Oil rig at sea

Materiality 

We continually identify Corporate Responsibility (CR) priorities to guide our CR activities as the business develops.

As in 2014, our CR priorities were re-evaluated so as to reflect the topics that matter most to the business and our stakeholders. We conducted reviews for the half-year update report and for the 2015 Annual Report. Findings showed the topics perceived to be most important to us and our stakeholders and were used to inform the development of our 2016 CR objectives.

How we identify our CR priorities

The process by which we identify these priorities is known as a materiality assessment process, in which CR issues are plotted in a matrix showing their significance in broad classifications of ‘high’, ‘medium’ or ‘low’.

Materiality assessment methodology

Materiality flow chart

Our ‘CR Materiality Methodology' is based on the AccountAbility APS model (an internationally recognised framework developed by AccountAbility) and helps us conform to the latest Global Reporting Initiative (GRI) sustainability reporting guidelines, known as G4, which Cairn adopted successfully in 2014.

We improved our approach to understanding stakeholder perspectives at the end of 2015 by conducting focused interviews with a cross section of stakeholders. This included representatives from: investors and finance organisations; business partners and peers; contractors and suppliers; communities; employees; industry organisations and agencies; non-governmental organisations; academia; and government and regulators. Despite inviting several regulators and government representatives, none felt it was appropriate to participate. More detail on the comments made by stakeholders and our responses to these is available at Stakeholder views on materiality.

The resulting materiality matrix is given below.

Materiality matrix

Note to diagram: the importance to Cairn is plotted on the vertical axis of the materiality matrix. The importance to stakeholders is plotted on the horizontal axis. The importance to Cairn reflects the probability and impact of a topic in line with our risk assessment criteria. The importance to stakeholders uses a number of criteria with increasing impact. In this way ‘preventing major accidents’ has a low probability but high impact when using Cairn’s risk criteria, giving a significant rating; however, it is classified as a 'high' against the stakeholder concern criteria, therefore, when plotted in the matrix it is a ‘high’ material issue.

A brief description of how things have changed over the last year appears in the table of movements below.

Movements in materiality assessment from end 2014 to end 2015

  Importance to Cairn Importance to Stakeholders  

Preventing major accidents

Preventing major spills

High importance to Cairn  

We have increased the materiality assessment for the prevention of major accidents including major spills as we increase the level of operations through our exploration and appraisal programme offshore Senegal.

Compliance with our business principles on Cap Boujdour Low importance to Cairn High importance to stakeholders

Our engagement activity indicated that the management of human rights was significant to stakeholders.

Initial drilling operations in Cap Boujdour concluded in early 2015; but we will continue to monitor the situation in anticipation of potential future seismic operations.

Non-operated joint ventures and international investments

Sustainable project funding

High importance to Cairn  

The importance of these issues to Cairn has increased, reflecting the importance of delivery of development projects in the North Sea and the continuing financial capability of industry companies through a depressed period for the industry.

Climate change High importance to Cairn  

The importance of climate change has increased, in recognition of the Paris agreement made at the UN Intergovernmental Panel on Climate Change (IPCC) Conference of the Parties (COP 21) at the end of 2015, and the importance of emissions management and controls to any future production.

Workforce

Succession planning

Low importance to Cairn  

The importance of these issues to Cairn has decreased as the organisation has adjusted to the rationalisation that occurred in 2014. Matters relating to the workforce and succession planning do, however, remain in focus in anticipation of the potential organisational requirements associated with the progress of the Senegal project.

Transparency   Low importance to stakeholders

The issue of tax transparency was regarded as less important by stakeholders, as it was being managed. We continue to regard the issue to be of high importance to the business.

Political uncertainty   High importance to stakeholders

Political uncertainty affecting our business activities was of medium significance to stakeholders.

Net social and economic benefit   High importance to stakeholders

The net social and economic benefit of our activities was significant to stakeholders.

Our key CR topics

At year end, seven material issues were identified as being of ‘high’ importance to both our stakeholders and to Cairn.

Supply chain and contractors

Ensuring that our supply chain and contractors operate safely and responsibly remains a very important issue to Cairn, as is delivering locally and maintaining an ethical social performance (see Supply chain).

Preventing major accidents

Our key focus is avoiding accidents, and we implement rigorous risk management during the planning and execution of activities (see Asset protection and major accident prevention).

Preventing major spills

Preventing spills is critically important and a key feature of our risk-mitigation programme (see Major accident and spill prevention).

Operational environmental footprint

Our operational environmental footprint consists of a number of elements that are important to us and our stakeholders. We seek to manage our activities effectively to avoid and minimise impact (see Environment).

Transparency

We add value to stakeholders in a number of ways and making sure this is transparent is a very important issue both to us and to our stakeholders. Cairn has been a Participating Company in the Extractive Industries Transparency Initiative (EITI) in September 2013 (see Transparency).

Non-operated joint ventures and overseas investments

Delivering our development projects in the North Sea safely and on schedule is important to the sustainable performance of the company (see Non-operated activities and international investments).

Sustainable project funding

We believe that CR performance is integral to maintaining sustainable project funding by promoting cost-effective operational performance and managing societal and reputational risks to the business (see Sustainable project funding).

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