicators are described in Heath Performance Indicators: A Guide for the Oi and Gas Industry (IOGP-IPIECA, 2007). Key eements of HMS incude: Heath risk assessment: provides workpace toos such as Heath Risk Assessment (HRA) for heath protection panning during the design of new projects, products and operations or modifications to existing processes, products or operations. This incudes gender-based profie issues (e.g. cardiovascuar data, chemica exposure eves, reproductive heath, etc.). Industria hygiene and contro of workpace exposures: focuses on potentia heath hazards in the workpace, such as benzene, hearing conservation, confined space entry, food and water safety, repetitive stress injury prevention programmes, etc. Medica emergency management: describes processes such as emergency response, emergency evacuation, communication and business continuity pans. Management of i heath in the workpace: incudes medica and psychoogica iness or injury, and capabiity to deiver an appropriate eve of routine and emergency care. Fitness for task assessment and heath surveiance: provides methodoogy to determine whether empoyees are abe to meet the essentia physica, psychoogica and cognitive requirements of their job without risk to sef, others or the environment, and are not impaired by fatigue, drugs, acoho or disabing medica conditions. Heath impact assessment (HIA): detais processes that support environmenta and socia impact assessments for new projects and the reassessment of existing operations. Heath reporting and record management: outines steps that ensure documents, procedures, records and other information are current, accessibe and controed for quaity, confidentiaity, ega compiance and retention standards. Pubic heath interface and promotion of good heath: describes programmes, based on risk and epidemioogica information, to promote persona heath awareness in areas such as obesity, smoking, nutrition, exercise, menta heath, substance abuse, hygiene, and infectious communicabe diseases (e.g. tubercuosis, maaria, HIV/AIDS, foodborne/waterborne iness, dengue, Eboa, etc.). 82

87 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Heath and safety issues and indicators Workforce protection HS2: Workforce heath REPORTING BASIS The indicator is quaitative and reportabe at a goba eve, and can be supported by quantitative iness incident rates as detaied in HS3, Occupationa injury and iness incidents. Workforce heath issues vary widey by ocation, and therefore oca case studies can support understanding of how issues are addressed. The workforce incudes both company empoyees and contractors. Quantitative workforce data shoud be consoidated within the company s reporting boundary using the workforce approach (Appendix A). Companies shoud determine significance (see Gossary) when considering reporting of heath issues by type or ocation. Section 5 Heath and safety issues and indicators Reporting eements Common reporting eements C1 Describe processes and programmes the company has estabished for identifying and addressing significant workforce heath issues at the oca, regiona and goba eve, together with resuting outcomes and pans. Suppementa reporting eements S1 Describe heath management system eements in pace and recent improvements to the system. S2 Provide case study exampes of heath impact assessments (HIAs). S3 Describe workforce heath measures to prevent, reduce and manage communicabe diseases, incuding vountary testing, treatment, counseing and return to work. Other reporting eements O1 Describe workpace heath training programmes for managers and workers incuding programmes to mitigate impact on diversity, cutura and persona beiefs. O2 Discuss the main heath chaenges at different operating ocations, incuding approaches to address oca heath issues, such as access to cean water and sanitation. O3 Describe proactive weness initiatives designed to encourage adoption of heathier ifestyes, incuding nutrition, fitness, and awareness of heath risk factors. References 1. API Five-point Approach to Addressing Workpace Ergonomics. (August 2004) 2. CDC (Centers for Disease Contro and Prevention). Guidance documents on diseases (incuding SARS, HIV/AIDS, etc.) as we as workpace heath and safety, emergency preparedness and environmenta heath ILO An ILO code of practice on HIV/AIDS and the word of work. Internationa Labour Organization IOGP-IPIECA. Heath Good Practices series. Avaiabe at and at 5. IOGP-IPIECA Heath Performance Indicators: A guide for the oi and gas industry United Nations Programme on HIV/AIDS / Goba Business Counci / Prince of Waes Business Leaders Forum The Business Response to HIV/AIDS: Impact and essons earned. 83

88 IPIECA API IOGP Heath and safety issues and indicators Workforce protection HS3: Occupationa injury and iness incidents Section 5 Heath and safety issues and indicators HS3: Occupationa injury and iness incidents DESCRIPTION Report heath and safety data on workforce injuries or inesses resuting from occupationa incidents. PURPOSE The reporting and anaysis of workforce occupationa incident injury and iness rates provides trend and causation information on heath and safety performance and enabes assessment of continuous improvement objectives. Incident reporting and investigation supports consistency of heath and safety management standards and faciitates performance benchmarking among oi and gas companies. SCOPE Guideines for reporting injuries and inesses have been pubished by a number of organizations, incuding the U.S. Occupationa Safety and Heath Administration (OSHA), IOGP and the European Chemica Industry Counci (CEFIC). Whie there is broad aignment among them, there are some differences in definitions and exemptions. The reporting basis used shoud therefore be ceary stated. The preferred basis is the IOGP guidance, due to widespread adoption within the oi and gas industry, however it is recognized that this may not be appropriate for some companies in some areas. The various guideines provide detais on the determination of whether an event was an occupationa incident. The guideines aso provide for the appropriate categorization of incident severity incuding criteria such as medica treatment beyond first aid, restricted duty, ost time, oss of consciousness or death. It is important for overa reporting integrity that injury or iness cassifications are made on an accurate and consistent basis. An occupationa incident (i.e. a work-reated event or exposure) is recordabe if it either caused or contributed (in any amount) to: a new injury or iness; an exacerbation of a pre-existing nonoccupationa injury or iness; or an exacerbation of a pre-existing occupationa injury or iness. The guideines provide a ist of exceptions to excude incidents that have occurred in the work environment but are not occupationa (i.e. not work-reated). Reporting of tota recordabe injury and iness, ost time injury and iness and fata accident rates shoud incude separate rates for both company empoyees and contracted workers. Injury and iness rates shoud be reported separatey. Companies may aso incude reated data such as combined rates for the tota workforce, numbers of incidents and hours worked. Data shoud be set into the appropriate context that can incude interpretation of incident trends, or progress and pans aimed at achieving management system objectives. 84

89 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Heath and safety issues and indicators Workforce protection HS3: Occupationa injury and iness incidents Section 5 Heath and safety issues and indicators Companies shoud describe impacts, actions and essons earned from major incidents. Companies are encouraged to share High Learning Vaue Incidents (HLVI), defined by IOGP as significant incidents causing, or having the potentia to cause, mutipe serious injuries and/or fataities. The sharing of sufficient HLVI detais and earnings can provide the industry with recommendations and guidance to prevent recurrence. The reporting of incidents provides agging measures of safety performance. Companies shoud consider estabishing and reporting appropriate eading safety measures that reate to activities and behaviours, and are most effective when taiored to the specifics of the operation and ocation (eading heath measures are provided in HS2, Workforce Heath). Leading measures incude near-miss events that did not resut in injury or iness; the reporting and investigation of near misses can yied simiar insights to reporting and investigation of HLVI and other occupationa incidents. REPORTING BASIS The indicator is quantitative and reportabe at a goba eve, and may be supported by quaitative descriptions of incidents, responses and pans. Quantitative workforce injury and iness data shoud be consoidated within the company s reporting boundary using the workforce approach (Appendix A). The workforce incudes both company empoyees and contractors. The cacuation method for determining rates shoud be ceary stated by indicating the number of work-hours empoyed as the normaization factor. The recommended factors are those defined by IOGP; these are per 1 miion hours worked for injury or iness rates, and per 100 miion hours worked for fataity rates. Companies may aso use the factors commony appied for OSHA incident reporting, which is per 200,000 hours worked for injury or iness rates, and per 1 miion hours worked for fataity rates. 85

90 IPIECA API IOGP Heath and safety issues and indicators Workforce protection HS3: Occupationa injury and iness incidents Section 5 Heath and safety issues and indicators Reporting eements Common reporting eements C1 Report occupationa injuries separatey for empoyees and contractors: Tota Recordabe Injury Rate; Lost Time Injury Rate; Number of fataities (excuding iness fataities); Fata Accident Rate (excuding iness fataities); and Fata Incident Rate. C2 Describe incidents of major consequence, determined by the company, together with impacts and response actions. Suppementa reporting eements S1 Report occupationa inesses separatey for empoyees and/or contractors: Tota Recordabe Iness Rate; Lost Time Iness Rate; and Number of iness fataities. S2 Describe initiatives to reduce occupationa incidents. Other reporting eements O1 Describe High Learning Vaue Incidents, incuding how essons earned have been shared. O2 Reporting approach and appication of eading safety measures that may incude: significant near-miss events (incuding first aid and no-treatment incidents); behaviour-based safety programmes (peer-to-peer observations, feedback sessions) (to demonstrate workforce engagement and the maturity of an organization s safety cuture); safety management system audits and site/activity assessments of the design and effectiveness of the system and of improvement pans; incident investigation competion and corrective action cosure (demonstrates effective investigation processes and management oversight); workpace job safety/hazard anaysis competion by the workforce (is an indicator of safety cuture); and heath, safety and environmenta orientations and training (track the number and effectiveness of activities designed to raise awareness and improve competency of the workforce). References 1. CEFIC Reporting of Occupationa Iness Frequency Rate IOGP Heath and safety incident reporting system users guide, 2010 data. IOGP Report 444. London, UK IOGP. Safety data reporting users guide. (Updated yeary). London, UK IOGP-IPIECA Heath Performance Indicators: A guide for the oi and gas industry OSHA (U.S. Department of Labor, Occupationa Safety and Heath Administration) Recording and Reporting Occupationa Injuries and Inesses. 29 CFR Part (January 2001) OSHA. Handbook on Injury and Iness Recordkeeping Step Change in Safety Leading Performance Indicators Guidance for Effective Use. 86

