© 2011 Chevron U.S.A. Inc. Reporting through the Carbon Disclosure Project GHG Reporting Workshop...

© 2011 Chevron U.S.A. Inc.

Reporting through the Carbon Disclosure Project

GHG Reporting WorkshopMarch 1, 2011

Laura VerduzcoChevron Corporation


Agenda

What is CDP?

Questionnaire

Scoring

The energy sector

Suggested areas of collaboration for IPIECA-CDP

CDSB – Organizational Boundaries for reporting GHG emissions

Issue questions


What is CDP?

“The Carbon Disclosure Project is an independent not-for-profit organization holding the largest database of primary corporate climate change information in the world.” -CDP website

Who discloses information? 3000+ companies in 60 countries (including 84% of the Europe 300, 82% of the Global 500; 70% of the S&P 500 and 74% of the South Africa 100 companies)

CDP represents 551 institutional investors, holding US$71 trillion in assets under management

Types of programs:

– Investor CDP

– CDP Public Procurement

– CDP Water Disclosure

– CDP Supply Chain

– CDP Cities

Focus


Questionnaire

Investor CDP

Management: Governance, Strategy, Targets and Communications

Risk and Opportunities

Emissions: Methodology and Data

Industry Specific: Auto, Electric Utilities and Oil and Gas


Response Rates

Total response rates and disclosed emissions over time by geography (All Scopes CDP 2003 to CDP 2010)

Source: CDP 2010


Scoring

Scoring:

– Disclosure: business-specific risks and potential opportunities related to climate change and internal data management practices for understanding GHG emissions

– Carbon performance score: Measures for climate change mitigation

– Leadership Index (CDLI and CDPI): companies with the most comprehensive report

Source: CDP 2010


CDLI and CDPI – Energy Sector

Energy Sector

Em

issionsCDLI cut-off

CP

LI

cu

t-o

ff

Sources: CDP 2010CDP 2010 chart courtesy of PwC

Trading

Governance


Suggested areas of collaboration: IPIECA and the CDP questionnaire

The following slides present sections of the CDP questionnaire that have been problematic for Chevron to respond to. The issues highlighted are likely to affect other IPIECA members, and are presented with the objective of engaging in a healthy exchange of ideas and determine IPIECA’s future involvement.


New Organizational Boundaries from the Carbon Disclosure Standards Board (CDSB)

CDP 2011 will add a new organizational setting approach developed by CDSB

The Climate Disclosure Standards Board (CDSB) was formed at the 2007 annual meeting of the World Economic Forum to standardize reporting guidelines on the inclusion of climate change information in mainstream financial reports.

The Carbon Disclosure Project (CDP) acts as Secretariat to CDSB and is responsible for advancing the CDSB Framework

Climate Change Reporting Framework (CCRF) v1.0: It is aligned to principles and objectives of financial reporting published by the International Accounting Standards Board (IASB).

– Chapter 4- Requirements for Disclosure Content-. Requirements are very similar to the CDP questionnaire, including information about governance, greenhouse gas emissions, risks and opportunities, management actions, and future outlook.

– Organizational boundaries for GHG reporting: The CCRF prescribes a single approach based on the International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) on consolidation and equity accounting

http://www.weforum.org/en/index.htm


CCRF Boundaries Snapshot

Part 2 GHG emissions should include emissions from operationally controlled and/or other entities/activities/facilities that:a. are not consolidated in Part 1; andb. must be reported under regulatory requirements by the disclosing organization in its capacity as operating licensee or in any other capacity (e.g.: tenant); or c. due to the nature of the contract for the operation or use of the entity/activity/facility:i. expose the reporting organization to risk, opportunity or financial impacts; orii. enable the reporting organization to influence the extent to which GHGs are emitted.

•CDP 2011: Added CCRF reporting approach to the list of consolidation options•What is the value of adding a fourth reporting boundary option? This will increase investor confusion and reporting burden. Further, some industries have well established guidelines (i.e. IPIECA GHG Reporting guidelines)


CDP 2011 – Other issue areas

The questions continue to change year-after-year: Lack of consistency limits analysis of historical results and trends

Different metrics every year to measure GHG intensity.

For example - CDP 2011 requires GHG/FTE. FTE definition:

“FTE (or full time equivalent) is a way to compare staff numbers across companies with different working arrangements. To calculate FTE employees you should add together

all staff hours and then divide it by a full time working day of 7.5 hours.”



Confidentiality concerns: Investment details and projected savings are confidential business information.

Prediction of the future: the scientific and engineering information requested is not yet available.



Disaggregation of investment numbers: Some of the strategic investments of the oil and gas industry, or other allied energy industries (such as power generators), are not for the sole purpose of reducing greenhouse gas emissions

What is the future of the O&G section?

“The oil and gas sector module is not scored as part of the CDP 2011 scoring methodology.” -CDP 2011 Guidance Document

© 2011 Chevron U.S.A. Inc. Reporting through the Carbon Disclosure Project GHG Reporting Workshop...

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