5.1.4Taskforce for Climate-related Financial Disclosure (TCFD)

MANAGEMENT APPROACH

Mitigating the impacts of climate change while meeting the needs of the future by facilitating the energy transition are key for SBM Offshore. The Climate Change Risk & Opportunity assessment is embedded in the portfolios of the CEO and CGCO. The Global Sustainability Director – who reports to the CSO in the CEO portfolio – prepares Climate Change scenarios whereas the Group Risk Manager – reporting to the CGCO – facilitates expert sessions to identify Risks & Opportunities for each scenario. This has been done with risk management professionals and SBM Offshore’s Group Strategy team first, followed by validation with business owners and the Risk Assurance Committee.

Frameworks from the TCFD have been used to structure the assessment, more specifically the TCFD’s Technical Supplement. SBM Offshore has applied the following steps:

  1. Ensuring Governance to integrate Climate Change Scenario analysis into Strategic planning and Enterprise Risk Management (ERM).
  2. Assessment of the Materiality of Climate Change related risks and opportunities with business- and functional experts.
  3. Identification and definition of range of Climate Change scenarios.
  4. Evaluation of business impact per scenario together with business owners.
  5. Identification of potential responses.
  6. Documentation in a Climate Change outcome presentation and embedding in SBM Offshore’s ERM system as well as Disclosure as per this Annual Report and internal presentations.

The outcome is used to future proof the current strategy against Physical & Transitional Climate Change related Risks and Opportunities. Identified risks and opportunities are embedded in SBM Offshore’s Risk Management approach explained in section 3.6 and SBM Offshore’s Strategic Planning processes.

Risk Management

Climate Change risks & opportunities are inherently identified and assessed against SBM Offshore’s strategy in SBM Offshore’s risk breakdown structure as deployed throughout SBM Offshore. When relevant, these risks are included in the detailed risk review and analysis is done for all tenders, projects and FPSO (asset) fleet operations which are part of SBM Offshore’s portfolio. The Group Risk Manager facilitates the process of bottom-up Climate Change risk reporting to the Risk Assurance Committee (RAC) for consolidation purposes. The outcome of the review in the RAC results in heat-maps of risks which are presented in in a quarterly Risk report. This covers proposal, projects and fleet individual risks, as well as Group Functions and Execution Centers, and includes actions and managing measures in place to mitigate risk. The report provides an overview to the Management Board and Supervisory Board with the measurement SBM Offshore’s Risk Appetite Statements and the latest Risk profile.

SCENARIO PLANNING

SBM Offshore defined two Climate Change scenarios to future proof current strategy and take subsequent action based on IEA and IPCC data:

  1. A Steady Climate Change Scenario based on IEA’s Stated Policy Scenario (STEPS) and IPCC’s Representative Concentration Pathway (RCP) 4.5 and 6.0. This scenario reflects the impact of announced country policies across the globe. This trajectory is said to have positive impact on climate change, however to fall short of meeting Paris Agreement goals.
  2. A Bold Climate Action Scenario based on IEA’s Sustainable Development Scenario and IPCC’s RCP 1.9 and 2.6. This scenario reflects a trajectory consistent with countries’ shared sustainable energy goals. The trajectory provides for strong commitment towards targets as per Paris Agreement.