91 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Heath and safety issues and indicators Product heath, safety and environmenta risks Introducing the issue: Product heath, safety and environmenta risks Customers have an increasing awareness of heath, safety and environmenta risks reated to the everyday products they purchase and encounter. There is a constant drive to introduce ceaner and better performing formuations for fues, ubricants and other refined materias. Stakehoders are interested in product composition, hazards and recycing /disposa. Assessment of the heath, safety and environmenta (HSE) risks of new products and maintenance of upto-date information on existing products are standard practice. The issue is ikey to be more materia for companies in the downstream parts of the industry who provide products to end-user customers. GUIDANCE ON REPORTING THE ISSUE When reporting on this issue, companies have the opportunity to describe the vaue chain benefits of their products whie carifying the systems in pace to manage HSE risks. Reference can be made to reguatory frameworks as we as specific interna processes that provide product stewardship contros, such as product registration, data sheets and abeing codes that provide transparency and confidence to customers when transporting, handing or using sod products. RECOMMENDED INDICATOR FOR THIS ISSUE The indicator recommended for this issue focuses on risk assessment and communication processes which are important aspects of managing HSE risks reated to a company s products. Section 5 Heath and safety issues and indicators 87

92 IPIECA API IOGP Heath and safety issues and indicators Product heath, safety and environmenta risks HS4: Product stewardship Section 5 Heath and safety issues and indicators HS4: Product stewardship DESCRIPTION The company s approach to assessing and communicating product heath, safety and environmenta (HSE) risks. PURPOSE Proactive assessment of HSE impacts and management of potentia HSE exposures to oi and gas industry products reduces and mitigates impacts to customers, empoyees, communities and the environment. In genera, understanding of such HSE risks is based on experience and knowedge of toxicoogica and exposure information. Countries reguate and manage HSE risks reated to products differenty, which presents chaenges for companies operating across nationa borders. Newy-deveoped products need to be assessed prior to marketing to ensure hazards and risks are recognized and managed. Systematic processes are typicay in pace to manage product HSE issues. Communication of hazards and risk management measures to stakehoders is essentia; Safety Data Sheets (SDSs) are a key means for this communication to customers. Additionay, the companies product-reated management systems aim to ensure effective execution and seek improvements. SCOPE This eading indicator appies to risk management of products across the suppy chain and the product ife cyce (manufacture, transportation, fina use and recycing or disposa, if appicabe). It describes the processes appied by companies to manage product risks to customers using three eements: 1. Product HSE risk characterization to identify and document risks and address findings, incuding: heath risks based on toxicoogy hazard information and human exposure information; safety risks, especiay those reated to major accident hazards; and environmenta risks reated to the impact of reeases, both intended (permitted) and unintended (i.e. spis). 2. Communication to provide SDSs and other product heath, safety and environmenta hazard or risk management information to customers and, where appropriate, product stewardship information to those who buy and/or hande the company s products. 3. Product HSE management system incuding processes to: identify HSE hazards, and manage risks; specify and communicate precautions for using, storing, handing, transporting and disposing of products; maintain knowedge of HSE risks of products; comprehend and compy with reguations where products are sod, or adopt reasonabe standards of care where reguations do not exist or are inadequate; and track and evauate product stewardship incidents. 88

93 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Heath and safety issues and indicators Product heath, safety and environmenta risks HS4: Product stewardship REPORTING BASIS The indicator is quaitative and reportabe at a goba eve, and may be supported by quantitative data on extent of programmes. Quantitative data shoud be consoidated within the company s reporting boundary (Appendix A). The indicator excudes environmenta impacts covered within Section 4 of the Guidance. Normaization methods are not described for these indicators due to the extensive range of product types and diversity of reguatory regimes. Section 5 Heath and safety issues and indicators Reporting eements Common reporting eements C1 Discuss the company s approach to product assessments and how identified findings are addressed. C2 Describe the processes to provide Safety Data Sheets and other risk management information to customers and to the pubic, as appropriate. C3 Describe the Product Heath, Safety and Environmenta Management System. Suppementa reporting eements S1 Report on activities to monitor, track, evauate and manage product-reated incidents. Other reporting eements O1 Quantitative data to provide scae to the narrative on product stewardship activities, such as the number of product assessments of potentia impacts undertaken or the number of new and updated Safety Data Sheets (SDSs) issued in the year compared to the tota number of appicabe SDSs in pace at the end of the year. References 1. ICCA (Internationa Counci of Chemica Associations). Goba Product Strategy (website) ISO ISO 11014:2009 Safety Data Sheet for chemica products content and order of sections OECD Guideines for Mutinationa Enterprises. 89

94 IPIECA API IOGP Heath and safety issues and indicators Process safety and asset integrity Section 5 Heath and safety issues and indicators Introducing the issue: Process safety and asset integrity Ensuring the safety of our workforce and the communities in which companies operate is of prime importance to the oi and gas industry. Assuring asset integrity is integra to maintaining safe operations. Process safety is the discipine of preventing an unpanned or uncontroed oss of primary containment (LOPC) of hazardous materia from a process due to an unintended event or condition (e.g. reease of hydrocarbon from its containment that, if ignited, coud resut in a major incident due to exposion or fire). This incudes LOPC of non-toxic and non-fammabe substances in circumstances where harm or damage coud resut. GUIDANCE ON REPORTING THE ISSUE The oi and gas industry has focused strongy on sharing the earning from actua and potentia process safety events in recent years. This focus recognizes that such events have a ow probabiity but can have very severe safety, heath, environmenta, socia and economic consequences. It is therefore now common practice to provide information specificay on process safety and asset integrity within reports to convey the company s commitment and approach to preventing such accidents. A description of a company s approach to process safety and asset integrity wi typicay outine how its management system and reated process act to contro risks within its operations. This incudes recognition of the need to maintain and improve mutipe barriers to contro risk and how this is supported through eadership, cuture and risk awareness, incuding the importance of intervening to interrupt or stop an unsafe act or condition. RECOMMENDED INDICATOR FOR THIS ISSUE A number of associations and companies have estabished metrics that are being adopted by companies in the oi and gas, petrochemica and chemica sectors. Athough metrics in this area are continuing to be deveoped, there is genera acceptance across the oi and gas industry of pubished metrics to record LOPC events, which are the basis for HS5, the Process safety indicator. Whie many technica, mechanica and procedura barriers are incorporated within faciities to prevent hydrocarbon reeases, HS5 aso encourages the use of eading measures to prevent process safety events by focusing on identifying and addressing barrier weaknesses. 90

95 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Heath and safety issues and indicators Process safety and asset integrity HS5: Process safety HS5: Process safety DESCRIPTION Report the number and description of Tier 1 and Tier 2 process safety events based on the consequence criteria defined by API Recommended Practice 754 Process Safety Performance Indicators for the Refining and Petrochemica Industries and IOGP s report entited Asset Integrity Key Performance Indicators. PURPOSE Across the oi and gas industry, considerabe effort has been directed at prevention of major process safety incidents. Such incidents are characterized as unpanned oss of containment events with the potentia for severe consequences, incuding mutipe fataities, widespread environmenta impact and/or significant property damage. The reporting eements beow are intended to provide industry-wide indicators for recording predictive events and trends that may identify precursors of process safety incidents which can be addressed through preventative actions. SCOPE The detaied definition for this process safety indicator has been defined by API Recommended Practice 754 (API RP 754). This practice is aigned with other industry sources such as those pubished by the Center for Chemica Process Safety (CCPS) and the Internationa Association of Oi and Gas Producers (IOGP). These documents describe four Tiers providing a range of agging and eading metrics as shown in Figure 10. Tier 1 has been adopted by many companies and is the common reporting eement. Tier 2 is the suppementa reporting eement, which was introduced in 2010, and is cosey reated to Tier 1 and existing LOPC metrics. The other reporting eements are based on Tiers 3 and 4, which are site specific. Figure 10 The four Tiers of agging and eading indicators Reproduced from API Recommended Practice 754, courtesy of API API RP 754 is focused on refining and petrochemica operations but has wider appicabiity. IOGP has deveoped requirements for reporting Tier 1 and 2 indicators for upstream production and driing activities, which wi be pubished within its annua Heath and Safety Data Reporting System Users Guide, together with separate impementation guidance in Asset Integrity Key Performance Indicators, which covers a four tiers of metrics. A Tier 1 process safety event is defined by API RP 754 as an unpanned or uncontroed LOPC reease of any materia, incuding non-toxic and non-fammabe materias (e.g. steam, hot condensate, nitrogen or compressed air) from a process that resuts in one or more of the foowing consequences: Section 5 Heath and safety issues and indicators 91

96 IPIECA API IOGP Heath and safety issues and indicators Process safety and asset integrity HS5: Process safety Section 5 Heath and safety issues and indicators 1. An empoyee, contractor or subcontractor days away from work injury and/or fataity. 2. Hospita admission and/or fataity of a third party. 3. Community evacuation or community sheter-in-pace (officiay decared by a oca authority). 4. Fires or exposions resuting in greater than or equa to US$100,000 of direct vaue. 5. A discharge from a pressure reief device resuting in one or more of four consequences iquid carryover; discharge to an unsafe ocation; on-site sheter-inpace; or a pubic protective measure and is in excess of the Tier 1 threshod quantities detaied in API RP A reease of materia greater than the Tier 1 threshod quantities in API RP 754, in any one-hour period. A Tier 2 process safety event is broady defined as an order of magnitude ess severe than the Tier 1 criteria above. (See API RP 754 for detaied definitions and guidance.) It shoud be noted that any process safety event causing, or having the potentia to cause, mutipe serious injuries and/or fataities, is aso a High Learning Vaue Event (HLVE) and can provide important earnings for industry, as described in HS3, Occupationa injury and iness incidents. It is recommended that companies report both Tier 1 and 2 process safety events, as we as context and narrative to broady describe the nature, consequences and interpretation of the data. In addition to Tier 1 and 2 reporting, companies are encouraged to deveop, seect, use and evauate site-specific process safety and asset integrity eading metrics. A eading metric reporting programme supports continuous improvement of the company s safety performance. These Tier 3 and 4 metrics support actions to improve safety barriers and management system eements that have been identified through causes of past incidents, company experience with risk contros, and knowedge of their specific sites and faciities. As Tier 3 and 4 metrics wi be driven by sitespecific programmes and issues, these are not envisioned to be normaized or compared. REPORTING BASIS The indicator is quantitative and shoud be reported for Tier 1 and 2 process safety events at a goba eve, supported by quaitative descriptions of incidents, responses and pans. Quantitative data shoud be consoidated within the company s reporting boundary using the operationa approach (Appendix A). To provide comparabiity between major activities or companies of different scae, the number of events can be expressed as a normaized rate based on workforce hours as appied in HS3 for cacuation of Occupationa injury and iness incidents (see additiona notes on normaization beow). NORMALIZATION Tier 1 can be normaized for comparabiity, but the normaized data is statisticay ony ikey to be vaid at an industry, industry segment or arge enterprise eve, and is not expected to be vaid at an asset eve. Tier 2 normaized data may be vaid for most statistica comparisons between assets. Tiers 3 and 4 are not usuay suitabe for industry ro-up or even for comparisons from asset to asset. Since Tiers 3 and 4 wi often be asset-specific, each ocation shoud determine whether count or normaized rates are appropriate to assist them in anaysing their data. 92

