Walking the talk on energy transition - November 2018 - Repsol
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Walking the talk on energy transition November 2018
Disclaimer
ALL RIGHTS ARE RESERVED
© REPSOL, S.A. 2018
Repsol, S.A. is the exclusive owner of this document. No part of this document may be reproduced (including photocopying), stored, duplicated, copied,
distributed or introduced into a retrieval system of any nature or transmitted in any form or by any means without the prior written permission of
Repsol, S.A.
This document contains statements that Repsol believes constitute forward-looking statements which may include statements regarding the intent,
belief, or current expectations of Repsol and its management, including statements with respect to trends affecting Repsol’s financial condition,
financial ratios, results of operations, business, strategy, geographic concentration, production volume and reserves, capital expenditures, costs
savings, investments and dividend payout policies. These forward-looking statements may also include assumptions regarding future economic and
other conditions, such as future crude oil and other prices, refining and marketing margins and exchange rates and are generally identified by the words
“expects”, “anticipates”, “forecasts”, “believes”, estimates”, “notices” and similar expressions. These statements are not guarantees of future
performance, prices, margins, exchange rates or other events and are subject to material risks, uncertainties, changes and other factors which may be
beyond Repsol’s control or may be difficult to predict. Within those risks are those factors and circumstances described in the filings made by Repsol
and its affiliates with the Comisión Nacional del Mercado de Valores in Spain and with any other supervisory authority of those markets where the
securities issued by Repsol and/or its affiliates are listed.
Repsol does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that the
projected performance, conditions or events expressed or implied therein will not be realized.
Some of the figures included in this document may be considered Alternative Performance Measures (APM) in accordance with the guidelines of the
European Securities and Markets Authority (ESMA. Further information on APMs (definition, purpose, reconciliation with financial statement figures) may
be found on Repsol’s corporate Website.
This document does not constitute an offer or invitation to purchase or subscribe shares, pursuant to the provisions of the Royal Legislative Decree
4/2015 of the 23rd of October approving the recast text of the Spanish Securities Market Law and its implementing regulations. In addition, this
document does not constitute an offer to purchase, sell, or exchange, neither a request for an offer of purchase, sale or exchange of securities in any
other jurisdiction.
The information contained in the document has not been verified or revised by the Auditors of Repsol.
2
Index 01. Company overview and strategy 02. Sustainability as part of Repsol’s DNA 03. Our commitments on climate change 04. Low Carbon Business 05. Corporate Governance 06. Annexes
Company
Overview
01
01 Company overview
Repsol: a unique, Integrated Global Position
Core businesses:
Upstream and
Downstream
~700 kboe/d
production
~2.4 billion boe
proved reserves1
1 Million bpd
refining capacity
~2.6 Million tons of
base chemicals2
capacity
Upstream Downstream Both ~4,700 service
stations
1. As of 31/12/2017. 2. Includes 1.2 Million tons of Ethylene and 1.4 Million tons of other base Chemicals 5
01 Company overview
Delivering value growth through the cycle
Note: CFFO (Cash Flow from Operation) = EBITDA +/-Working Capital variation + Dividends from affiliates -taxes paid -abandonment cost and others
In this document, economics shown under $50/bbl Brent and $3/MBtu HH flat in the period 2018-20, although it is not Repsol´s price deck 6
01 Company overview
Key metrics to 2020 @ $50/Bbl Brent flat
Focusing on financial discipline with ROACE > WACC, maintaining investment grade and
keeping our zero accidents ambition based on operational excellence
Note: EPS considering Adjusted Net Income.
