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Responsible governance

Responsible governance

We consider our material issues within four themes, in line with our Business Principles shown below: governance, people, environment, society.

Responsible Governance

#1

We manage risk and seek to continually improve.

#2

We behave honestly, fairly and with integrity.

Behaving responsibly to people

#3

We develop the potential of our people.

#4

We foster a workplace that respects personal dignity and rights, is non-discriminatory and provides fair rewards.

#5

We provide a healthy, safe and secure work environment.

Behaving responsibly towards the environment

#6

We take a precautionary approach to our effect on the environment.

#7

We strive to prevent and minimise our impact on the environment.

Behaving responsibly to society

#8

We seek to make a positive social impact in every area where we work.

#9

We respect the rights and acknowledge the aspirations and concerns of the communities in which we work.

#1 We manage risk and seek to continually improve

Management of Material Issues

Every year, we conduct a thorough materiality assessment to better understand issues that are material to both the business and to our stakeholders, and that we need to manage on an ongoing basis. In doing so, we ensure we are well placed to manage our risk efficiently and to operate with the support of our many stakeholders.

Investment

Increasingly, investors around the world are asking us to demonstrate our responsible working culture and practices before they make investment decisions.

Funding

The cash flow from our production assets funds our exploration and development activity. This self-funding business model enables us to deliver our strategic objectives.

Joint Venture Partners and Funding

We recognise the increasing pressure on our industry to improve performance within a challenging business environment. Volatile oil prices continue to be a principal risk, so working closely with our joint venture partners to allocate capital efficiently is vital.

Global Energy Transition

Climate risk and energy transition is considered a principal risk to our business. During 2020, we examined our business model and actions to date, to improve our strategy and set a clearer path to net zero. The Board actively considers ESG related risk during the year.

Cairn’s ABC Practices

Our zero-tolerance position on bribery, fraud and corruption continues to protect our reputation, our ability to access funding and our impact on people and communities. We have continued to provide training throughout the company in Cairn’s anti-corruption policies and procedures in 2020.

Operations in Sensitive and Complex Locations

We operate in a number of different jurisdictions around the world, each of which presents a unique set of physical and regulatory considerations such as logistics, environment, national legislation and local community context. As part of our new ventures work, understanding often increasingly complex country environments is paramount to operating to best practice standards and managing associated risk accordingly. Wherever we work, we are committed to not operating in UNESCO World Heritage sites.

#2 We behave honestly, fairly and with integrity

Business Partner Alignment on Corporate Responsibility Issues

Working ethically requires our business partners, as well as our employees, to align on CR issues, such as adhering to our Code of Ethics. In 2019, we revised and reissued the Code to all personnel.

Climate Change Policy and Planning

Given the importance of climate change policy and planning to both Cairn and its stakeholders – especially investors – we have assessed our reporting against the Task Force on Climate-Related Financial Disclosures (TCFD) and are committed to complying with its recommendations. We aim to improve communication about our climate change performance and our processes for governance, strategy, risk management and target setting with internal and external stakeholders in a transparent and consistent manner.

Governments’, Authorities’, Contractors’ and Suppliers’ ABC Practices

Maintaining transparent relationships free from bribery and corruption with governments, authorities, contractors and suppliers in the locations where we operate is a high priority for Cairn.

Tax and Payments to Governments Including Fines and Prosecution

We are committed to transparent compliance in the UK, EU and other jurisdictions where we work, many of which are increasingly complex and uncertain from a legislative perspective. We also comply with a number of voluntary standards. We report payments to governments in compliance with EU legislation and as part of our voluntary commitment as a member of the Extractive Industries Transparency Initiative (EITI).

#3 We develop the potential of our people

People Management

We work with key sourcing organisations across the UK to help us find the best people to match our needs and aspirations. We have attracted them to live and work in Edinburgh from across the UK, as well as from Europe and the United States.

Enabling and empowering people to work at their best is the key to being a high-performing organisation, so proactively managing our workforce is critical for us. With a clear focus on business results, our efforts are underpinned by our core values of building respect, nurturing relationships and acting responsibly (known as the ‘3Rs’) and our High Performing Behaviours.

We aim to create positive, collaborative work environments that enable our people to fulfil their potential. We respect personal dignity and rights, and want everyone to feel involved, heard and values.

Learning and Development

Through our ongoing commitment to training and professional development, we support our employees’ career aspirations and make our business more efficient and successful.

We invest in developing our people and each colleague has a personal learning ‘budget’ to help them to fulfil their potential and deliver our objectives.

In 2019, we launched the Cairn Academy which enables colleagues to undertake both mandatory compliance and self-help refresher training.

Supporting a Talent Pipeline

We have a robust approach to managing talent into the organisation through strategic partnering with specialist firms. Our approach to succession planning plays an important part in identifying learning and development opportunities, as well as ensuring our people are deployed in roles and activities where they will add most value to the business while gaining job satisfaction and career development. We have an annual promotions panel to review development and career progression for all roles in the business as well as to identify individuals ready to join our mentoring programme.

#4 We foster a workplace that respects personal dignity and rights, is non-discriminatory and provides fair rewards

Equality and Diversity

For us, diversity and inclusion is about recognising and respecting our different capacities, capabilities and perspectives, and making the most of them.

By fostering a working environment that respects personal dignity, avoids discrimination and provides fair rewards, we recognise diversity in all its dimensions. Our People Management Policy guides how equality and diversity are built into all aspects of recruitment and selection, learning and development, and remuneration and benefits.