97 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Heath and safety issues and indicators Process safety and asset integrity HS5: Process safety There is no uniformy appicabe normaization factor for process safety/asset integrity indicators. As such, industry segments may want to deveop a specific normaized rate or a severity index. However, genera consensus prefers to use worker exposure hours (as used Reporting eements for injury rates) as a convenient, easiy obtained factor for Tier 1 and 2 indicators. This provides a simpe basis for year-to-year trending and aows imited comparison between simiar business activities. Section 5 Heath and safety issues and indicators Common reporting eements C1 Number of Tier 1 process safety events with narrative per API RP 754 definitions and reported per business activity (refining, upstream, etc.). Suppementa reporting eements S1 Number of Tier 2 process safety events with narrative per API RP 754 definitions and reported per business activity (refining, upstream, etc.). Other reporting eements O1 Reporting process safety event frequency rates (see Normaization notes above). O2 Describe approach and appication of Tier 3 and 4 eading metrics, such as: demand on safety systems intended to protect against LOPC events (e.g. pressure reief vave reease, safety instrumented system events); HSE operating enveope deviations; effectiveness of management system execution; training and competency; eadership/management committee/cuture; management of change, and permit to work. References 1. API ANSI/API Recommended Practice 754: Process Safety Performance Indicators for the Refining and Petrochemica Industries (First Edition, Apri 2010). Avaiabe from API at: 2. CCPS (Center for Chemica Process Safety) Guideines for Risk-Based Process Safety. American Institute of Chemica Engineers, New York, CCPS Guideines for Process Safety Metrics. American Institution of Chemica Engineers, New York, CCPS Process Safety Leading and Lagging Metrics. American Institute of Chemica Engineers, New York, OECD Guidance on Deveoping Safety Performance Indicators Reated to Chemica Accident Prevention, Preparedness and Response for Industry (2nd Edition). OECD Environment, Heath and Safety Pubications, Series on Chemica Accidents. No. 19, Paris, IOGP Asset Integrity the Key to Managing Major Incident Risks. IOGP Report IOGP, Process safety: recommended practice on key performance indicators. IOGP Report IOGP Asset Integrity Key Performance Indicators. (Provides guidance for E&P industry use of API Recommended Practice IOGP. Heath and Safety Data Reporting System Users Guide. This User s Guide for reporting heath and safety data is typicay updated annuay in December. Use of the most recent guide is recommended UK Heath and Safety Executive (HSE) Step-By-Step Guide to Deveoping Process Safety Performance Indicators. HSG254, Sudbury, Suffok, UK,

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99 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Section 6 Socia and economic issues and indicators 95

100 IPIECA API IOGP Socia and economic issues and indicators Section 6 Socia and economic issues and indicators Section 6 Socia and economic issues and indicators OVERVIEW By the very nature of the ocation of oi and gas reserves and scae of their deveopment, oi and gas companies can face chaenging socia and economic issues. For goba companies, those chaenges vary across operating areas. Given this compexity and diversity, reporting in the area of socia responsibiity is deveoping, as is the understanding of economic factors that reate to sustainabiity. Since the 2010 revision of the Guidance, there has been significant internationa progress in the deveopment of important frameworks, standards and guidance across aspects of socia responsibiity. This incudes the pubication of the UN Guiding Principes on Business and Human Rights (UNGPs) in 2011 and the 2012 edition of the Internationa Finance Corporation s Performance Standards, which have been taken into account in the 2015 update of this Guidance. The Guidance provides direction on narrative and strategic reporting on five socia and economic issues ikey to be materia for companies: community and society; oca content; human rights; business ethics and transparency; and abour practices. These five issues are supported by 18 indicators (see tabe beow) that refect the evoution of socia and economic reporting; for this reason, they contain a range of options for reporting, with additiona guidance incuded within the Scope of each indicator. Because of the compexity and oca dimension of these issues, the majority of indicators in this section are based on quaitative descriptions of a company s management approach. Companies can determine which of these issue categories and indicators are materia for reporting (see page 18). Summary of socia and economic issues and indicators Issue Indicator Page number Community and society SE1: Loca community impacts and engagement 98 SE2: Indigenous peopes 100 SE3: Invountary resettement 102 SE4: Socia investment 104 Loca content SE5: Loca content practices 107 SE6: Loca hiring practices 109 SE7: Loca procurement and suppier deveopment 110 Human rights SE8: Human rights due diigence 114 SE9: Human rights and suppiers 116 SE10: Security and human rights 117 Business ethics and SE11: Preventing corruption 120 transparency SE12: Preventing corruption invoving business partners 121 SE13: Transparency of payments to host governments 123 SE14: Pubic advocacy and obbying 124 Labour practices SE15: Workforce diversity and incusion 127 SE16: Workforce engagement 128 SE17: Workforce training and deveopment 129 SE18: Non-retaiation and workforce grievance system

101 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Community and society Introducing the issue: Community and society The oi and gas industry operates a over the word, often in remote regions and diverse communities. Understanding and addressing the interests of societies, different socia groups and communities that may affect, or be affected by, oi and gas operations, is often an important component of designing and executing successfu and sustainabe oi and gas projects. Stakehoders inked to such projects, incuding the oca workforce, suppiers and communities, are typicay diverse and muti-ayered, with a variety of voices and representatives. Achieving common understanding of interests and concerns is essentia for engagement to be meaningfu and capabe of contributing to mutua respect, trust and confidence. Lack of consutation and coaboration with oca communities can ead to project disruption, deays, costs and given today s networked word a potentia escaation of oca issues to the goba stage. Conversey, successfu engagement with host communities may see companies accepted for the ways in which they hep to enhance the iveihood, we-being and economic future of a ocae and those who ive there. GUIDANCE ON REPORTING ON THE ISSUE Companies shoud report on their systematic approach to managing interactions with societies and communities incuding, where reevant, the four indicators provided here. This can incude references to internationa standards, guides or practices adopted by the company. Particuar chaenges or opportunities reated to oca communities affected by specific projects or operations shoud be discussed if materia to the company s sustainabiity reporting. In ine with the UNGPs (see Human rights, page 112), mechanisms to address community grievances and concerns, with remedy provision where appropriate, are particuary reevant within the context of the issue of Community and society. When carefuy designed, propery impemented and embedded in an effective community engagement programme, such grievance mechanisms provide significant benefits to both companies and communities 7. As part of reporting on the company s approach on this issue, companies are encouraged to outine processes for systematicay receiving, investigating and responding to community compaints and concerns at an operationa eve, and how any adverse human rights impacts wi be addressed. RECOMMENDED INDICATORS FOR THIS ISSUE The first indicator, SE1, asks companies to report on their overa systems for managing impacts on, and engaging with, communities reevant to company operations. The next two indicators, SE2 and SE3, provide options for more specific reporting where the company may affect, or be affected by, indigenous peopes and/or invove invountary resettement, incuding cutura heritage aspects. Finay, with SE4, companies are encouraged to report on the use and effectiveness of community and socia investments in areas in which they operate, as one of the instruments for estabishing and maintaining mutuay beneficia reationships with oca, regiona and nationa stakehoders. Section 6 Socia and economic issues and indicators 7 See the IPIECA pubications, Operationa eve grievance mechanisms: IPIECA Good Practice Survey (2012) and Community grievance mechanisms in the oi and gas Industry: A manua for impementing operationa eve grievance mechanisms and designing corporate frameworks (2015). 97

102 IPIECA API IOGP Socia and economic issues and indicators Community and society SE1: Loca community impacts and engagement Section 6 Socia and economic issues and indicators SE1: Loca community impacts and engagement DESCRIPTION Describe poicies, strategies and procedures for understanding and addressing oca community impacts and engaging with affected stakehoders. PURPOSE Oi and gas activities are typicay ong term and may have a variety of impacts on oca communities and different socia groups. Timey engagement and management of impacts on communities is centra to the company s abiity to buid trust and confidence and to safeguard its icence to operate. SCOPE The term affected communities is defined within the 2012 Internationa Finance Corporation (IFC) Poicy and Performance Standards on Socia and Environmenta Sustainabiity. For this indicator, the terms affected communities and affected stakehoders incudes individuas, administrations, businesses and other representatives of civi society within a oca community. Loca community incudes those groups of peope who ive or work sufficienty nearby to be potentiay impacted by the company s operations, incuding their environmenta and cutura resources, and is not restricted to fence-ine neighbours of a faciity. The reporting company shoud describe its overa approach to engagement with affected communities, as we as to oca community impact assessment and mitigation. This can incude descriptions of: stakehoder engagement strategies and processes that are appropriatey targeted, timey, incusive and representative of different socia groups (e.g. women, youth, minorities and vunerabe groups); impact assessment processes, and how these inform strategy, project or operation design, and impementation; mechanisms for periodic and proactive pubic discosure of information on company activities and management of impacts; grievance mechanisms, where reevant; and monitoring and foow-up procedures, throughout the project ife cyce. At the suppementa reporting eve, in particuar in reation to major projects, case studies can be incuded to iustrate how approaches are put into practice. The case 98

