Climate Governance and Risk Management

Corporate Responsibility

Climate Governance and Risk Management

Board oversight of climate change risks and opportunities 

Aspects of climate change risk and opportunities that most influence Canadian Natural’s business strategy are: future regulatory changes and associated compliance costs, commodity price, access to markets and capital, social preferences, and reputational and Environmental, Social and Governance (ESG) risk (related to climate change, human rights and ethical and sustainable business practices), and technology development. These risks and mitigation strategies are further described in our Annual Information Form
 
Canadian Natural uses a multi-disciplinary risk management process, which considers climate change risks and opportunities as part of our business evaluation. Processes for identifying, assessing, and managing climate-related issues are integrated into our Enterprise Risk Management (ERM ) framework. Our business strategy is influenced by incorporating knowledge of climate-related risks and opportunities, including current and potential policies and regulations, into decisions made by our Management Committee and Board of Directors. Risk is managed at all levels of our company, and several bodies take part in this governance approach:
 
  • Management Committee (MC) is responsible for the identification, assessment and management  of climate change risks and opportunities. Business units identify and report on significant local risks and opportunities regularly.
  • MC, including the ESG Committee (a sub-group of the MC) and the Greenhouse Gas (GHG) Operations Strategy Committee, provides direction and guidance to business units on climate-related risk assessment, carbon emissions management and project implementation.
  • ESG Committee provides internal stewardship reports to the HSAI&E Committee of the Board, reporting on sustainability performance, key indicators and actions taken to mitigate risks.
  • GHG Operations Strategy Committee is responsible for climate change strategy and issue prioritization. This Committee oversees our working groups that manage and coordinate GHG reduction and technology projects across the Company, such as the cross-functional Methane Working Group. The GHG Operations Strategy Committee also assesses and provides input on current and developing GHG policy and regulation.
  • Nominating, Governance and Risk Committee of the Board reviews and monitors the status of risk management activities across the organization, including climate-related regulatory and operational risks, and the steps Management has taken to implement mitigating activities and controls. 
  • HSAI&E Committee of the Board is responsible for ensuring that Management has effective design and implementation of sustainability and environmental risk management programs, including controls and reporting systems.
  • Board of Directors is responsible for overseeing and ensuring that the Management Committee has appropriate and effective measures in place to manage climate-related risk, and their implications for our business strategies across Canadian Natural. 

Climate risk management also occurs at the asset level through recurring projects and reviews, as well as economic evaluations, including forecasting GHG intensity and compliance costs, and reviewing abatement projects. Internal quarterly management reviews are completed to monitor GHG emissions performance. As per regulatory requirements for specific facilities and/or jurisdictions where we operate, GHG emissions reports are submitted annually.

Climate and GHG Management Reporting 

Canadian Natural provides ongoing reporting on how we are addressing climate and other environmental related financial and operational risks. Canadian Natural has reported on climate risks and opportunities through our Carbon Disclosure Project (CDP) submission since 2006 and has produced a sustainability report, Stewardship Report to Stakeholders, since 2004. Risk and opportunities are identified by our Management Committee, the ESG Committee, the GHG Operations Strategy Committee, as well as other functional areas that include our government relations/public affairs, regulatory, legal, health and safety, and stakeholder/Indigenous and community relations. In addition, our public affairs and sustainability staff advises the business on aspects of sustainability and external reporting, with quarterly reports to the Board. 
 
Climate-related management of risks and opportunities is monitored every quarter, with risks assessed every six months or more frequently, considering risks that impact our business as far as 6+ years in to the future. Performance results are reported internally through a management review process and externally through the annual sustainability report. Annual performance objectives and targets are tracked and corporate status reports are presented quarterly to senior management and our Board of Directors. 
 

Legal and Regulatory Environment 

Canadian Natural works with stakeholders, including legislators and regulators, to ensure that any new or revised policies, legislation or regulations properly reflect a balanced approach to sustainable development. Specific measures that we take in response to existing or new policies and legislation focus on our energy efficiency, GHG emissions management, water management, tailings management and the minimization of the impact on the landscape to conserve high-value biodiversity. 
 
Canadian Natural’s operations have been, and in the future may be, affected by political developments and by national, federal, provincial and local laws and regulations such as restrictions on production, changes in taxes, royalties and other amounts payable to governments or governmental agencies, price or gathering rate controls and environmental protection regulations. These risks and mitigation strategies are further described in our Annual Information Form, and opportunities, including resource efficiency and advancing technology, are described in our 2020 CDP Climate Change submission.
 
We engage proactively in policy and regulation to effectively manage climate risks and opportunities, for example new GHG and air emissions policies, such as provincial and federal methane policy development. We advocate to ensure an adequate level of competitiveness protection for Energy Intensive Trade Exposed (EITE) industries, including the oil and gas sector, and a framework for international credits.  
 

Lobbying Activities  

Canadian Natural works together with government and industry associations through effective and constructive engagement in public policy is an important part of responsible operations. We support involvement in activities that advance Canadian Natural’s goals and enhance the communities where we work and live.
 
Canadian Natural complies with all lobbying legislation, including disclosures on public lobbyist registries and political spending for the federal, Alberta (AB), British Columbia (BC) and Saskatchewan (SK) governments, and our internal lobbying processes and guidelines. Corporate donations are not permitted to federal, AB or BC governments. Information on corporate donations over $250 to political parties in SK is publically available from the elections office.
 
  • Policy Engagement 

    Canadian Natural participates in public policy discussions on a variety of issues relevant to our business and regularly communicates with governments in jurisdictions where we operate. We work with governments to ensure that new and leading climate policy encourages technological innovation and deployment to achieve cost-effective GHG emissions reductions and energy efficiency, while maintaining competitiveness of Canada’s oil and natural gas sect or. We are not engaged on aspects of broader climate policy beyond the oil and natural gas industry, including broad-based carbon tax.
    To ensure consistency in policy advocacy with our climate change strategy, company representatives from the business units, including the Public Affairs, Government Relations department, take the direction and guidance from Management Committee. This direction is reflected in our public policy engagement activities, which include company representatives providing input, advice and analysis on potential regulations to policy makers and regulators directly and through participation on industry association working groups/committees.
  • Industry Associations

    We work with the Canadian Association of Petroleum Producers (CAPP), the Mining Association of Canada (MAC) and Oil & Gas UK, to ensure that new policies encourage technological innovation, energy efficiency, and targeted research and development while not impacting competitiveness. Our participation  as a member of these organizations comes with the understanding that we may not always support every position taken by these organizations or their members. In these situations, we work together to establish common ground.
  • Payments Transparency

    We also disclose payments to governments (including municipal, provincial, federal, and Indigenous payments) through the annual ESTMA report, as well as EITI, available on our website
Further details on environmental risks, GHG emissions management strategies and climate change policies and regulations can be found in our Annual Information Form and Management Information Circular, as well as in our 2020 CDP Climate Change Questionnaire