The sustainability reporting process

1. The sustainability reporting process

2. Inside the “revised” Guidance • “Front Section”: Process • Why report? • How to report • What to report • Strong indicator sections: Content • Environmental • Health and Safety • Social and Economic • Appendices: Additional background info • Boundaries • Glossary • Changes from 2005 Edition, relationship to GRI G3 and indicator mapping • Measurement/conversion factors • References

3. Section 1: Why reportCommunicating strategic sustainability issues • Why report? • Enhanced business value • Improved operations • Strengthened relationships • Enhanced trust and credibility • And a few more … • Meet growing expectations of broad range of stakeholders • Improved reputation with socially responsible investors • Employee recruitment and retention • Brand protection and customer loyalty

4. Section 2: How to reportThe sustainability reporting process

5. Set out how a company’s sustainability priorities are integrated into its overall vision and business strategy • Define sustainability • Describe understanding of what ‘sustainability’, ‘social responsibility’ or ‘corporate citizenship’ means to the company • Reveal vision • Vision should look to the sustainability opportunities and challenges of supplying energy into the future. • Often presented in the context of existing corporate values, principles and policy commitments • Explain strategy • How to create value for its shareholders by means of its current performance; describing principal sustainability issues and approach to addressing them

6. Important to report on the role of the board and/or executives with regard to sustainability-related governance and management systems • Outline board governance • How it functions, how often it meets, whether board members are associated with sustainability issues, etc. • Discuss the role of the most senior executives and their structure for managing the day-to-day business. • Detail management systems • The status, implementation and effectiveness of such management systems are usually addressed in a sustainability report

7. Information in a report should be relevant to users and should be provided consistently to enable comparability • Defining materiality • Material issues for sustainability reporting are those that, have the potential to significantly affect sustainability performance • Use a simple process • Companies should establish a simple process to identify those material issues that warrant inclusion in their report.

8. Indicator selection • Material issues for reporting should inform the selection of indicators • The Guidance contains 11 issue categories that are likely to be relevant to many oil and gas companies for reporting, along with 33 performance indicators for use by companies to demonstrate how the issues are being addressed • Companies may choose to customize indicators or develop additional measures to report on key issues • Data collection • Determine what quantitative data and qualitative information will be collected within the company • A choice of ‘reporting elements’ is provided that may be applicable to the company’s operations, and which define the types of information or data that can be collected

9. Analyse the indicator data and incorporate the results into a narrative that describes performance progress • Putting results into context • Developing a narrative requires a company to think strategically about how it communicates material issues and indicator data • How the results are relevant to the company’s operations • The nature of impacts on relevant stakeholders • The opinions of stakeholders or other credible third parties on those impacts • How the results may compare to relevant industry benchmarks or averages • Strategic responses, goals or lessons learned

10. Explain progress against goals • Plot progress against plans to achieve goals, together with explanations for variations in related performance • Recognize complex issues • Material issues may have many dimensions and involve reporting against a variety of indicators • Employ case studies • Including real-world challenges illustrate how a company can manage and integrate sustainability performance into its operations • Incorporating financial data • Can be useful to incorporate selected financial and operating information to provide business context when reporting on sustainability issues.

11. Inclusion of information to provide assurance on the content of sustainability reports is a common practice • Assurance processes provide an opinion regarding the quality of reported information • Audit-based verification • Typically focuses on quantitative data, may also seek to test materiality processes or assess qualitative statements or claims • Third-party commentary • Can be statements by experts, a stakeholder panel, or academic, non-governmental organization (NGO) or community comments • May include views on management performance, progress and recommendations. • May also provide an opinion on whether the report includes the most relevant and material issues • Important to explain how assurance is achieved

12. Section 3: What to reportContent, in context - 11 key issues, 33 indicators • Environmental Issues • Climate change and energy (4 indicators) • Ecosystem services (2 indicators) • Local environmental impacts (4 indicators) • Health and Safety Issues • Workforce protection (3 indicators) • Product health, safety and environmental risks (1 indicator) • Process safety and asset integrity (1 indicator) • Social and Economic Issues • Community and society (4 indicators • Local content (3 indicators) • Human rights (3 indicators) • Business ethics and transparency (4 indicators) • Labor practices (4 indicators)

13. Section 4: Environmental indicators

14. Section 5: Health and safety indicators

15. Section 6: Social and economic indicators (1 of 2)

16. Social and economic indicators (2 of 2)

17. External stakeholder engagement • To progress external engagement an independent external stakeholder panel was convened • Provided insights and feedback on direction and priorities • Group of experts with solid understanding of sustainability issues affecting the oil and gas industry • Representative of views of typical report readers: • Environmental and community-oriented NGOs • Business and industry • Investors • Multi-lateral institutions • Public comment • Early on-line survey to obtain feedback on Guidance, priority areas • Second comment period / on-line survey on draft of revised Guidance • Broader engagement across industry

18. External stakeholder panel members • Tom Delfgaauw • Business • Louise Gardiner • International Finance Corporation • Roger Hammond • Living Earth • Elizabeth McGerveran / Karina Litvack • F&C Asset Management • Janet Ranganathan • World Resources Institute

19. Engagement with GRI • Regular interactions to promote synergies • Joint Communication Plan • Periodic updates via meetings and conference calls • Key role of members-in-common– BP, Statoil, Hess, Petrobras, Shell • Sharing of key documents • Recognition of the value of both processes • Differentiation of the two processes • GRI places priority on “process” and has more external engagement (multi-stakeholder, consensus-seeking approach) • IPIECA puts higher priority on technical content, precise definitions and protocols, and brings more industry-specific, technical expertise • Oil and Gas Sector Supplement expected late 2011 • Will work cooperatively on mapping Guidance to the Oil and Gas Sector Supplement

20. Thank you IPIECA the global oil and gas industry association for environmental and social issues www.ipieca.org