1. 2017 values adjusted to $50/bbl Brent scenario and to exclude Spain extraordinary tax refund effect. EPS in 2017 €1.6/share without adjustment 7
Sustainability as
part of Repsol’s
DNA
02
02 Sustainability as part of Repsol’s DNA
Repsol’s
commitment to • Repsol has implemented integrated reporting which also includes disclosure in-
line with the Task Force on Climate-related Financial Disclosures (TCFD)
Sustainability is
• Sustainability Committee established on May 27th 2015
integrated in the
company’s strategy, • Policy on Sustainability approved by the Board of Directors on December 2015
and a New Sustainability model approved by the Corporate Executive Committee
and supported by on October 2016
Senior Management • Sustainability Global Plan for the whole company approved on June 2017. It
establishes specific goals for 2020
• Existence of a Technology Development, Resources, and Sustainability Division,
reporting directly to the CEO
• Participation of the Senior Management in setting strategic objectives for social,
safety and environmental out to 2020
• Establishment of objectives linked to social, safety and environmental targets,
for all employees with variable remuneration (weight between 10-20%)
• Global and Local Sustainability plans aligned with the consecution of the
Sustainable Development goals (SDG)
9
02 Sustainability as part of Repsol’s DNA
Repsol’s Global Sustainability Plan: main axes
Safe operations
• Our ambition: zero Accidents
• Embedded safety culture
• Strict asset integrity procedures
People Environment
• Our ambition: to achieve and maintain • Implementation of circular economy
solid relationships with communities projects
• Policy on respect for human rights • Excellence in spill prevention and
based on the UN Guiding Principles on response
Business and Human Rights • Optimized water & waste management
• Objective: proportion of women in
leadership positions to 30% by 2020
Innovation and Technology Climate Change
• Promoting innovation and • Objective: reduction of 5.2 million tons
development CO2 emissions by 2020
• Investing in Start ups and new • Achieved reduction of 4.5 million tons
Technologies : 85 M € committed for CO2 by 2017
the period 2016-2020 • Already investing in Low carbon
Ethics and Transparency business
• Objective: 30% of women on the Board of
Directors by 2020
• New Code of Ethics and Conduct approved
following Talisman acquisition
• Anticorruption policy
• No presence in Tax havens 1002 Sustainability as part of Repsol’s DNA
Safe operations
Our ambition: zero accidents
We have established targets to reduce PSIR 1 and occupational safety (LTIFR2 and TRIR3)
No fatalities in 2017
Occupational Safety Process Safety Incident Rate1
7
6 2012 2013 2014 2015 2016 2017
5 Tier 1+2 123 93 58 46 32 25
4 Tier 1 24 16 10 4 5 8
LTIFR
3
TRIFR Tier 2 99 77 48 42 27 17
2
N hours 31.016.119 34.638.711 37.241.382 45.526.525 49.485.180 40.418.251
1
0 PSIR Tier 1+2 4.0 2.7 1.6 1.0 0.65 0.62
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Systemic Risk Management
• Risk assessment through the entire safety process lifecycle to prevent impacts on people,
environment and assets
• Operations control through work permits and identification of critical elements of our facilities
Focus on Process Safety to prevent major industrial accidents: Smart Keys program
• Working with 2015-2020 specific goals
(1) PSIR (Process safety incident rate): number of accidents from Tier 1 and Tier 2 processes accumulated over the course of the year, for every million hours worked.
(2) LTIFR (Lost Time Injury Frequency Rate).
(3) TRIR (Total Recordable Incident Rate). 1102 Sustainability as part of Repsol’s DNA
Safe operations
Our target: Embedded safety culture
Progress Next steps
Culture Project:
• Developed our own evaluation methodology • Make headway with the implementation of the
on safety culture, aiming to identifying Company's Crisis Plan by carrying out a crisis
strong and weak points. The results enable management drill exercise in the Downstream
the development of improvement plans to area
achieve the same level of safety culture for • Improve the quality of our incident investigations
the whole company • Publish the White Paper on Safety Culture
• Nine diagnostics have been carried out so far
1
• Workshops have also been conducted in
Norway, Canada and the US
Safety and environment training:
• Applying both to employees and contractors
(1) Bolivia E&P business, LPG business in Spain, petrochemical business in Portugal (Sines facilities) Cartagena, A Coruña, Tarragona Puertollano refineries, Repsol Technology Center 1202 Sustainability as part of Repsol’s DNA
Environment
Our ambition: neutral environmental impact of natiral resource management
Circular Economy: Repsol’s strategy on Circular Economy was approved by the CEO on
December 12th, 2016
Progress Next steps
1. Broadcasting of the Circular Economy Strategy
2. Network generation: Repsol works in the development of projects that
• Collaboration with 46 external companies that can contribute already exist within the Initiative Catalog. We are
to the definition and start-up of projects searching for innovative projects designed for
• Active participation in national and international work groups efficient use of natural resources that meet
on Circular Economy (CEOE1, Chamber of Commerce, CEPS2, criteria of maximum efficiency, maximum
World Economic Forum, European Commission) transparency and the least environmental impact
• Establishment of an internal network with experts of different
businesses and areas from the Company (accounting more than
70 people)
3. Creation, promotion and execution of projects:
• Generation of new circular projects in the fields of water, waste
and raw material
• Execution of 36 projects with external partners
• Preparation of circular initiatives catalog (CIC) with 161
initiatives for working in the coming years
1.- Confederación española de organizaciones empresariales
2.- CEPS: Fundación Centro de Estudios Políticos y Sociales 1302 Sustainability as part of Repsol’s DNA
Environment
Water Excellence in spill prevention and response
Repsol has defined a water management improvement Robust safety management minimizes the probability and
action plan for 2015-2020 that is specific to each consequences of spills
installation
• Working in three phases: i) prevention of spills, ii) early
• Continue working on the Repsol Water Tool (RWT)1 detection and iii) emergency management
• Implementation of Repsol Water tool in legacy Talisman • Entered into agreements with different service providers: Oil
Assets Spill Response OSRL (to collect the spillage and recover the
• Finding alternatives to guarantee water supply affected area) and Wild Well control (installation of capping
• Preparing the White Paper on Water in Downstream stack systems to control the outflow of hydrocarbons in the
operations with a view to improving water management event of a spill)
in our facilities
Waste Biodiversity and Ecosystem services
Working to improve waste management through the Prevention and minimization of any negative environmental
lifecycle of our processes impact in all our operations
• Company waste map redesigned • First O&G company to put into practice the IPIECA2 and IOGP3
• Working to minimize the amount of waste sent to the management framework on biodiversity and ecosystem
landfill services (BES)
• Improvement goals in E&P through the implementation • Ecosystem Services Reviews carried out in Peru (Block 57) and
of the company's EPPs: 100% of the Environmental Colombia, in collaboration with the Fauna and Flora
Performance Practice (EPPs) planned were International NGO
implemented • Inclusion of ecosystem services criteria into the operational
management system.
