Our governance structure provides Board and management oversight of our risk processes and mitigation plans. Our integrated management system approach to identifying, assessing and managing sustainable development (SD) risks is aligned with how we make business decisions to ensure the consistent global identification and assessment of risks. This system links directly to the enterprise risk management (ERM) process, which includes an annual risk review by executive leadership and the Board. These elements help us manage and mitigate risk, as well as track our SD performance.

Assessing and Managing Risks

Our SD Risk Management Standard mandates a process for operated assets and projects to assess and manage risks to ensure corporate oversight, assurance and consistent implementation. Risks are identified and assessed against the physical, social and political settings of our operations by subject matter experts in each business unit (BU) and project. Local concerns may influence the potential importance of these environmental and social matters, including cumulative effects. Each risk is then assessed using a matrix that evaluates both its likelihood and consequence. In evaluating the consequence severity, we consider potential impacts on employee and public safety, sociocultural and economic impacts to stakeholders, environmental impacts, and reputational and financial implications. Risks identified as significant or high at the corporate or BU level are included in the corporate SD Risk Register. The company undertakes a review of SD risks annually and updates the SD Risk Register and associated action plans. An audit protocol for the standard was developed in 2020 and we implemented a regular audit schedule in 2021.

The standard further mandates developing action plans for mitigated risks ranked significant or high and are tracked in the corporate SD Risk Register. Risks that are no longer ranked significant or high due to the effectiveness of mitigation actions, as well as risks that are identified as medium or low, continue to be tracked at the Business Unit level.

Read more about our management process for climate change , water , biodiversity and social risks on our website.

Action Plans

The SD Risk Management Standard ensures that an action plan is developed to track mitigation activities for each risk included in the corporate SD Risk Register. These plans include details about our commitments, related responsibilities and milestones. As part of annual updates to the register, the action plans and their effectiveness are evaluated, and decisions are made to continue mitigation measures, add new measures or simply monitor the risk for further developments. Significant and high risks are removed from the corporate risk register when mitigation actions have reduced the level of risk, and they are tracked to ensure ongoing mitigation effectiveness. The SD Risk Register and action plans are also used to track performance and guide goal setting. Read more about Performance and Compensation on our website.

Action plans for prioritized risks are typically managed at the BU level, along with the ongoing management of SD performance and engagement designed to minimize or avoid other social and environmental aspects of our business. Overarching risk management actions, such as greenhouse gas (GHG) target setting, prioritization of global emissions-abatement projects and disclosure and reporting, are managed at the corporate level. Line-of-sight goals for business units and key functions are shown as specific action items within the action plans. Mitigation actions can range from single or multiyear specific projects to routine and long-term programs.

Enterprise Risk Management

Sustainability risks are integrated into the corporate Enterprise Risk Management (ERM) system. Risks from the corporate SD Risk Register are mapped to relevant enterprise risks including market, reputational, operational and political. Owners of these enterprise risks, who are ELT members or senior managers, are briefed on the risks and our mitigation activities. Enterprise risks are then presented to the Audit and Finance Committee (AFC) of the Board. The AFC receives annual updates on how enterprise risk is being addressed, mitigated and managed across the company.

Long-Range Plan and Corporate Strategy

Our long-range and strategic planning activities consider sustainable development risks and mitigation. Our Long-Range Plan (LRP) forecasts key data for our corporate strategy covering our proposed portfolio development and performance, production, costs and cash flows. We also use the LRP to forecast GHG emissions and water use to understand our future environmental footprint. Environmental and social risk mitigations, such as emissions reduction projects, are reflected in the LRP and our annual budget.

Our corporate strategy defines the company’s direction for exploration and development, including portfolio, capital allocation and cost structure. Our cost of supply, portfolio diversification (both geological and geographical) and technology investments are aspects of the corporate strategy that also address sustainability risk. For example, a low cost of supply mitigates climate transition risk in lower-energy demand scenarios. Having a geographically diverse portfolio helps mitigate the risk of community or stakeholder concerns delaying a significant portion of our production. Investing in water treatment technology allows us to recycle produced water and decrease our reliance on local water sources. We work with company leadership through our governance structure, enterprise risk management system and energy transition models to ensure our strategy effectively manages SD risks.

