Near, medium and long-term risks
As described in the risk management section, we evaluate and track our climate-related risks through our SD Risk Register and Climate Change Action Plan. Those risks broadly fall into the categories of transition risks (including climate- related policy and emissions management) and physical climate-related impacts.
Our planning time horizons are developed according to the time required to realize the majority of the net present value of our projects and the time we expect it will take for the risks to potentially manifest. Our GHG forecasting and financial planning processes are used to determine risks and opportunities that could have a material financial impact for each period.
- Near-term, one to five years: Complete short-cycle drilling campaigns and small projects. Our near-term climate- related risks are generally government policy-related and managed at the business unit level through policy advocacy and technology to reduce emissions.
- Medium-term, six to 10 years: Complete most major projects and revise our portfolio if required. Medium-term risks take longer to impact our business and may include emerging policy that is not yet fully defined. These risks are managed by business unit planning but, if significant, may also be managed by corporate strategies and company-wide risk assessments.
- Long-term, 11 years and beyond: Generally, long-term risks are managed by our scenario analysis and Climate Risk Strategy, as they include long-term government policy, technology trends and consumer preferences that affect supply and demand. They may also include risks that align with long-term physical climate scenarios.
Time horizon | Risks | Potential impact | |
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Near-term | 1-5 years Aligns with short cycle drilling and small projects |
Transition risks | |
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Medium-term | 6-10 years Aligns with major project timelines and ability to adjust portfolio | Transition risks | |
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Physical risks | |||
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Long-term | 11+ years Aligns with scenario analysis |
Transition risks | |
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Physical risks | |||
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Read more about our SD Risk Register.