103 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Community and society SE1: Loca community impacts and engagement studies may discuss evidence of effectiveness and outcomes from affected stakehoder engagement pans and/or management of oca community impacts together with exampes of issues and essons earned from monitoring and evauation. Case studies can describe how the company responded to issues raised by affected stakehoders, and the Reporting eements extent of oca community support for the company s subsequent decisions. REPORTING BASIS The indicator is quaitative and reportabe at a goba eve, and may be supported by oca case studies. Section 6 Socia and economic issues and indicators Common reporting eements Suppementa reporting eements C1 Describe poicies, programmes and/or procedures for: assessing and addressing oca community impacts; engaging with affected stakehoders and responding to their grievances and concerns; and pubic discosure of information on company activities and management of impacts. S1 Case studies to iustrate effectiveness and outcomes from engagement with affected stakehoders and/or management of impacts on oca communities, and their environmenta and cutura resources. Other reporting eements O1 Describe efforts to assess and understand community perceptions of company impacts and activities such as sefappraisa, use of reiabe and unbiased third-party or independent research, and/or surveys deveoped in coaboration with the affected stakehoders and oca community. O2 Quantitative measures may incude: the number and/or percentage of sites with grievance processes or simiar confict resoution procedures in pace; and data on the types of concerns raised via engagement or grievance mechanisms, supported by quaitative information on how concerns have been addressed, incuding eevation of concerns to corporate management, as appropriate. O3 Discuss the company s approach to partnerships with reevant stakehoders, incuding communities, civi society, other companies and/or governments. O4 Describe assessment, consutation and preservation measures with regard to archaeoogica, historic and cutura sites of affected communities that coud be impacted by the company s activities. References 1. IFC IFC Performance Standards on Environmenta and Socia Sustainabiity IPIECA Guide to successfu, sustainabe socia investment for the oi and gas Industry. Contains information on socia investment processes, incuding measuring effectiveness IPIECA Integrating human rights into environmenta, socia and heath impact assessments. A practica guide for the oi and gas industry WRI Breaking Ground: Engaging Communities in Extractive and Infrastructure Projects Zandviet, Luc and Anderson, Mary B Getting it Right: Making Corporate-Community Reations Work. Greeneaf Pubishing. 99

104 IPIECA API IOGP Socia and economic issues and indicators Community and society SE2: Indigenous peopes Section 6 Socia and economic issues and indicators SE2: Indigenous peopes DESCRIPTION Describe poicies, programmes and procedures used for engagement with Indigenous Peopes and for addressing their concerns and expectations. PURPOSE This indicator demonstrates the company s approach to managing interactions with Indigenous Peopes (see definition under Scope), when it is reevant. The IFC, ILO and UN recognize that Indigenous Peopes as socia groups with different identities from dominant groups in society are often ikey to be reativey marginaized and vunerabe. Their status in society (whether economic, socia or ega) often imits their abiity to defend their rights and interests in reation to ands and other natura and cutura resources. In some countries they are afforded specia rights or protection; in others they receive itte or no protection, or aws guaranteeing their rights are not enforced. Companies with operations or activities that may affect, or be affected by, indigenous groups and their cutura heritage shoud engage with them, where appropriate, to understand and seek to address their concerns and expectations. SCOPE The reporting company shoud expain the term Indigenous Peopes as used in its reporting. Whie there is no universay accepted definition of the term, based on UN and ILO pubications, IPIECA (2011) has previousy isted the foowing characteristics considered to be party and/or fuy attributabe to Indigenous Peopes: sef-identification as indigenous; occupation and use of a specific territory prior to the arriva of other groups; coective attachment to specific ands and cutura heritage; a common experience of marginaization and discrimination; distinct cutura, economic, socia and/or poitica systems; a distinct anguage; and the aspiration to transmit to future generations their ands, and their distinct cuture and identity. The reporting company shoud describe its approach to engaging with Indigenous Peopes. This can incude the description of processes and mechanisms reated to: identification, avoidance, minimization and mitigation of potentia impacts on communities, their iveihoods, cutura heritage and the oca environment; information discosure, consutation, informed participation and mutuay acceptabe soutions with consent, where appropriate; access to cuturay appropriate grievance mechanisms 8 ; and identification and joint impementation of deveopment benefits (incuding access to jobs and economic opportunities. 8 See the effectiveness criteria for non-judicia grievance mechanisms in UNGP 31 ( EN.pdf), and the IPIECA manua and tookit on community grievance mechanisms ( / 100

105 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Community and society SE2: Indigenous peopes If appropriate, the company may aso report on human rights aspects reated to Indigenous Peopes when reporting on its human rights due diigence processes (see Indicator SE8, Human rights due diigence). At a suppementa eve, provide case studies, exampes or other evidence of how Indigenous Peopes (incuding their traditiona knowedge and cutura resources) are invoved in panning and decision making, and/or impact identification and mitigation processes. REPORTING BASIS The indicator is quaitative and reportabe at a goba eve, and may be supported by oca case studies and supporting quantitative data, if appropriate. Section 6 Socia and economic issues and indicators Reporting eements Common reporting eements C1 Describe poicies, programmes, procedures and practices used to: identify and imit impacts on Indigenous Peopes; engage with them and address their grievances, concerns and expectations; and coaborate on opportunities that create mutua benefits. Other reporting eements Suppementa reporting eements S1 Provide case studies, exampes or other evidence reated to participation and invovement of Indigenous Peopes. O1 Describe issues raised by Indigenous Peopes in specified countries, and actions taken by the company to address the issues. References 1. IFC Performance standards on socia and environmenta sustainabiity. ( Performance Standard 7: Indigenous Peopes) 2. ILO Convention 169 on Indigenous and Triba Peopes. (see aso: ILO Convention 107 on Indigenous and Triba Popuations Convention. en/index.htm) 3. IPIECA Indigenous Peopes and the oi and gas industry Context, issues and emerging good practice. Schedued for pubication in United Nations Genera Assemby (UNGA) Decaration on the Rights of Indigenous Peopes. Adopted by the UNGA in

106 IPIECA API IOGP Socia and economic issues and indicators Community and society SE3: Invountary resettement Section 6 Socia and economic issues and indicators SE3: Invountary resettement DESCRIPTION Describe poicies, programmes and procedures reated to invountary resettement. PURPOSE In exceptiona circumstances, oi and gas activities may invove invountary resettement of peope and/or their economic activities. This indicator provides insight into a company s efforts to avoid or imit invountary resettement, and to provide fair and transparent compensation as appropriate. SCOPE The reporting company shoud describe its approach to avoiding, mitigating and/or compensating for invountary resettement and addressing any associated potentia human rights impacts. Invountary resettement refers both to physica dispacement (i.e. reocation or oss of sheter) and to economic dispacement (i.e. oss of assets or access to assets that eads to oss of income sources or means of iveihood) of individuas/communities as a resut of project-reated activities. When describing poicies, programmes and/or procedures for invountary resettement, companies can incude information on a number of reated processes: project design (resettement avoidance or minimization); community consutation and engagement; resettement panning and impementation; compensation, iveihood restoration, community deveopment and benefits for affected peope; grievance mechanisms; and monitoring and evauation processes. At a suppementa reporting eve, companies may ist and quantify cases of invountary resettement during the reporting period. This can incude the number of househods resetted in each case, and an expanation of how iveihoods were affected and restored in the process. REPORTING BASIS The indicator is quaitative and reportabe at a goba eve, and may be supported by oca case studies. 102

107 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Community and society SE3: Invountary resettement Reporting eements Common reporting eements C1 Describe poicies, programmes and procedures for invountary resettement, incuding engagement processes and practices with communities that may be affected. Other reporting eements Suppementa reporting eements S1 List, quantify and/or describe cases of invountary resettement required by the company s activities (where governments aow permit discosure). O1 Provide quaitative case studies describing how the process was impemented in specific cases, for exampe: any chaenges or grievances encountered and how these were resoved; how fair compensation was cacuated and/or iveihood restoration provided; why invountary resettement was unavoidabe; and the provisions for any and returned at abandonment/cosure, if appicabe. O2 Describe future pans that may invove invountary resettement and how potentia adverse impacts wi be avoided or minimized. Section 6 Socia and economic issues and indicators References 1. IFC Performance Standard 1: Assessment and Management of Environmenta and Socia Risks and Impacts. Performance standards on environmenta and socia sustainabiity, Internationa Finance Corporation IFC Performance Standard 5: Land Acquisition and Invountary Resettement. Performance standards on environmenta and socia sustainabiity, Internationa Finance Corporation

108 IPIECA API IOGP Socia and economic issues and indicators Community and society SE4: Socia investment Section 6 Socia and economic issues and indicators SE4: Socia investment DESCRIPTION Describe strategies, programmes and procedures reating to socia investment, and their effectiveness. PURPOSE This indicator demonstrates a company s approach to socia investment. Since socia investment decisions are often the resut of consutation and engagement activities aimed at understanding and meeting community needs and aspirations, successfu socia investment projects can be an indicator of the quaity of reationships of a company with oca communities. SCOPE Companies shoud describe their overarching socia investment strategy. This may incude descriptions of corporate objectives, engagement strategy on socia investments, decision-making criteria, and spending to support community deveopment. Companies can incude detais on whether initiatives are community-owned and driven, third-party or company-faciitated. At a suppementa reporting eve, companies can discuss the effectiveness of their socia investments, incuding descriptions of: processes and methods for assessing and evauating socia investment effectiveness; outcomes, impacts and essons-earned; and how socia investments may have attracted additiona funding to the community from other sources, other ong-term partnerships and/or other deveopment activities. Socia investment generay incudes companyfinanced investments and donations for charity, community and socia deveopment programmes. It can incude contributions of expertise, access to faciities, training or other non-financia resources. REPORTING BASIS The indicator has both quaitative and quantitative aspects, is reportabe at a goba eve, and may be supported by oca case studies. Quantitative data shoud be consoidated within the company s reporting boundary (Appendix A). 104