1.- Repsol Water tool incorporates aspects of the Global Water tool adopted by IPIECA (Global Oil and Gas Industry Association for Environmental and Social Issues and Local Water Tool
,Adopted by GEMI (Global Environnemental Management Initiative). 2.- IPIECA: Global Oil and Gas Industry Association for Environmental and Social Issues. 3.- IOGP: International
Association of OIL& Gas producers 1402 Sustainability as part of Repsol’s DNA
Ethics and Transparency
Our ambition: No cases of corruption in the activities carried out by the Repsol Group
Ethics and Conduct Ethics and Compliance Crime Prevention Model
Regulation Channel
• A new Code of Ethics and • Allows employees and third • A formal framework of
Business Conduct was parties to ask questions and regulations, procedures and
approved by the Board of report concerns about the Code controls, to monitor and
Directors following the of Ethics and Business Conduct control the risks of crimes
acquisition of Talisman and Crime prevention model being committed
Company. without fear of retaliation
• In 2017: a Crime Prevention
• Applies to all Repsol directors, • It is administered by an Manual was designed, to
executive personnel employees independent company (NAVEX explain what conduct is
and contractors Global) and it is available 24 prohibited, and what Repsol
hours a day, seven days a week, expects from all its employees
• 2017 objective: mandatory
by telephone, online and in
training to all employees in
different languages
Ethics and Conduct regulation
• 45 concerns received during 2017
1502 Sustainability as part of Repsol’s DNA
Ethics and Transparency
Our ambition: No cases of corruption in the activities carried out by the Repsol Group
Ethics and Compliance Chief Compliance Office Anti-corruption policy
Committee
• It’s duty is to manage the • Strengthening the role of • It enshrines the company’s
compliance of the Repsol compliance through the commitment to carrying out all
Group’s Ethics and Conduct appointment of a Chief its activities in accordance with
Code Compliance Officer in the CD current legislation wherever it
legal affairs and CCO operates
• it is also Repsol’s Crime
Prevention Body for the • Reinforcing our compliance • Anticorruption policy applies to
purposes of the Crime commitments contributes to employees, contractors and
Prevention Model the strategic objectives of business partners
efficiency and control of the
• Repsol rejects all forms of
Company
corruption and will apply a
zero-tolerance approach in
respect to any breach of this
policy
1602 Sustainability as part of Repsol’s DNA
Ethics and Transparency
Our ambition: Achieve public recognition as a
responsible and transparent company in tax matters
1 Responsible compliance 4 Prevention of significant tax risks
• Application of the Spanish Code of Good Tax • Incorporation of tax risks to Group’s comprehensive
Practices risk management system
• Streamlining of Group’s corporate structure, not • Reporting to Board of Directors of tax strategy and
using tax havens or non-transparent structures management during year. Submission to approval of
• First submission of country-by-country report (CBC) Board of Directors of any transaction which may
to the Spanish tax agency (AEAT) entail a special tax risk
2 Tax efficiency 5 Transparency
• Application of tax benefits in accordance with letter • Publication of tax payments by country
and spirit of law and accessible to all economic • Leaders in Spain in transparency and tax
operators (R&D deductions, freedom of amortization, responsibility
capitalization reserve, etc.) • Incorporation of tax objectives to Repsol Global
Sustainability Plan
3 Cooperative relations • Active dialogue with NGO’s
• Participation in joint work forums with authorities
(Spain, Portugal, Singapore, United Kingdom,
Netherlands)
• Members of tax forums of the EU, OECD and the UN
1702 Sustainability as part of Repsol’s DNA
People: respect for Human Rights and community relations
Our ambition: To establish solid relationships based on recognition, trust, mutual
respect and shared value through active dialogue with communities
Policy on Respect for Human • Based on the UN Guiding Principles on Business and Human Rights “Protect,
rights and Community Respect and Remedy”
Relations
Community Relations and • Global Framework and management system as a result of the integration
Human Rights Management between Repsol and Talisman, based on leading International Standards (IFC1,
UNGP2, OECD3 guidelines)
Framework
• 100% of significant operations manage opportunities and risks by taking into
Risk management/ Impact account at least one of the following mechanisms: 1) development mechanisms,
Assesments 2) impact assessments, 3) participation of stakeholders
• All impact assessments performed in 2017 included social and human rights
issues
• In 11 especially important countries in social matters, 11 workshops were
conducted, to shore up the management of risks, impacts and social
opportunities, and to consolidate a network of professionals who manage these
relations with communities
1.- IFC: International Finance Corporation ( World Wide Group ) 2.-UNGP: United Nations Guding principles on Business and Human Rights 3.-
OECD: Organisation for Economic Co-operation and development 1802 Sustainability as part of Repsol’s DNA
People: respect for Human Rights and community relations
Our ambition: To establish solid relationships based on recognition, trust, mutual