We also have policies on disability, equality and diversity; full-time and part-time employees; and harassment. We continue to develop our diversity metrics to promote equality of opportunity, pay and reward on a non-discriminatory basis.

Employee Engagement

We engage with our people through regular staff meetings, monthly ‘pulse’ surveys, twice-yearly Employee Voice Forum meetings, AGMs, staff focus groups and our intranet. Such engagement has led to greater clarity about our strategy, a fresh approach to entering new countries, a revised model for internal communications and team workshops about collaboration.

Employee Voice Forum

In May 2019, we launched our Employee Voice Forum, which gives our people direct access to the Board. There are two meetings each year chaired by a Non-Executive Director and colleagues’ concerns, ideas and suggestions are discussed.

Rewards and Benefits

Every year, we benchmark salaries and benefits against other oil and gas companies. This helps us to continue to offer a competitive package as a way to attract and retain employees. We provide employees with an annual Total Reward Statement (TRS) to demonstrate the total value of their compensation and rewards, as well as an online Rewards and Benefits Guide for UK-based staff, giving them immediate access to relevant information and resources.

#5 We provide a healthy, safe and secure work environment

Workplace Safety

Providing a safe working environment is a core corporate responsibility, and minimising risks to people and the environment is of paramount importance to us. Managing safety hazards involves several safe working procedures, including management visits, audits, a permit-to-work system, toolbox talks and safety drills. We actively engage with contractors to ensure they have effective systems in place. Although we have limited direct exposure to potentially hazardous materials, we still have robust requirements for chemical and waste management in our CRMS, to protect human health and the environment.

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#6 We take a precautionary approach to our effect on the environment

Greenhouse Gas (GHG) Emissions

GHG emissions – mainly from the combustion of fuels such as marine diesel used by rigs and transport vessels – form a relatively modest part of our operational footprint. We monitor and manage the emissions from our operated assets, disclosing them in accordance with industry requirements and standards. Complying with national regulatory requirements across our global operations is also an important priority.

Around 95% of the GHG emissions associated with our operations occur in the supply chain which largely limits our influence to the selection of energy-efficient contractors, assets and equipment, and their carbon and energy management during projects.

During 2020, we also endorsed the World Bank’s Zero Routine Flaring initiative, which seeks to phase out routine flaring by 2030.

In absolute terms, our GHG emissions vary with the duration and nature of our projects during the year. Compared to the previous year, 2020 was a year of low operational activity for Cairn.

In Mexico, operations largely ended in March, other than post-drilling, sampling and wellhead recovery. We also completed the sale and divestment of our interests in Senegal. This meant that our total GHG emissions decreased to 24,967.35 tonnes CO2e in 2020, while normalised emissions also fell to 35.99 tonnes CO2e per 1,000 hours worked.

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#7 We strive to prevent and minimise our impact on the environment

Protecting Biodiversity and the Environment

We have always recognised the risks to the habitats, ecosystems and species that sustain our planet, and their importance to communities relying on them. We work hard to minimise the biodiversity risks associated with both operated and non-operated opportunities and commit not to operate in World Heritage sites.

Where our current or potential activities might affect critical habitats, protected areas or the welfare of communities relying on ecosystem services, such as Suriname and Mexico, we undertake environmental and social assessments of their potential biodiversity impacts. We then work with technical specialists, government departments, NGOs and other local stakeholders on any mitigation activities required.

Our Biodiversity Framework is set out in our CRMS, and we use the latest industry guidance to integrate biodiversity into our CR management processes. All relevant commitments are covered by our Business Principles and our Environment Policy, which was reviewed and reissued globally in October 2020. We also include biodiversity aspects to be included in investment proposals to identify critical risks before any work commences.

Environmental Baseline Surveys

Environmental baseline (EBL) surveys help us to define existing biodiversity, environmental and other conditions near our activities, using techniques including photography, seabed sampling and physicochemical analysis. As well as providing data for assessing our potential impacts on habitats and developing mitigation measures, EBL surveys also help to determine the extent of existing damage arising from the previous activities of others. Repeating these surveys on entering and exiting a location helps to delineate our impact and avoids liability for impacts caused by others.

We conducted no new baseline surveys in 2020 as most planned operational work was deferred, in part due to COVID-19.

#8 We seek to make a positive social impact in every area in which we work

We seek to mitigate and negative impacts and enhance the positive benefits that arise from our operations, as well as share the value generated by oil and gas activities.

Social and Economic Impacts and Opportunities

Our CRMS requires us to evaluate the potential social risks and impacts of any major activity we undertake using a Social Impact Assessment (SIA), the scope and nature of which depends on the local context and regulations. SIAs are often performed as part of a combined Environmental and Social Impact Assessment (ESIA).

We also use the UN Sustainable Development Goals as an additional framework for understanding environmental, social and governance risks and opportunities, and developing Impact Benefit Plans.

We develop a social management plan for each project to mitigate any negative impacts and enhance the positive benefits identified. In this way, we can assess and track the benefits and impacts together, with the aim of providing a positive overall benefit.

#9 We respect the rights and acknowledge the aspirations and concerns of the communities in which we work

Local Community Stakeholders

Understanding the concerns of the communities in which we work, and meeting their needs and aspirations, are key to mitigating the possible impacts and enhancing the benefits of our activities and supporting their community development.

For each project, we develop a stakeholder engagement plan, which identifies key stakeholders and their interests and enables community feedback to inform our understanding. This includes monitoring media and civil society commentary, stakeholder enquiries, and community, government and local authority engagement.