109 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Community and society SE4: Socia investment The company shoud define what it considers as socia investment. In particuar when reporting financia data, expain the basis for reporting tota socia investment spend (e.g. whether it incudes empoyee giving, marketing projects, sponsorship, and everaged funding). Reporting eements Socia investment is separate from any compensation procedures described in Indicator SE3, Invountary resettement. Section 6 Socia and economic issues and indicators Common reporting eements C1 Describe the company s socia investment strategies, programmes and procedures. C2 Tota socia investment. Suppementa reporting eements S1 Provide appraisas of quaity and effectiveness of socia investment strategy, incuding outcomes and impacts. S2 Socia investment broken down by region or country. Other reporting eements O1 Case studies to iustrate impementation of strategy and associated essons earned, for exampe: how significant segments of the oca community fee they are benefiting, incuding the extent iveihoods and economic opportunities are improving; or whether socia investments are fostering improved community reations or creating tensions. O2 Socia investment broken down by vountary and contractuay obigated spend. References 1. IPIECA Creating Successfu, Sustainabe Socia Investment: Guidance Document for the Oi and Gas Industry. Contains information on socia investment processes, incuding measuring effectiveness The London Benchmarking Group provides a mode used by many companies around the word to assess and report on the vaue and achievements of their socia investments

110 IPIECA API IOGP Socia and economic issues and indicators Loca content Section 6 Socia and economic issues and indicators Introducing the issue: Loca content Loca content has emerged as a key aspect of socia performance for oi and gas companies. For purposes of the Guidance, oca content is defined as: The added vaue brought to a host nation (nationa, regiona and oca areas in that country, incuding communities) through the activities of the oi and gas industry. This may be measured (by project, affiiate and/or country aggregate) and undertaken through activities such as: workforce deveopment (internationa and nationa oi companies; contractors and subcontractors): - empoyment of nationa, regiona and oca workforce; - training of nationa, regiona and oca workforce; investments in contractor/suppier deveopment (a oi and gas industry goods and services, incuding engineering and fabrication yards): - deveoping suppies and services ocay; - procuring suppies and services ocay. For oi and gas companies, opportunities to add oca vaue arise across operations. Whie much of the focus around oca content is often directed at ow- and midde-income countries, in reaity there may be expectations as to companies contributions and activities anywhere in the word. GUIDANCE ON REPORTING THE ISSUE As part of a company s reporting on how it sustainaby addresses issues in its suppy chain, it is good practice to incude descriptions of corporate poicy, procurement strategy or other measures that specificay address oca content. At this eve, companies can expain how such measures aim to create jobs, promote enterprise deveopment and acceerate the transfer of skis and technoogies. A discussion on why the issue is important, and the consequent business benefits of the company s strategy, wi hep frame the narrative reated to individua countries where particuar programmes have been put in pace for oca suppy chain capacity deveopment. The genera approach to systematic impementation may aso be described, incuding stakehoder engagement, anaysis, workforce deveopment, suppier deveopment, tendering and contractua mechanisms, as we as monitoring to measure and sustain progress. Since the 2010 edition of the Guidance, IPIECA has pubished guidance on oca content strategy 9 which provides guidance that is hepfu to reporting companies. Reporting companies may then report on countries where oca content aspects are of significant concern to the business, its sustainabiity objectives and its impacts. Information on oca content management and performance is typicay reported at a nationa eve, but in certain circumstances may be provided at a regiona, state, community or other demographic eves. Reporting on oca content may be required by forma agreements or egisation, or because of expectations from host governments or stakehoders. RECOMMENDED INDICATORS FOR THIS ISSUE The three indicators SE5, SE6 and SE7 encourage companies to quaitativey describe their practices reated to oca content, incuding empoyment, procurement and suppier aspects of the issue, suppemented by quantitative data, if appropriate. 9 Loca content strategy: A guidance document for the oi and gas industry. IPIECA, 2011 (revision panned 2015) 106

111 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Loca content SE5: Loca content practices SE5: Loca content practices DESCRIPTION Describe poicies, programmes and procedures reated to oca content. PURPOSE Companies in the oi and gas industry face externa expectations regarding sourcing of goods and services and hiring of peope from within the host countries in which they operate. Legisation or specific agreements with host countries may incude oca content requirements. Loca content practices can bring a range of business benefits, incuding ower operating costs, increased oca and nationa commitment, and coser business aignment with government goas for deveopment and oca capacity buiding. Section 6 Socia and economic issues and indicators SCOPE Companies shoud describe their approach to sourcing of goods, services and human resources from within reevant host countries at different stages of operation. The description may incude specific objectives or pans that enabe oca sourcing of goods, services and abour. At a suppementa reporting eve, companies may incude case studies to convey their approach at a oca eve, incuding how companies have cascaded requirements to contractors and how any issues have been addressed. The company may discuss how oca capacity assessments and engagement with stakehoders heped anticipate the range of goods, services, skis and competencies necessary for project deivery and how they may best be deveoped and met ocay. Companies may aso refer to their own, or independent, assessments that have been conducted on oca capacity to suppy goods and services, or on existing skis and competencies of the oca abour force. REPORTING BASIS The indicator is quaitative and reportabe at a goba eve, and may be supported by oca case studies. 107

112 IPIECA API IOGP Socia and economic issues and indicators Loca content SE5: Loca content practices Section 6 Socia and economic issues and indicators Reporting eements Common reporting eements C1 Company poicies, programmes and procedures to sourcing goods, services and human resources. Other reporting eements Suppementa reporting eements S1 Using case studies, describe how company poicies, programmes and procedures are impemented ocay, incuding resuts and essons earned. S2 List of countries/regions where oca capacity assessments have been made. O1 Quantify the number (or percentage) of the company s organizationa entities that are covered by forma agreements or egisation within host countries regarding oca content. O2 Case studies may be usefu for discussing the socio-economic impacts of company oca content activities on the host country. This may be inked to reporting of Indicator SE1, Loca community impacts and engagement. References 1. IPIECA Loca content strategy: A guidance document for the oi and gas industry. (Revision panned 2015) 108

113 74 Socia and economic issues and indicators Loca content SE6: Loca hiring practices OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING SE6: Loca hiring practices DESCRIPTION Describe the company s strategies, programmes and procedures to provide empoyment opportunities to residents or nationas of host countries and communities. PURPOSE This indicator demonstrates the reach and effectiveness of a company s management strategy on oca empoyment in reevant ocations. It is one aspect of the company s oca economic impact. SCOPE Companies shoud describe the nature and effectiveness of their processes and strategy aimed at providing empoyment opportunities to residents or nationas of host countries, broken down by countries, regions, Reporting eements communities, business units or other demographics, where reevant. This shoud incude descriptions of: processes reated to staff hiring, appraisa, training, deveopment and progression; and specific education programmes to enhance oca empoyabiity. At a suppementa reporting eve, companies can provide further evidence of their programmes by reporting and discussing annua statistica data on oca hiring reated to key job posts in reevant ocations. REPORTING BASIS The indicator is quaitative and reportabe at a goba eve, and may be supported by quantitative information and oca case studies. If reported, quantitative data shoud be consoidated within the company s reporting boundary (Appendix A). Section 6 Socia and economic issues and indicators Common reporting eements C1 Describe strategies, programmes and procedures aimed at providing empoyment opportunities to residents or nationas of host countries. Suppementa reporting eements S1 Number and/or percentage of oca (nationa) versus expatriate (internationa) empoyees in management and other senior roes in target countries or regions. Other reporting eements O1 Provide information on how oca empoyment strategies promote diversity and incusion (e.g. in reation to gender, ethnicity, disabiity) at the oca eve. Incude management roes. (See aso Indicator SE15, Workforce diversity and incusion). O2 Incude information and/or quantitative data on oca empoyees that are given training in other (nonoca) assets of the company. O3 Discussion on indirect job creation and economic deveopment resuting from the company s activities. References Econometric modes exist for estimating mutipier effects (creation of indirect jobs), and may be found in the foowing (among others): 1. EBRD (European Bank for Reconstruction and Deveopment). Maximising the Positive Socio-Economic Impact of Minera Extraction on Regiona Deveopment in Transition Economies: A Review of the Literature ICMM Resource Endowment Tookit: The Chaenge of Minera Weath: Using Resource Endowments to Foster Sustainabe Deveopment. Internationa Counci on Mining and Metas

114 IPIECA API IOGP Socia and economic issues and indicators Loca content SE7: Loca procurement and suppier deveopment Section 6 Socia and economic issues and indicators SE7: Loca procurement and suppier deveopment DESCRIPTION Describe the company s strategies, programmes and procedures to improve the abiity of oca suppiers and contractors to support operations and carry out projects. PURPOSE Given the extent of activity in the industry that is dependent on suppiers and contractors, company approaches to procurement and to working with suppiers and potentia suppiers pay a pivota roe in deveoping and accessing suppy chains in regions of activity and in sharing goba work practices with oca companies. access to financing, or shorter-term contracts) and to increase suppier capabiity to meet company standards (e.g. skis training on heath, safety and environment, socia responsibiity, abour standards and respect for human rights). At a suppementa reporting eve, companies may report expenditure on ocay sourced goods and services within seected host countries as a percentage of tota nationa procurement budgets. Companies may describe activities or investments undertaken to assist suppier deveopment (e.g. capacity buiding, technica assistance or technoogy transfer, suppier network deveopment). SCOPE Companies shoud describe how they hep oca suppiers and contractors, to competitivey service the needs of the company and business generay, in ine with business requirements. The indicator focuses on actions taken to improve participation of oca suppiers. This can incude efforts to simpify the procurement process for oca suppiers (e.g. unbunding, REPORTING BASIS The indicator is primariy quaitative and reportabe at a goba eve, and may be supported by oca case studies. If reported, quantitative data shoud be consoidated within the company s reporting boundary with consideration of the criteria for determining the suppiers and contractors that are categorized as oca (Appendix A). 110