respect and shared value through active dialogue with communities
• Grievance Mechanisms established in most of our projects, to allow local
Community Grievance communities, contractors and other stakeholders to communicate any queries
Mechanisms related to our operations
• Diagnosis of existing Community Grievance Mechanisms in assets ( Bolivia and
Peru)
• In 2017, the Company received 82 grievances related to human rights through 14
grievance mechanisms in 7 countries. Some 68 were resolved and 14 are still
being handled
• Signatories to the Voluntary Principles on Security and Human Rights initiative
Voluntary principles on on 2014
Security and Human Rights • Implementation of the action plan launched in 2015, to be applied in all countries
• Internal audits carried out in Bolivia, Ecuador, Peru and Venezuela to measure the
evolution of the implementation
• 98% of contracted security personnel trained in human rights
1902 Sustainability as part of Repsol’s DNA
Community relations and Human Rights Management Framework:
respecting Indigenous Rights
• Presence of Indigenous communities in Bolivia, Canada, Colombia, Ecuador, Peru and US
Bolivia, Canada,
• Repsol recognizes and respects the unique nature of indigenous, tribal and aboriginal
Colombia, Ecuador, peoples and their rights, in accordance with existing legislation, and the obligations
Peru and US established by International Labour Organization (ILO) Convention 169, whether incorporated
into the national legislation of the countries in which we operate or not
• First O&G company operating in Latin America with an official policy explicitly supporting
indigenous rights defined by ILO Covenant 169, including right to free, prior and informed
consultation (FPIC). Recently, a new Community relations policy has been approved, based
on the same principles than the previous one
• Repsol establishes solid relationships with indigenous communities in the area of influence
of our projects and assets, based on principles of respect, cultural sensitivity, integrity,
responsibility, transparency and good faith
• Repsol carries out human rights impact assessments as part of the due diligence process
and develops community grievance mechanisms adapted to distinctive features of
indigenous peoples
• Repsol performs with special preventive measures, such as anthropological contingency
plans, in operations close to areas inhabited by indigenous peoples living in voluntary
isolation
• Repsol leads this issue in the O&G Sector: Repsol co-chairs the IPIECA1 Community
Engagement & Indigenous Peoples task force since 2014 and participates in the ARPEL2
Indigenous Peoples Working Group
1.-IPIECA: Global Oil and Gas Industry Association for Environmental and Social Issues
2.-ARPEL: Asociación regional de empresas del sector petróleo, Gas y Biocombustibles en Lationoamerica y el Caribe 2002 Sustainability as part of Repsol’s DNA
First global agreement signed between UNDP and a company from
the oil& Gas sector
Repsol and the • The global agreement facilitates cooperation for a period of two years
united nations in close to 20 countries where both entities operate
development
programme will • Community development and the protection of human rights will be
collaborate to promoted through local economic and social progress, along with
promote sustainable support for environmental protection
development
• The two organizations will engage local communities to define their
priorities for sustainable development; support initiatives that ensure
this development; and share information and experiences in order to
contribute to achievement of the Sustainable Development Goals
(SDGs)
2102 Sustainability as part of Repsol’s DNA
Innovation and technology
Repsol corporate venture capital fund
Capture Innovation in Start-ups
• A five-year funds of investment in start-ups was established
in 2017, with the objective of enabling the early incorporation
of new technologies and business models to the activities of
the company
• 85 M € committed 2016-2020 period. 10.5 M € already invested
• Objective: Investing in new innovative companies and key
strategic business in order to speed up the development and
implementation of new technologies and business models on
behalf of Repsol. These activities complement the Company's
internal R&D capacities
• A reputational due diligence of the start up and its
stakeholders is performed prior to any acquisition, to confirm
its alignment with good business practices
22Our position on
climate change
0303 Our position on climate change
At Repsol we believe that two global goals We are convinced that innovation and technological
have to be pursued: development are essential for ensuring reliable and
sustainable energy supply in the long term
• To fight against climate change and
• To provide access to affordable energy in order to
support economic growth and development
Carbon Capture, Utilization and Storage is a key
element to hold the increase in the global average
temperature well below 2ºC above pre-industrial
We set up and deploy ambitious energy efficiency levels
programs to reduce energy consumption and GHG Repsol supports the deployment of these technologies,
emissions as one of the key elements of our strategy working to allow projects to be technically and
These programs pursue long- term targets which have economically feasible, sustainable and socially acceptable
been made public in order to facilitate their progress by
the stakeholders.
