We take a digital approach to our sustainability reporting. To provide stakeholders with timely information we provide performance examples and updates as they occur. These updates and our performance metrics are integrated into the foundational information on our website and consolidated into our sustainability hub . Performance metrics are updated annually.

We recognize that a yearly report is important for many stakeholders and we consolidate annual performance information and metrics into a report that can be found in our Reports and Resources section on the company’s website. Stakeholders can also create customized reports, based on topics of interest, by using our report builder .

Issue Prioritization

We evolve and refresh our perspective on sustainability reporting by considering the most pressing issues affecting our stakeholders, the global community and our industry. We determine the most relevant issues for our reporting by engaging with internal and external stakeholders throughout the year to better understand concerns about our business, particularly relating to the environment, society and our governance.

Identification

Through our annual risk assessment process, each business unit identifies potential sustainability risks while considering the physical, social and political settings of our operations. Local concerns may influence the potential importance of these environmental and social matters, including cumulative effects. Each risk is assessed using a matrix that evaluates both its likelihood and consequence. In evaluating the consequence level, we consider potential impacts to stakeholders and the company. Our Issues Working Groups (IWG), comprised of internal subject matter experts for climate change, water, stakeholder engagement/human rights and biodiversity, meet quarterly to discuss issues in each subject area. Annual discussions with other key internal functions provide further input and prioritization of the topic list.

Through meetings, correspondence and a review of publicly available materials, we gather opinions and input from key external stakeholders to further identify issues and potential impacts. These include mainstream investors, ESG-focused investors, banks, rating agencies and ESG-focused nonprofit organizations, as well as community members, leaders, policy makers and regulators in the areas where we operate. This is supplemented with analysis of the topics being considered by rating agencies and other survey questions as well as recommended reporting for the Sustainability Accounting Standards Board (SASB), Task Force on Climate-Related Financial Disclosures (TCFD) and the World Economic Forum: Measuring Stakeholder Capitalism. We also review the priority issues as publicly reported by industry peers to ensure alignment with identified industry issues.

Prioritization

We develop a list of potentially important issues across a range of topics from governance to safety to impacts on the environment and society. In 2021, we conducted a priority issues assessment to help identify and prioritize the reporting topics about our business as it relates to ESG. Participants included subject matter experts from over 20 of our key functions within the company who provided further insight and prioritized topics based on level of interest or concern to key stakeholders and strategic importance to the company. This process helped determine the significance of 18 sustainability topics. The ESG issues covered in this report reflect discussions with subject matter experts from across our company, findings from primary and secondary research, the feedback we received, and insights we gained through our ongoing engagement with stakeholders.

2021 Priority Issue	Definition
Environment
Carbon Asset Risk	Identifying the financial risk of stranded reserves and infrastructure.
Carbon Policy	Considering legislation and regulation related to climate change and an energy transition to a lower carbon economy.
Energy Efficiency	Reducing the amount of energy required to find and produce natural gas and oil.
GHG Emissions	Reducing greenhouse gas emissions emitted during natural gas and oil production.
Low Carbon Technologies	Defining the net-zero roadmap to understand the new energies landscape and prioritize investment opportunities.
Methane	Reducing methane emitted during natural gas and oil production.
Biodiversity	Mitigating impact to threatened or at-risk species impacting activities or operations, or activities and operations impacting species or habitats.
Produced Water	Managing discharge (offshore), disposal and/or recycling of produced water.
Water Sourcing	Securing sustainable and economic water sources for exploration, drilling, completions or production.
Social
Stakeholder Engagement	Respectfully engaging with local stakeholders and Indigenous Peoples to understand their interests, concerns and culture, seeking solutions that create mutually beneficial relationships and then integrating them into planning and decision-making.
Community Investment	Investing in communities to support giving categories including education, natural resources, health and safety, arts, civic and social services, and disaster relief.
Human Rights	Implementing human rights policies and practices that promote respect for civil, cultural, economic, political and social rights, consistent with the Universal Declaration of Human Rights (UDHR) and United Nations Declaration on the Rights of Indigenous Peoples.
Local Content	Creating and maintaining a safe and healthy workplace that is free of injuries, fatalities and illness.
Safety and Health	Creating and maintaining a safe and healthy workplace that is free of injuries, fatalities and illness.
Supporting our People	Attracting and retaining talent, offering training and development for workers to build capability and career opportunities while promoting diversity, equity and inclusion.
Governance*
Business Ethics	Adhering to applicable laws and the highest ethical standards.
Transparency and Corruption	Promoting transparency to reduce corruption, improve government accountability and foster economic stability.
SD Governance Process	Having a comprehensive governance framework, including oversight from the Board of Directors, in place to manage ESG risks and opportunities.

In this year’s report we focused our disclosure on topics most important to stakeholders, including greenhouse gas emissions, water use, biodiversity and human capital management.

Reporting Frameworks and Scope

We report our sustainability performance using internationally recognized reporting standards and frameworks. This includes reporting guidelines, indicators and terminology developed by TCFD , SASB , IPIECA, Global Reporting Initiative (GRI) Standards 2021 , API Template 2.0 for GHG Reporting , and the AXPC ESG Metrics Framework and Template . We provide regular information to the CDP for climate change, Dow Jones Sustainability Index (DJSI) and other organizations that assess the ESG performance of companies. We engage with MSCI, Sustainalytics and ISS E&S QualityScore, all of whom rate us based on publicly available information. We have mapped relevant TCFD, SASB, IPIECA, GRI and UN Global Compact Principles disclosures for stakeholder convenience, and we continue to assess alignment with other emerging frameworks.

The 2021 Sustainability Report covers data from January 1 to December 31, 2021. Notes to our metrics outline the scope and methodologies of our data reporting. The minimum boundary for reporting on social and environmental priorities is assets we operate. Concho Resources and Shell Permian assets performance data are integrated in this report as applicable to align with production reporting for 2021.

Read about our Data Quality and Assurance.