115 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Loca content SE7: Loca procurement and suppier deveopment Reporting eements Common reporting eements C1 Describe strategies, programmes and procedures to improve the abiity of oca suppiers and contractors to support operations and projects. Other reporting eements Suppementa reporting eements S1 Proportion of money spent on goods and services sourced ocay. S2 Describe further activities undertaken to assist suppier deveopment. O1 Describe how the procurement process faciitates or encourages first-tier suppiers and contractors to buy ocay. O2 Discuss pre-quaification criteria for potentia suppiers, which coud incude: track record of working with oca firms; strategies for deveoping oca content in a given country; and demonstrabe experience of deveoping capacity of oca suppiers and subcontractors. O3 Evidence of oca business deveopment not directy reated to meeting current company needs, but as a resut of increased economic activity and opportunities made possibe by the project and its oca economic benefits. Section 6 Socia and economic issues and indicators References 1. Engineers Against Poverty. Maximising the Contributions of Loca Enterprises to the Suppy Chain of Oi, Gas and Mining Projects in Low Income Countries. A briefing note for suppy chain managers and technica end users WBCSD Promoting Sma and Medium Enterprises for Sustainabe Deveopment. Deveopment Focus Area - Issue Brief 111

116 IPIECA API IOGP Socia and economic issues and indicators Human rights Section 6 Socia and economic issues and indicators Introducing the issue: Human rights Human rights are generay defined as standards of treatment to which a peope are entited, regardess of nationaity, gender, race, economic status or reigion. The Universa Decaration of Human Rights ist of core universa human rights incudes thirty different rights and freedoms, covering civi, cutura, economic, poitica and socia rights. [1] They incude the right to food, sheter, education and decent work; and freedoms such as speech, movement and assemby, and basic protections such as freedom from savery and torture. The core principes that underie human rights are referenced in numerous documents incuding the Internationa Bi of Human Rights, which consists of the Universa Decaration of Human Rights, the Internationa Covenant on Civi and Poitica Rights, the Internationa Covenant on Economic, Socia and Cutura Rights and the Internationa Labour Organization (ILO) Conventions. Carity on corporate responsibiity to respect human rights was reached in 2008 with the Protect, Respect and Remedy framework set out by John Ruggie, the UN Secretary-Genera s Specia Representative on Business and Human Rights. The resuting Guiding Principes on Business and Human Rights [2] (UNGPs) framework was unanimousy endorsed by the UN in Subsequent activity by governments, the Organisation for Economic Cooperation and Deveopment and others to operationaize the UNGPs effectivey provided guidance on the previousy uncear boundaries for the spheres of responsibiity for human rights issues among states and mutinationa corporations. The UNGPs encompass three piars outining how states and businesses shoud impement the framework: the state duty to protect human rights; the corporate responsibiity to respect human rights; access to remedy for victims of business-reated abuses. Consistent with the UNGPs, oi and gas companies shoud respect a human rights and exercise due diigence to become aware of, mitigate and address any adverse human rights impacts inked to their activities. The UNGPs aso promote the use of 112

117 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Human rights effective community grievance mechanisms (CGMs) which can provide channes for affected individuas or communities to raise questions or concerns with a company and to have them addressed, and where appropriate remedied, in a prompt, fair and consistent manner. CGMs can compement, but do not repace, state-based judicia or non-judicia forms of remedy. IPIECA pubications support understanding and impementation of the UNGPs, particuary in the areas of due diigence, impact assessment and CGMs. The content of these pubications is refected in this 2015 update of the Guidance. GUIDANCE ON REPORTING THE ISSUE The oi and gas industry operates in some of the most chaenging ocations in the word, and can face compex human rights-reated issues. Athough it is for each company to deveop its own approach to reporting on human rights, the foowing types of narrative may be incuded: At the corporate eve, a description of any reevant processes, positions or poicy principes to ensure respect for human rights through the ife cyce of activities and within the suppy chain, referencing human rights frameworks and guidance adopted by the company. At the regiona, country or asset eve, a discussion on the reevance of human rights to their operations, incuding specific oca chaenges and opportunities. For companies operating in ocations where there is a heightened risk to human rights, a discussion of the importance of being proactive with due diigence measures to ensure human rights are respected, incuding assessment of potentia impacts, grievance mechanisms and remedia support. Highights of initiatives to improve the company s overa approach to human rights, such as the use of integrated Environmenta and Socia and Heath Impact Assessment (ESHIA) processes, enhancements to procurement and suppy chain management processes, or awareness/training. The human rights issue cuts across other issues in this Guidance, in particuar Community and Society, Labour Practices, Heath and Safety and Environment. For this reason, a company may discuss how these issues are interreated and systematicay managed. RECOMMENDED INDICATORS FOR THIS ISSUE The three indicators, SE8, SE9 and SE10, are primariy quaitative and focus on human rights due diigence and on specific areas reated to suppiers and security that are reevant to oi and gas companies. Section 6 Socia and economic issues and indicators References 1. Universa Decaration of Human Rights Adopted by the United Nations Genera Assemby in December Ruggie, J Guiding Principes on Business and Human Rights: Impementing the United Nations Protect, Respect and Remedy Framework. Report of the Specia Representative of the Secretary-Genera on the issue of human rights and transnationa corporations and other business enterprises. United Nations Human Rights Counci, Geneva, 21 March mar-2011.pdf. See aso 3. Internationa Bi of Rights. Incudes the Universa Decaration on Human Rights (UDHR), the Internationa Covenant on Civi and Poitica Rights (ICCPR), the Internationa Covenant on Economic, Socia and Cutura Rights (ICESCR) and the two Optiona Protocos to the ICCPR. In addition to the covenants in the Internationa Bi of Human Rights, the United Nations has adopted more than twenty principa treaties further eaborating human rights. These incude conventions to prevent and prohibit specific abuses such as torture and genocide and to protect specific vunerabe popuations such as Indigenous Peopes (Convention on Indigenous and Triba Peopes in Independent Countries, 1989), refugees (Convention Reating to the Status of Refugees, 1951), women (Convention on the Eimination of A Forms of Discrimination Against Women, 1979), and chidren (Convention on the Rights of the Chid, 1989). Other conventions cover racia discrimination, prevention of genocide, poitica rights of women, prohibition of savery ( and torture. 113

118 IPIECA API IOGP Socia and economic issues and indicators Human rights SE8: Human rights due diigence Section 6 Socia and economic issues and indicators SE8: Human rights due diigence DESCRIPTION Describe the company s approach to human rights due diigence incuding supporting processes. PURPOSE The indicator demonstrates that the reporting company has estabished processes for due diigence which it carries out in support of its respect for human rights. SCOPE Companies may describe their due diigence approach reated to human rights and abour standards, and how it aigns with approach provided within the UN Guiding Principes. This may incude descriptions of: reevant poicies, processes and guidance reated to impementing the responsibiity to respect human rights, incuding externa commitments or initiatives; procedures in pace to identify, assess and address any adverse human rights impacts to the workforce, oca communities and others, incuding ESHIAs and community grievance mechanisms; and efforts made to integrate reevant poicies and commitments at the oca eve. At a suppementa reporting eve, companies may describe interna monitoring and auditing processes undertaken to track impementation of standards, poicies or procedures reated to human rights. This may incude outcomes of assessments and potentia chaenges. Companies can consider reporting on the scope and content of training programmes on human rights. This can incude quantitative data on the training offered and a description of training pans, the target group for the training, and the anticipated percentage of the target group that shoud have received the training during the reporting year. REPORTING BASIS The indicator is quaitative and reportabe at a goba eve, and may be supported by oca case studies. 114

119 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Human rights SE8: Human rights due diigence Reporting eements Common reporting eements C1 Describe the components of the company s human rights due diigence approach incuding supporting processes to assess, address, monitor and communicate actua or potentia human rights impacts. Other reporting eements Suppementa reporting eements S1 Describe strategies and programmes that support the company s approach to human rights at the oca eve, supported by specific exampes for carification, as appropriate. S2 Scope, content and tracking of human rights training programmes. Section 6 Socia and economic issues and indicators O1 Provide additiona context on the reevance of human rights standards to operations, which may incude references to externa country and/or human rights risk indices or rankings. O2 Case studies to iustrate how potentia human rights issues reated to company operations are being assessed and addressed through management pans with procedures to monitor concerns and grievances, and to progress these to cosure. O3 Quaitative and/or quantitative measures for tracking impementation and outcomes of poicies and procedures (e.g. human rights considerations in evauating investments and/or business reationships, and resuts of monitoring/auditing). O4 Quaitative and/or quantitative measures to track the effectiveness of human rights due diigence. References 1. Danish Institute for Human Rights. Business and human rights toos and pubications GRI A Resource Guide to Corporate Human Rights Reporting. (GRI Research and Deveopment Series) ICCPR (The Internationa Covenant on Civi and Poitica Rights) Adopted by the United Nations Genera Assemby in December www2.ohchr.org/engish/aw/ccpr.htm 4. ILO Decaration on Fundamenta Principes and Rights at Work IPIECA Human rights due diigence process: a practica guide to impementation for oi and gas companies 6. OECD Guideines for Mutinationa Enterprises Ruggie, J Guiding Principes on Business and Human Rights: Impementing the United Nations Protect, Respect and Remedy Framework. Report of the Specia Representative of the Secretary-Genera on the issue of human rights and transnationa corporations and other business enterprises. United Nations Human Rights Counci, Geneva, 21 March See aso 8. Shift Project Ltd UN Guiding Principes Reporting Framework Universa Decaration of Human Rights Adopted by the United Nations Genera Assemby in December Vountary Principes on Security and Human Rights