We consider natural gas as the most cost effective
solution to promote a structured transition to a low
emissions future, specifically in the power
generations field
In this sense, our upstream portfolio evolves towards
greater percentage of gas versus oil ( 63% in production
and 74% in reserves)
2403 Our position on climate change
Governance
Sustainability Committee created in 2015
The Board of Directors, at the proposal of the At least twice a year, or as often as necessary, the CEC
Sustainability Committee, approves the strategy for and the Sustainability Committee review information
sustainability and, specifically, for climate change on execution of the climate change and CO2 emission
strategy
The Sustainability Committee’s duties include GHG emissions reduction targets weight between
analyzing the expectations of the Company’s 5% and 20% of the targets of the business of the
stakeholders and reporting them to the Board, and Company, and have a direct impact on the variable
orienting and monitoring the Company’s sustainability remuneration of employees up to the Executive
objectives, action plans and practices Directors
Strategic decisions on climate change and lines of
action are set at the highest executive level. The
Corporate Executive Committee (CEC) has direct
responsibility in the management of matters related
to climate change. The CEC also approves the
multiyear objectives and annual targets for reduction
of greenhouse gases (GHG)
2503 Our position on climate change
Strategy
01 We promote the role of Natural Gas 03 Energy Efficiency
• 63% of our production and 74% of our reserves are gas • Our objective: to reduce 2.1 million tons of CO2 annual run
• Committed to mitigate methane emissions associated with rate by 2020 (as part of our energy efficiency program
our production 2014-2020)
• LDAR (leak, detection and repair) programs implemented to • 4.5 Mt CO2 have been reduced since 2006. Achieve
detect and repair methane leaks reduction of 5.2 M tons CO2 by 2020
• Endorsed United Nations Climate and Clean Air Coalition • 37.5 M€ invested in reduction actions in 2017
O&G Methane Partnership initiative • Endorsed the World Bank Zero Routine Flaring by 2030
• Working with OGCI partners to reduce methane emissions in Initiative
0.25% by 2025 • Repsol continues implementing a global energy
• Participating in different engagement initiatives with management system (EnMS) under ISO 50001 standard: 8
investors: PRI Initiative on Methane Emissions Institutional of our main facilities and a multicenter business certified
Investors Group on Climate Change (IIGCC), Climate Action so far
100+ • Repsol has been the first Oil& Gas company issuing a
• Members of Methane Guiding Principles Roundtable Green Bond to invest in energy efficiency measures
02 Carbon Capture, Use and Storage (CCUS) 04 Renewable energy
• Working with our OGCI partners on pathways for • Investing in Sustainable mobility
marketing commercialization, capture technologies, cost • Development of advanced biofuels projects to reduce CO2
reduction and availability of storage capacity • Strategic Update 2018-2020: 2.5 Bn capex committed to
• Participate in some investments in the OGCI Climate invest in low carbon business
Investments
2603 Our position on climate change
Strategy
• Repsol supports worldwide carbon pricing policies as a global policy
Carbon pricing as
framework that will provide our businesses with a clear roadmap for low
a company tool to emissions future investments
improve resilience
in a low emissions
future • In any carbon pricing scheme or climate policy implemented by
governments industry, competitiveness has to be a central piece
• Carbon price will ensure the resilience of our portfolio, encouraging
energy efficiency and low emission technologies
• Repsol includes a carbon pricing in their strategic plans:
2018 2025
25
USD/ ton CO2
40
USD/ ton CO2
2703 Our position on climate change
Strategy
Scenario Analysis
Our ambition: to commit to 2 degrees C Scenario
There is no single pathway to a low emission future. Finding these pathways is a task for many actors from all
sectors of society over the short, medium and long term. Nevertheless, three elements are common to most of
the projected pathways:
• Improving efficiency and saving energy: The most cost effective method of reducing GHG
emissions is to save energy
• Reducing emissions from power generation: In the near term, one of the most cost-effective
and impactful steps that society can take is to switch from coal to gas. In this sense, at
Repsol we are well positioned with respect to our competitors. 63% of our production and
74% of our reserves are gas
• Reducing emissions from remaining end-use sectors. Alternatives to electrification include
hydrogen, biofuels, industrial CCUS and bioenergy with CCUS
Scenario analysis is one of the recommendations of the Task Force on Climate- related financial
disclosure (TFCD)
2803 Our position on climate change
Risk Management
Repsol operates in areas with strict legislative requirements for energy and
carbon. Pursuant to the Paris Agreement, countries’ commitments will have
Climate change is
a significant impact on climate policies.
