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The sustainability

reporting process

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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 toGRI G3 and indicator mapping

Measurement/conversion factors

References

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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

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Section 2: How to reportThe sustainability reporting process

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Set out how a companys sustainability priorities areintegrated into its overall vision and business strategy

Define sustainability

Describe understanding of what sustainability, socialresponsibility 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 issuesand approach to addressing them

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Important to report on the role of the board and/orexecutives with regard to sustainability-relatedgovernance 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 suchmanagement systems are usually addressed in a sustainability

report

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Information in a report should be relevant to users andshould be provided consistently to enablecomparability

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.

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Indicator selection Material issues for reporting should inform the selection of

indicators

The Guidance contains 11 issue categories that are likely tobe relevant to many oil and gas companies for reporting, alongwith 33 performance indicators for use by companies todemonstrate how the issues are being addressed

Companies may choose to customize indicators or developadditional measures to report on key issues

Data collection

Determine what quantitative data and qualitative informationwill be collected within the company

A choice of reporting elements is provided that may beapplicable to the companys operations, and which define thetypes of information or data that can be collected

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Analyse the indicator data and incorporate the resultsinto 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 companys 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

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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 canmanage and integrate sustainability performance into itsoperations

Incorporating financial data Can be useful to incorporate selected financial and operating

information to provide business context when reporting onsustainability issues.

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Inclusion of information to provide assurance on the contentof sustainability reports is a common practice

Assurance processes provide an opinion regarding thequality of reported information

Audit-based verification

Typically focuses on quantitative data, may also seek to testmateriality 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 andrecommendations.

May also provide an opinion on whether the report includes themost relevant and material issues

Important to explain how assurance is achieved

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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 (1indicator)

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)

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Section 4: Environmental indicators

Issue category IndicatorClimate change and energy E1 Greenhouse gas emissions

E2 Energy use

E3 Alternative energy sources

E4 Flared gas

Ecosystem services E5 Biodiversity and ecosystem services

E6 Fresh water

Local environmental impacts E7 Other air emissions

E8 Spills to the environment

E9 Discharges to water

E10 Waste

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Section 5: Health and safety indicators

Issue category IndicatorWorkforce protection HS1 Workforce participation

HS2 Workforce health

HS3 Occupational injury and illness incidents

Product health, safety and

environmental risks

HS4 Product stewardship

Process safety and

Asset integrity

HS5 Process safety

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

Issue Category IndicatorCommunity and Society SE1 Local community impacts and engagement

SE2 Indigenous peoples

SE3 Involuntary resettlement

SE4 Social investment

Local Content SE5 Local content practices

SE6 Local hiring practices

SE7 Local procurement and supplier

development

Human Rights SE8 Human rights due diligenceSE9 Human rights and suppliers

SE10 Security and human rights

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Social and economic indicators (2 of 2)

Issue Category IndicatorBusiness ethics and

transparency

SE11 Preventing corruption

SE12 Preventing corruption involving business

partners

SE13 Transparency of payments to hostgovernments

SE14 Public advocacy and lobbying

Labor protection SE15 Workforce diversity and inclusion

SE16 Workforce engagement

SE17 Workforce training and development

SE18 Non-retaliation and grievance systems

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External stakeholder engagement

To progress external engagement an independent externalstakeholder panel was convened Provided insights and feedback on direction and priorities

Group of experts with solid understanding of sustainability issuesaffecting 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, priorityareas

Second comment period / on-line survey on draft of revisedGuidance

Broader engagement across industry

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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

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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-seekingapproach)

IPIECA puts higher priority on technical content, precisedefinitions 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

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Thank you

IPIECA

the global oil and gas industry association

for environmental and social issues

www.ipieca.org

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