120 IPIECA API IOGP Socia and economic issues and indicators Human rights SE9: Human rights and suppiers Section 6 Socia and economic issues and indicators SE9: Human rights and suppiers DESCRIPTION Describe the approach, programmes and processes to promote respect for human rights and abour practices by suppiers. PURPOSE As providers of goods and services, suppiers pay a key roe in the operations of the oi and gas industry. Hence, the conduct of suppiers and contractors concerning human rights and abour practices can have a significant impact on the company and its stakehoders. SCOPE The reporting company may describe its overa approach, in procurement and contracting, to promote respect for human rights and equitabe abour practices by its suppiers and contractors. This may incude: reevant processes and guidance provided to suppiers and contractors; steps taken before entering into contracts with suppiers and contractors (such as suppier engagement, review of poicies and performance, and assessment/audit); and training or capacity buiding to improve suppier performance to meet contract requirements. Reporting eements At the suppementa reporting eve, companies may incude quantitative information by estimating the percentage of significant suppier contracts that contain specific human rights causes. Companies shoud define the term significant (see Gossary). They may decide to base the determination on the size of the contracts issued to suppiers in particuar regions/ countries or other criteria set out by the reporting company. Companies may discuss specific efforts to engage suppiers in deveoping common goas, attitudes and behaviour reated to respecting human rights. Companies may incorporate reevant aspects of the abour practices issue (see pages , incuding Indicators SE16 18) reated to specific actions that promote good practices within the suppy chain. REPORTING BASIS The indicator is quaitative and reportabe at a goba eve and may be supported by oca case studies. The company shoud determine which issues reated to their suppy chains are materia for reporting (see page 18). Where quantitative data is incuded, the company shoud determine an appropriate reporting boundary, incuding consideration of the extent to which subcontractors and further eves of the suppy chain are incuded (see Appendix A for further guidance.) Common reporting eements C1 Describe approach and processes that the company has for promoting respect for human rights and abour practices by suppiers. Suppementa reporting eements S1 Estimated percentage of significant contracts with reevant causes. S2 Efforts aimed at promoting the UN Guiding Principes in the suppy chain, incuding due diigence processes and grievance mechanisms. Other reporting eements O1 Procedures to monitor suppier adherence to contractua agreements reated to human rights and actions taken when findings do not meet the company s expectations. 116

121 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Human rights SE10: Security and human rights SE10: Security and human rights DESCRIPTION Describe poicies, programmes and processes reated to security and human rights. PURPOSE Maintaining safe and secure operations whie respecting human rights is an important eement of oi and gas operations. This indicator demonstrates how the reporting company manages and monitors performance pertaining to security and human rights. SCOPE The reporting company shoud describe the company s approach to security and human rights practices. This may incude a description of reevant goba eve poicies, procedures and/or guideines, such as: risk assessment processes; procedures to monitor, report and respond to security-reated incidents with human rights impications; procedures for entering into reations with pubic or private security providers; and efforts to raise awareness of security and human rights for reevant staff. At a suppementa reporting eve, companies may discuss impementation of their countryspecific poicies, programmes and processes. This may incude an overview of countries where impementation is taking pace, such as: descriptions of engagement with stakehoders; criteria for the seection and contracting of private security forces or arrangements with pubic security forces; and exampes of support for outreach, education and training of reevant personne, private security, pubic security and civi society. REPORTING BASIS The indicator is quaitative and reportabe at a goba eve, and may be supported by countryeve information. Section 6 Socia and economic issues and indicators Reporting eements Common reporting eements C1 Describe reevant poicies, programmes and processes pertaining to security and human rights. Suppementa reporting eements S1 Describe how poicies, programmes and processes reated to security and human rights are impemented at the country-specific eve. Other reporting eements O1 Companies that are participants in the Vountary Principes on Security and Human Rights (VPSHR) may aso report on impementation of the Vountary Principes. O2 Report on specific objectives set during the reporting period, or on essons and issues encountered at the country eve. References 1. Vountary Principes on Security and Human Rights

122 IPIECA API IOGP Socia and economic issues and indicators Business ethics and transparency Section 6 Socia and economic issues and indicators Introducing the issue: Business ethics and transparency The bribing of private or pubic persons to obtain business advantage can distort internationa competitive conditions and negativey affect the economic and poitica progress of societies, in addition to being iega in most countries. There are two internationa conventions against corruption that have been widey endorsed and incorporated into nationa egisation: OECD Convention on Combating Bribery of Foreign Pubic Officias in Internationa Business Transactions (1997); and United Nations Convention against Corruption (2005). At the nationa eve, egisation can vary. The US Foreign Corrupt Practices Act of 1977 and the UK Bribery Act of 2010 are both widey recognized, as are the EU Anti-Corruption Conventions of 1997 and Countries incuding Russia, China, Brazi and Canada have more recenty enacted comparabe egisation and today many countries have anti-corruption measures. Whie egisation tackes corruption, there are practices that egisation does not aways address ceary, incuding faciitation payments, donations and gifts. Companies therefore commony estabish their own business ethics poicies supported by codes of conduct or integrity programmes. Transparency is an important aspect of this issue, particuary with respect to revenue payments to host governments and any advocacy or obbying activities. Oi and gas companies contribute arge sums of money to the fisca revenue streams of host governments. Revenue transparency is a mechanism for discosing information about revenue fows from oi and gas activities in resource-rich countries. The best-known effort aimed at promoting and standardizing revenue transparency is the Extractive Industries Transparency Initiative (EITI), under which: companies within a country report on their significant payments to the host government; the host government reports what it receives; and the host government issues a pubic report on company payments and government revenues. More recenty, at the regiona eve, the 2012 Dodd- Frank Wa Street Reform and Consumer Protection Act (Section 1504) in the US was foowed by new EU discosure rues within the EU Accounting Directive and the revised EU Transparency Directive. Business can have infuence through participation in pubic poicy debates and input to egisative deveopments. Engagement of this sort is both egitimate and necessary. However, transparency regarding a company s poitica engagement and financia contributions is an important part of maintaining trust with a variety of stakehoders. 118

123 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Business ethics and transparency Section 6 Socia and economic issues and indicators GUIDANCE ON REPORTING THE ISSUE The egisation and practices described above have resuted in greater carity on business ethics and transparency for extractive industries. In their sustainabiity reports, companies shoud expain how they address this issue through governance, poicies and systems of interna contro that are depoyed to ensure robust standards of business conduct centray and in countries where they operate. Companies may provide information on how anticorruption and business ethics poicies are impemented and monitored. On revenue transparency, the combination of EITI and US/EU measures has been an enaber of financia discosure and companies are better positioned to provide financia data regarding payments to host governments; this is refected in a significant revision to Indicator SE13 in this 2015 update of the Guidance. RECOMMENDED INDICATORS FOR THIS ISSUE Reporting on business ethics and transparency is supported by four indicators. Ethica standards and practices aimed at preventing corruption, incuding bribery, are the focus of the first two indicators, SE11 and SE12, with the atter providing the opportunity to discuss suppier, contractor and other business reationships. The third indicator, SE13, provides a basis for describing how revenue transparency is promoted, with the option of providing data on payments to governments. The reevance of the fourth indicator, SE14 on pubic advocacy and obbying, is more dependent on the ocation and nature of a company s business activities, and therefore the prominence of this indicator is ikey to vary by company. 119

124 IPIECA API IOGP Socia and economic issues and indicators Business ethics and transparency SE11: Preventing corruption Section 6 Socia and economic issues and indicators SE11: Preventing corruption DESCRIPTION Describe poicies, programmes and procedures to prevent bribery and corruption, and mechanisms to monitor compiance. PURPOSE This indicator demonstrates the company s poicies and commitments to prevent empoyees from vioating appicabe antibribery/anti-corruption aws, and procedures in reation to parties with whom the company does business. SCOPE Companies shoud describe key eements of the company s approach to preventing corruption incuding giving or receiving bribes. Companies shoud refer to mechanisms to promote anti-corruption poicies and programmes, incuding information, resources and toos for raising empoyee awareness. The indicator incudes a description of compiance mechanisms for: reporting suspected vioations, e.g. through a company hotine (see aso Indicator SE18 referring to non-retaiation against whistebowing ), supervisory reviews, and empoyee and third-party tip-offs; and detecting, investigating and preventing bribery and corruption, e.g. through interna contros and audits. At a suppementa reporting eve, companies may report on the scope and content of antibribery and anti-corruption training programmes offered for empoyees, incuding the reevance and appicabiity to the empoyees specific work. Reporters can provide a description of the training pans and expectations for the percentage of empoyees trained. REPORTING BASIS The indicator is quaitative and reportabe at a goba eve. Reporting eements Common reporting eements C1 Describe company's poicy to address bribery and corruption. C2 Describe empoyee awareness programmes. C3 Describe interna procedures for reporting and foowing-up suspected vioations. Other reporting eements Suppementa reporting eements S1 Describe the scope, content and tracking of anti-corruption training programmes provided. O1 Describe risks associated with bribery and corruption which are reevant to company operations. O2 Participation and eve of invovement in vountary initiatives or internationa conventions. O3 Discipinary measures as a resut of non-compiance. 120

125 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Business ethics and transparency SE12: Preventing corruption invoving business partners SE12: Preventing corruption invoving business partners DESCRIPTION Describe anti-corruption poicies and procedures appicabe to business partners, incuding suppiers and contractors. PURPOSE This indicator demonstrates a company s impementation of poicies and commitments to address the risk of bribery and corruption invoving its business partners, incuding suppiers, contractors and other intermediaries, particuary those representing a company before government officias. SCOPE Describe the company s procurement and contracting approach reated to preventing bribery or corruption by its business partners, incuding suppiers and contractors. This may incude descriptions of anti-corruption poicies and due diigence procedures appicabe to business partners incuding: communication, incuding contractua causes, and actions taken to encourage business partners, incuding suppiers and contractors, to impement anti-corruption programmes; and processes to monitor compiance with anticorruption poicies and/or compiance with provisions set forth in contracts. At a suppementa reporting eve, companies may estimate the expected percentage of significant contracts that contain specific anguage intended to prevent corruption. A company woud be expected to define significant based on, for exampe, the size of the contract or other criteria set out by the reporting company. REPORTING BASIS The indicator is primariy quaitative and reportabe at a goba eve, and may be supported by quantitative data and oca case studies. Section 6 Socia and economic issues and indicators Reporting eements Common reporting eements C1 Describe anti-corruption poicies and due diigence procedures appicabe to business partners, incuding suppiers and contractors. Suppementa reporting eements S1 Percentage of significant contracts that contain specific anguage intended to prevent corruption. Other reporting eements O1 Loca case studies or exampes to iustrate the impementation of poicies, communication and actions. 02 Discipinary measures as a resut of non-compiance. 121