other variable to
be taken into Legislative risks (1)
account in the • In Europe, the 2020 Energy and Climate package that includes a number of key directives,
notably the Directive that regulates the Emissions Trading System (EU-ETS)
strategic • The 2020 Energy and Climate package also includes the Directive on Renewable Energies that
decision-making will involve, among other things, incorporation by the year 2020 of up to 8.5% of biofuels in
automotive fuels. This percentage will be increased by the additional incorporation of the
Fuel Quality Directive
• Legislation on the promotion of clean and efficient road transport vehicles: light vehicles
have to reduce their emissions from 130 gr of CO2/km in 2015 to 95 gr of CO2/km by 2020
• Outside Europe, (Canada):implementation of the Pan-Canadian Framework on Clean Growth
and Climate Change, in which the federal government has set a carbon price pathway that
will reach CAD$50/ton in 2022.
• European Commission has also introduced the 2030 Energy and Climate package with more
demanding regulations on EU ETS:
o by 2030: at least -40% below 1990 GHG levels
o by 2050: EU leaders have committed to reducing emissions by 80-95%
o Energy Efficiency (target for the EU for 2030 of 32.5% with an upwards revision clause
by 2023)
o Renewables (overall EU target for Renewable Energy Sources consumption by 2030
to 32%
• Furthermore, it mandates member states to require fuel suppliers to supply a minimum of
14% of the energy consumed in road and rail transport by 2030 as renewable energy)03 Our position on climate change
Risk Management
Legislative risks (2)
Climate change is
other variable to • The European Commission is preparing an update of its low-carbon economy
roadmap for 2050, acknowledging that the bloc’s current target of cutting
be taken into greenhouse gas emissions at least 80% by mid-century are insufficient
account in the
• Legislation on the promotion of clean and efficient road transport vehicles:: light
strategic vehicles have to reduce their emissions from 130 gr of CO2/km in 2015 to 95 gr of
decision-making CO2/km by 2020. Additionally, there is a new target with a reduction of 35% by 2030
with a sub-target of -15% by 2025, as compared to the emission limits valid in 2021.
• Outside Europe, (Canada):implementation of the Pan-Canadian Framework on Clean
Growth and Climate Change, in which the federal government has set a carbon price
pathway that will reach CAD$50/ton in 2022.
Physical Risks
Working to minimize physical risks and the magnitude of potential impacts of climate change in
natural resources, facilities and in the climate phenomena to which the Company is exposed:
drought, flooding, temperature change, etc
Reputational Risks
Establishing how changes affect consumer behavior and other variables that may affect the
company03 Our position on climate change
Metrics and objectives
€37.5
million Invested in reduction
1.4 Mt
GHG avoided between 2014 and
4.5 Mt
GHG avoided between 2006 and
actions in 2017 2017 2017
3103 Our position on climate change
2018- 2020: Thriving in the energy transition
Repsol has the ambition (~40% by 2040) to reduce our carbon
intensity and fight against climate change:
01 Repsol uses the ratio tCO2/GJ 03 Paris Agreement ambition to 04 Repsol aligned with the 40%
to measure its 2ºC path reduce carbon intensity 40% reduction through key levers
progression by 2040
Repsol has a clear positioning tCO2/GJ Key levers for CO2 emissions
and values aligned with climate (Base 100) reduction:
change - 40%
• Natural gas shift
• Supply society with access to energy • Energy efficiency
• Be part of the solution in the fight • Methane emissions reduction
against climate change
• Minimizing flaring
Objective: Supply the energy • Carbon capture, utilization and
needed with a reduced impact to storage
environment • Non fuel uses (chemicals)
• Increase biofuels
02 Ratio used: carbon
• Increase use of renewables
intensity (tCO2/GJ)
2016 2040 • Natural sinks
• Hydrogen & others
Repsol has a 2020 reduction target for carbon intensity of 3%
Note: 40% tCO2/GJ reduction needed to achieve the 2 degrees C objective from Paris Agreement
Source: Repsol, IEA 32Low Carbon
Business
0404 Low Carbon Business
Ambition to develop a new operated position in low carbon business
by swapping GNF
Repsol is swapping a €5-6B exposure to … To an operated and synergistic position
a medium carbon businesses through in low carbon businesses
GNF…
• Operated business with full synergies
Gas Natural Fenosa
• Leveraging previous experience in low carbon
• Non-operated businesses, markets and know-how
• No synergies exploited • Focused business mix: wholesale gas, retail G&P
• 85% regulated business in 2017 EBITDA with a mix and low carbon generation
of high/low carbon generation
Ambition
Be players in the future energy transition, fostering sustainability and energy efficiency