Key SD Management Processes

Our integrated management system is based on mandatory and auditable corporate standards, which are supported by principles and guidelines aligned with how we make business decisions to ensure the consistent global identification and assessment of SD risks. This includes integration into key business-planning processes for the company, from business development activities and exploration to developing major capital projects and managing our day-to-day operations.

SD Risk Management Standard	Identify social and environmental risks, conduct risk ranking and develop mitigation action plans. Applies to all operated assets and projects.
HSE Social and Due Diligence Standard	Identify risks and liabilities related to health, safety, environment, regulatory and social issues for transactions requiring due diligence including acquisitions, divestitures, trades, exchanges and farm-in/farm-out agreements. Applies to all operated assets and projects
HSE Management System Standard	Identify and manage operational risks to the business, employees, contractors, stakeholders and environment. Applies to all operated assets and projects.
Capital Projects Management Standard	Assess risks, including SD risks during the project engineering stage. Applies to all operated capital projects costing more than $50 million net.
HSE Waste Management Standard	Prepare management plans for waste and produced water, evaluate the suitability of industrial disposal facilities and contract only with approved facilities. Applies to all operated assets and projects.
Environmental Performance Metrics Reporting Practice	Outlines the requirements and company expectations for reporting the company’s environmental performance metrics. Applies to all operated assets and its subsidiaries globally, including all affiliated companies and joint ventures.
Groundwater Assessment and Monitoring Guideline	Provides guidance on when and how voluntary baseline sampling could be conducted through a risk-based approach. Available for use by operated assets and projects in areas not already covered by state-regulated groundwater baseline assessments.
Global Induced Seismicity Guideline	Provides a method to characterize seismicity risks by assessing historical seismicity, identifying geological faults of concern, assessing existing or proposed injection operating conditions and considering proximity to people and population centers. Available for use by business units for the planning and operation of injection wells for operated assets and for screening third-party injection operations.
Zero Routine Flaring Guideline	Provides guidance on application of World Bank Zero Routine by 2030 Initiative for ConocoPhillips operations. Applies to all operated assets and its subsidiaries globally, including all affiliated companies and joint ventures.

We perform due diligence on acquisitions, divestitures, trades, exchanges and farm-in/farm-out agreements. This process is designed to ensure that past, present and potential HSE and sustainable development risks and liabilities are clearly identified, understood and documented. This due diligence standard applies to ConocoPhillips and global subsidiaries, and we strive to influence all affiliated companies and joint ventures to conduct due diligence before undertaking binding business transactions.

While the majority of ConocoPhillips’ oil and natural gas reserves and production are within Organization of Economic Cooperation and Development (OECD) nations, some of the world’s most resource-rich areas are in countries that pose risks associated with political instability, inadequate rule of law or corruption. Before entering a new country — or for other new developments, when warranted by the geopolitical environment — we have adopted comprehensive risk management tools to evaluate and manage these types of risks. A preliminary due diligence assessment is conducted to identify significant risks, including social, environmental and political concerns, and define how they will be managed.

As operated and non-operated projects are developed and put forward for internal approval, consideration is given to environmental and social risks and their mitigation. For qualifying projects, our management system also requires the following for investment approval:

• Climate-Related Risk Assessment
• Environmental, Water and Biodiversity Risk Assessments
• Social and Stakeholder Engagement Plans

In managing our day-to-day operations, the HSE management system addresses operational risk and helps ensure that business activities are conducted in a safe, healthy and environmentally and socially responsible manner, aimed at preventing incidents, injuries, occupational illnesses, pollution and damage to assets. We believe incidents are preventable and that HSE considerations must be embedded into every task and business decision. We also provide guidance to address specific activities in our operations including waste management. This standard ensures all our assets have detailed plans to manage waste streams, minimize where possible, and ensure waste is directed to facilities that have been evaluated and approved by the company.