126 IPIECA API IOGP Socia and economic issues and indicators Business ethics and transparency SE13: Transparency of payments to host governments Section 6 Socia and economic issues and indicators SE13: Transparency of payments to host governments DESCRIPTION Describe poicies and programmes for the promotion of revenue transparency. PURPOSE Oi and gas companies often make a significant contribution to the pubic revenues of host governments around the word. This indicator encourages companies to describe their efforts to achieve transparency of payments to host governments. SCOPE The reporting company shoud describe its poicies and programmes for the promotion and achievement of transparency of payments to host governments. The company shoud indicate: participation in transparency initiatives, such as the Extractive Industries Transparency Initiative (EITI); compiance scope for appicabe nationa and regiona reporting mandates on pubication of payments, such as those being impemented in the United States and European Union; and adoption of any other standards or practices on transparency of payments. At the suppementa reporting eve, the company may report on payment discosures in response to government poicy or EITI commitments. Companies may aso report payments to countries not yet subject to reporting mandates. Payment information can be provided at different eves of detai. Companies can consider reporting payment by type (e.g. taxes, royaties, bonuses, fees, production entitements, infrastructure deveopment or other payments) or by amounts paid to individua receiving government agencies. The company may aso report information on any additiona transparency efforts to inform communities and governments about the quantified economic vaue it is deivering over and above direct government payment obigations. REPORTING BASIS The indicator is quaitative and quantitative with reporting at a goba and country eve, if appropriate. Reporters shoud provide information reated to activities in countries where revenue transparency issues may be of particuar reevance. Companies shoud aso ist those EITIimpementing countries where upstream company operations are taking pace and payments are being reported. In addition, companies may incude inks to any EITI or other pubic reports that meet ega or other requirements for discosure of payments to governments. 122

127 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Business ethics and transparency SE13: Transparency of payments to host governments Reporting eements Common reporting eements C1 Describe company poicies and programmes on revenue transparency. C2 Describe scope of ega and poicy mandates for government revenue reporting with which the company is obiged to compy. C3 Describe participation in the EITI and any other vountary reporting initiatives, where reevant for individua companies, incuding a ist of EITI-impementing countries where the company has upstream operations. Suppementa reporting eements S1 Report, by country, payments to countries for which reporting is subject to governmenta ega or poicy mandates, or EITI requirements. S2 Report, by country, payments to countries for which there is no reporting requirement. S3 Expain changes in the reported data compared to prior years. S4 If appicabe, incude inks to any EITI or other pubic reports of the company that discose payments to governments. S5 Information on further transparency, governance or anti-corruption efforts reated to revenue transparency. Section 6 Socia and economic issues and indicators Other reporting eements O1 Case studies that iustrate the company s transparency efforts with specific governments and communities. O2 Report other payments outside the scope of nationa or regiona reporting standards or practices. References 1. EITI (Extractive Industries Transparency Initiative), incuding the EITI Business Guide EU Accounting Directive 2013/34/EU on the annua financia statements, consoidated financia statements and reated reports of certain types of undertakings EU Transparency Directive 2004/109/EC on the harmonisation of transparency requirements in reation to information about issuers whose securities are admitted to trading on a reguated market and amending Directive 2001/34/EC United States Dodd-Frank Wa Street Reform And Consumer Protection Act, Sec. 1504, Discosure of payments by resource extraction issuers

128 IPIECA API IOGP Socia and economic issues and indicators Business ethics and transparency SE14: Pubic advocacy and obbying Section 6 Socia and economic issues and indicators SE14: Pubic advocacy and obbying DESCRIPTION Describe the company s approach to managing pubic advocacy, obbying and poitica contributions. PURPOSE This indicator demonstrates how a reporting company contributes to pubic poicy debates and egisative deveopment, incuding poicies covering transparency, poitica engagement and financia contributions. It shows how a company is working to maintain stakehoder trust regarding the nature of its potentia infuence. SCOPE The reporting company shoud describe key eements of its advocacy and obbying activities. This may incude: the company s overa approach to the reporting of such activities; descriptions of priority pubic poicy issues the company is advocating; and quantitative indications of the amount of money paid for pubic advocacy and obbying purposes. At a suppementa reporting eve, the company can expain how it reports on poitica contributions. The company can aso report on the amount of money paid to: candidates, poiticians and poitica parties; and individuas, organizations and institutions whose prime function is to fund poitica parties or their candidates. REPORTING BASIS The indicator is primariy quaitative and reportabe at a goba eve, and may be supported by quantitative data or country eve information. Since definitions and egisation reated to obbying and poitica contributions vary between countries, it is hepfu to expain which definitions or standards are appied in managing a company s contributions. Reporting eements Common reporting eements C1 Describe the key eements of the company s advocacy and obbying activities. Suppementa reporting eements S1 Describe the company s approach to the reporting of poitica contributions. S2 Provide quantitative indications of the amount of money spent on poitica contributions. Other reporting eements O1 Provide exampes to iustrate the impementation of the company s approach in specific countries or on particuar issues. 124

129 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Labour practices Introducing the issue: Labour practices Companies are expected to treat a workers with respect and dignity and promote diversity in the workpace. The workforce is a key stakehoder group and underpins the success of a company. As with other stakehoders, engagement is a key too to ensure that the company cuture is positive, i.e. motivation is strong and workers are satisfied with their treatment, remuneration and conditions. It is essentia that systems are in pace to bring forward grievances without fear of retaiation. Fair and equitabe treatment of workers is a basic expectation of society that needs to be approached systematicay and underpinned with robust poicies and procedures. GUIDANCE ON REPORTING THE ISSUE Companies shoud describe their approach to impementation of abour practices, incuding poicies if appicabe. It is hepfu in the report, when discussing poicies and corporate practices, to highight any changes, initiatives or new processes that the company has put in pace to address particuar chaenges or opportunities that were materia during the reporting year. Often topics for discussion wi have a geographic or demographic dimension that serve to iustrate abour practices by case study, for exampe in reation to oca suppy chains, to specific groups within the workforce or to human resources in deveoping countries. When discussing company poicies and practices, it is hepfu to make reference to, or state aignment with, reevant nationa or internationa aws, standards or guideines. At an internationa eve, abour standards consist of conventions or nonbinding recommendations, which are negotiated through the tripartite Internationa Labour Organization (ILO). The four core abour standards, set out in eight ILO Labour Conventions designated as fundamenta by the ILO governing body, incude: freedom of association and the right to coective bargaining; eimination of forced and compusory abour; aboition of chid abour; and eimination of discrimination in the workpace. Section 6 Socia and economic issues and indicators 125

130 IPIECA API IOGP Socia and economic issues and indicators Labour practices Section 6 Socia and economic issues and indicators These four core abour standards aso form the basis of principes 3 6 of the United Nations Goba Compact. With the 1998 adoption by the ILO Conference on the Decaration on Fundamenta Principes and Rights at Work, a ILO member states became obigated to recognize the rights in these eight conventions as universa irrespective of the reevant conventions ratification status. Apart from these eight fundamenta conventions, ILO abour standards incude up to 80 other conventions and recommendations, which have been ratified or adopted, and integrated into nationa egisation and reguations to varying degrees. Standards of particuar reevance to the oi and gas industry address specific groups in society such as indigenous and triba peopes, migrant workers, seafarers and fishermen, or cover subjects such as working time, empoyment security, wages, vocationa guidance and training, and occupationa heath and safety. Foowing the requirements of oca aw and reguations, together with effective impementation of aigned corporate poicies and processes, enabes companies to meet or exceed internationa abour standards. RECOMMENDED INDICATORS FOR THIS ISSUE Indicators in this section describe characteristics regarding recognition of the need to respect worker rights and to vaue human capita by, among other practices, provision of equa opportunities to current or prospective workers through promotion of diversity and incusion. It incudes investment through activities ike training and deveopment, in a manner consistent with company poicy and cutura expectations. The four indicators recognize the need for incusion of empoyees as we as contractors and others who form the workforce of a company. When discussing the workforce, particuary in quantitative terms, companies shoud carify the extent to which each indicator incudes empoyees, contractors and others. References 1. ILO (Annex revised 2010). Decaration on Fundamenta Principes and Rights at Work. en/index.htm 2. ILO Standards (Conventions and Recommendations) 3. IFC Performance Standards on Environmenta and Socia Sustainabiity 126

131 OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING Socia and economic issues and indicators Labour practices SE15: Workforce diversity and incusion SE15: Workforce diversity and incusion DESCRIPTION Describe poicies, programmes and procedures promoting diversity and incusion. PURPOSE This indicator demonstrates the effectiveness of the reporting company s poicies on workforce diversity and incusion, particuary in reation to gender, ethnicity and disabiity. Section 6 Socia and economic issues and indicators SCOPE The reporting company shoud describe its poicies, programmes and/or procedures to address workforce diversity and incusion at a goba eve, iustrated by exampes of impementation at nationa eves. Nondiscrimination aspects are treated separatey under SE8, Human rights due diigence. At a suppementa reporting eve, the company can use oca or nationa case studies to demonstrate how its poicies and procedures are impemented in practice. Impementation outcomes can be evidenced through a discussion on the composition of the workforce, particuary at management eve, or by providing quantitative data for reevant diversity categories, such as gender. REPORTING BASIS The indicator is quaitative and reportabe at a goba eve, and may be supported by workforce data and oca case studies. If reported, quantitative data shoud be consoidated within the company s reporting boundary using the workforce approach (Appendix A). Reporting eements Common reporting eements C1 Describe the reporting company s poicies, programmes and procedures to promote workforce diversity and incusion. C2 Workforce composition data for gender and/or other diversity categories. Suppementa reporting eements S1 Case study materia to iustrate oca impementation of poicies, procedures and programmes. S2 Discuss workforce composition particuary with reference to management positions. Other reporting eements O1 Provide information on other incusion parameters such as equa pay for equa work. 127