Creating profitable Enhancing capabilities to Reducing emissions in our
low carbon thrive in energy operations and products
businesses transition
3404 Low Carbon Business
Roadmap by 2025
Low carbon
Wholesale Gas Retail G&P generation
Top capability Leverage our industrial self Strong brand and ~10M clients Technical capabilities and
consumption as the largest gas base with direct contact experience in managing large
consumer in Spain scale projects
Roadmap • Create a successful wholesale • To become a relevant Spanish • Develop a strong position in
gas business, ensuring a low carbon multi-energy Spain achieving a low carbon
competitive gas supply retailer integrated business
• Developing new business • Progressively sophisticate our • Technological vocation
through gas flexibility offer including advanced oriented to solar, wind, CCGT
energy services and solutions and other low carbon
• Deliver a competitive gas offer
technologies
for our future retail clients
• Diversify in emerging countries
that yield higher returns
Targets by >15% >5% 2.5M ~ 4.5 GW
2025 Market share1 Market share2 Clients3 Capacity
Investments in low carbon businesses with IRR above 10%4
1. Spain market share including our refineries' consumption; 2. Spain market share in number of clients; 3. Not adjusted for dual clients; 4. Assuming an average
financial leverage of ~50% 3504 Low Carbon Business
Viesgo: strengthening Repsol’s position as a multi-energy supplier
Transaction data Generation assets acquired
• Valued at €750 million Hydro
• 2,350 MW installed capacity 699 MW
• ~ 750,000 retail customers Combinned
cycle
1.648 MW
Advancements on Strategic Plan objectives
After the transaction 2025 objectives
Retail gas &
electricity business
2% 0.7M >5% 2.5M
Market share2 Clients2 Market share1 Clients2
Low carbon ~ 2.9 GW ~ 4.5 GW
generation Capacity Capacity
Investments in low carbon businesses with IRR above 10%3
1. Spain market share in number of clients; 2. Not adjusted for dual clients; 3. Assuming an average financial leverage of ~50% 36Corporate
Governance
0505 Corporate Governance
Shareholder structure
4.64%
Total number of shares 7.69%
as of June 2018: 2.98%
1,596
million (*)
Free Float
84.69%
As of September 2018
Retail
Investor
17%
Caixabank S.A. Sacyr Vallehermoso, S.A. Temasek
(*) Post settlement of scrip dividend 3805 Corporate Governance
Board of Directors
The company's Board of Directors recognizes that a solid commitment to corporate governance is critical to
establishing trust and credibility with investors.
Directors may Presence of External Directors
• Non Executive Directors make up 86.7% of the Board
not hold more
than 4
mandates Rotation of independent Directors
• None of the Independent Directors have been on the Company’s board for more
in other listed than 12 years
companies1 • Implementation of the international standard (12 years cap) in our legal
framework and in our internal regulations (art. 13.2.j) of the Regulations of Board
of the Directors)
% of Board independence
• Independent make up 53.3% of the Board
% of Committee Independence
• Audit and Control Committee: Composed exclusively of independent directors
• Nomination Committee: Majority independent / Chairman is independent
• Compensation Committee: Majority independent / Chairman is independent
• Sustainability Committee: Majority independent / Chairman is independent
1.- According to Repsol’s internal regulations all mandates held in companies within the same group or held as proprietary director proposed by a company of the same group
will be considered as one single mandate. 3905 Corporate Governance
Board of Directors
Separated roles of CEO and Non Transparency on remuneration
Executive Chairman The Company continues improving the disclosure on the
The roles of the CEO and Chairman have been separated remuneration issues and the implementation of
since 2014. international best practices
• The Remuneration Report is submitted annually to the General
Gender Diversity Shareholders Meeting. On 2018 AGM the Report was approved
by 94.5% of the share capital attending the meeting.
• Female directors make up 20% of the Board’s Directors
• Repsol has committed to increase the proportion of
• The 2017 AGM approved the Remuneration Policy for the
women in leadership positions in Spain to 30% by 2020
Directors for the years 2018, 2019 and 2020 (majority of
as recommended in the Good Governance Code for Listed 95.9%). This Remuneration Policy was prepared in response to
Companies. the new regulatory framework and reflects best practices on
good governance and also Repsol's unflinching commitment to
Geographical diversity ensuring the utmost transparency
• Repsol’s Board recognizes that the presence of foreign
Directors can add value to the decision-taking process. • Since 2009 the fix pay for Directors has increased only 2.5%
• Foreign Directors make up 20% of the Board’s Directors.
