Impact assessments
The impact assessment process is an integral part of the overall risk management process in Equinor.
Embedding sustainability in how we work
At Equinor, our approach to sustainability is embedded in how we work. This includes our corporate governance principles, performance and reward framework and management system. These elements are described in the Equinor book, available here.
Governance
The Equinor ASA Board of Directors (BoD) and The Corporate Executive Committee review, monitor and discuss sustainability issues. This includes business risks related to safety, security, climate change, energy transition, human rights, environmental and social issues. The Chief Executive Officer is day-to-day responsible for Equinor’s management actions related to sustainability, hereunder climate change and the energy transition.
Climate change and the energy transition are discussed in most of the ordinary board meetings either as integral parts of strategy and investment discussions or as separate topics. In 2020, as part of establishing a new climate roadmap for Equinor, the board participated in a half-day workshop which included climate risk training. In the annual board evaluation for 2020 where the board evaluates its own work and competence, climate change capabilities and knowledge were included as key components.
The BoD members are elected by the corporate assembly. In addition, there are employee-elected representatives as required by Norwegian company law. The board’s composition is diverse in terms of expertise and background, enabling the board to address the company’s strategy, goals and challenges. The BoD members’ background includes experience from oil, gas, renewables, shipping and telecom businesses, politics and climate policy.
The BoD has three sub-committees which act as preparatory bodies; the safety, sustainability and ethics committee (SSEC), the compensation and executive development committee (BCC), and the audit committee (BAC).
The SSEC assists the BoD in its supervision of the company’s safety, security, sustainability, including climate, and ethics policies, systems and principles. This includes quarterly reviews of risk issues and performance, including climate-related risks and performance, and an annual review of the sustainability report. The instructions for the committee can be found here.
The role of the BCC is to assist the BoD in its work on terms and conditions of employment for the CEO, and on the philosophy, principles and strategy for the compensation of leading executives in Equinor. In order to better reflect the Equinor strategy and the energy transition, the instructions for the BCC was updated in 2020 to include that also achieving goals related to climate and energy transition should be part of the remuneration policies.
BAC’s role is to assist in the exercise of the BoD’s management and control responsibilities and to ensure that the group has an independent and effective external and internal auditing system. As part of this, the committee also supervises the implementation of and compliance with the group’s expectations, commitments and requirements for ethical conduct concerning financial reporting.
The company has a separate corporate risk committee chaired by the Chief Financial Officer. The committee meets at least four times per year to give advice and make recommendations on Equinor’s enterprise risk management, including climate-related risks.
Group level functions responsible for sustainability-related issues include safety and security, sustainability, people and leadership and legal. These functions are responsible at group level for setting strategic direction, to give advice and report on risk and performance to the corporate executive committee and the BoD, including relevant committees. The corporate sustainability function is responsible for overseeing climate change (including climate-related risk), environment, social performance and human rights. The corporate safety and security function is responsible for safety, health, work environment and security. The chief compliance officer is responsible for business ethics and compliance. The people and leadership function is responsible for our efforts to promote diversity and inclusion.
The business line is accountable for executing the company’s sustainability ambitions and for managing relevant risks and performance. Dedicated safety, security and sustainability staff in the business line is part of company-wide functional networks and provides advice and support to the business line.
Performance framework
Management of sustainability performance is integrated in strategy, business planning, risk management, decision-making and management follow-up processes. Our performance framework translates our vision, values and strategy into actions and results. We measure progress and results in a holistic way, using key performance indicators when relevant.
Safety, security and sustainability management is an integrated part of our management system, which includes our policies, requirements and guidelines for all material topics. Together with our corporate governance principles and performance framework, this forms the basis for how we are embedding these topics in our business activities. The principles and framework are described in the publicly available Equinor book, which is approved by the CEO.
At Equinor climate and sustainability is embedded into our performance and reward framework. The reward framework is an integrated part of our values-based performance culture and has been designed to contribute to the business strategy, long-term interests and sustainability of the company. At Equinor performance is evaluated in two dimensions, both “what” we deliver and “how” we deliver. Business delivery (“what”) and behavior (“how”) are equally weighted when recognising and rewarding individual performance.
For the business delivery dimension, the CEO, his direct reports and Equinor’s broader leadership are assessed based on results within a broad range of topics, including safety, security and sustainability. In addition, their ability as leaders to be role models for sustainable development and the energy transition forms part of the holistic evaluation. Within safety, serious incident frequency (SIF), total recordable injury frequency and oil/gas leakages are companywide KPIs. Within sustainability, CO2 intensity (upstream) is used as the KPI to measure performance related to climate change. The annual bonus for employees is based on a holistic assessment of company performance which includes, among other areas, CO2 intensity (upstream) and execution of climate strategies. A comprehensive set of performance indicators and monitoring reports are made available to all employees in our Management Information System.
The effectiveness of our management approach within sustainability is regularly evaluated through performance reviews at several management levels, including the corporate executive committee, the BoD and the BoD’s safety, sustainability and ethics committee, and by corporate and business area staffs. The frequency and granularity of the performance reviews varies with materiality, frequency of reporting and management level. Internal and external audits, verifications and self-assessments constitute key assurance elements of our management approach. We conduct internal and external benchmarking and participate in external performance ratings for the same purpose. Concerns related to misconduct can be reported to relevant internal entities or to Equinor’s Ethics Helpline which is available to any individual. Equinor has developed internal requirements for establishing and running effective operational-level community grievance mechanisms.
Risk and impact management
Management of sustainability related risks, including climate-related risks, is embedded in our enterprise risk management process. Risk management in Equinor follows a common, company-wide and documented process based on ISO31000 “Risk management”. It includes requirements, a specific work process and a common reporting tool. We regularly identify, evaluate and manage risks according to this process to create sustainable value and avoid incidents. Our enterprise risk assessment and related actions are reviewed biannually by the corporate executive committee and the BoD.
The impact assessment process informs the overall risk management process in projects and is based on national requirements in the countries we operate, and guidance as set out in international standards such as the International Finance Corporation (IFC) Standards. Disclosure of information and an open dialogue with relevant authorities, potentially affected communities and other stakeholders are key elements in the impact assessment process.
Impact assessment documents and more information about corporate governance are available below.
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