In line with the multinational nature of Repsol, the Board • The Company applies the limit of 2 years severance payment
is committed to include foreign born members with solid when proposing the appointment of new Executive Directors
international experience, such as Rene Dahan (Dutch), (as is the case of the CEO)
Robinson West (United States) and Henri Philippe • Shareholding policy for Executive Directors equivalent to 2
Reichstul [Brazil]. times salary
• Repsol’s Board members present a wide diversity of
experience, skills and capabilities such as energy
• Partial payment of the long-term variable remuneration in
industry, accounting, finance, IT, strategic planning, shares for Executive Directors
corporate governance, academic and institutional, 40
among others.Annexes
0606 Annexes
Safety indicators
Lost time injury frequency rate 1
Total recordable injury frequency rate 2
3
2.59
2,5 2.38
2.25
0.85 0.92
0.71 2
0.69
0.59 1.46 1.43
1,5
1
0,5
0.6 0.55 0.92 0.78 1.12 0.79 0.73 0.66 0.78 0.65
0
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Own Employees Contractors Employees Combined
1.-Lost time Injury Frequency rate: Number of lost time accidents and fatal accidents recorded over the year, per million work hours
2.- Total Recordable Injury Frequency Rate: Number of accidents without lost time, with lost time and fatal accidents over the year, per million hours worked 4206 Annexes
Climate reporting and partnership
Moving from stakeholder engagement to partnerships
Transparency Climate Change Initiatives
CDP is one of the most important questionnaires OGCI is an industry-driven initiative officially launched at the UN
about climate change. It requests information on Climate Summit in 2014. It aims to catalyze action on climate
the risks and opportunities from the world’s largest change.
companies on behalf of 827 institutional investor
Repsol joined the initiative in June 2015. We are working in 3 different
signatories with a combined US$100 trillion in
focus areas:
assets. • Low Emissions Roadmap: We are researching what scenarios intended to
limit the global temperature rise to 2°C or below mean concretely for the oil
Historical results and gas industry.
• Managing Methane Emissions: We are collaborating on research to fill the
gaps in methane data and detection technology to help both companies and
2010 2011 2012 2013 2014 2015 2016 2017 policy-makers act more effectively.
• Carbon Capture, Utilization and Storage: CCS projects are already underway,
Discloure but large-scale deployment will require us to reduce costs, develop viable
88 89 98 98 96 100 market mechanisms and improve our understanding of geological storage
(0-100)
A- A- capacity.
Perfor- Repsol takes part at the OGCI Investment fund, established to invest one
mance A B A- B B B billion dollars over the next decade to accelerate the development of
(A-D) innovative technologies that, once commercialized, have the potential to
reduce GHG emissions on a significant scale.
Repsol has been recognized as one of the best O&G IPIECA is the global oil and gas industry association for
companies for its Carbon Strategy. Our company has been environmental and social issues.
included in the group of “leaders” 8 times in the last 11 years. In Repsol is actively involved in several work streams:
2016 and 2017, Repsol achieved an A- score and has
attained the Leadership level. • Low Emissions Pathways. • Energy efficiency.
• Methane emissions. • Climate reporting.
• Adaptation and resilience.
4306 Annexes
Main Sustainability Indexes and Initiatives
The company belongs to:
• FTSE4Good Index and FTSE Russell ESG Rating
• Ethibel Sustainability Index (ESI) Excellence Europe, and
the Ethibel Sustainability Index (ESI) Excellence Global
• Euronext Vigeo index (Europe 120) y Euronext Vigeo
index (Eurozone 120)
• MSCI Global Sustainability: Repsol scored AA
• Sustainalitycs: Repsol scored AA
Other recognitions and awards:
• Extel Survey 2018: Best Firm for ESG and Sustainability (all sectors): Repsol #22 (there
is no O&G specific ranking). Repsol ranks 2nd in sector just behind Shell and ahead of
Statoil)
• 2017 Independent Research on Responsible Investment (IRRI) survey: Repsol ranks
19/308 (TOP 6%)
• EXTEL Survey 2016- INVESTOR RELATIONS RANKINGS- FIRMS BEST FOR ESG AND
SUSTAINABILITY: Repsol ESG IR team #2 (out of 79 companies)
• ENCUESTA EXTEL 2015- SRI CONNECT
• Repsol ESG team ranked by more than 700 companies and 1,300 PM, as the 3rd
best company in communication with ESG investors
44Repsol Investor Relations contact details: Mr. Ramon Álvarez- Pedrosa, Director of Ms. Leticia Padura, ESG Manager Investor Relations lpadurafn@repsol.com ralvarezp@repsol.com +34 91 7535988 + 34 91 7536315
Walking the talk on
energy transition
November 2018You can also read
