Risk management

Risks	Time horizon	Mitigation actions1
Physical risks (BU-specific)
Species, habitats, ecosystems	Near to mid-term	Integrating Indigenous Peoples priority areas into early stages of development planning. Prioritizing collaborative research with industry and research institutions for conservation-significant and commercially valued species.
Cumulative effects (biodiversity)	Near to mid-term	Continuing engagement with Indigenous Peoples on development planning and restoration approach. Implementing development planning flexibility.
Produced water disposal	Near to mid-term	Completing produced water disposal capacity study. Conducting regional pre-operational seismic screenings or risk assessments. Progressing research to develop and pilot technologies and processes to treat produced water for potential beneficial reuse opportunities beyond the oil and gas industry.
Policy and legal risks (global)
Nature-related policy changes and regulations	Mid-term	Engaging with organizations developing nature-related frameworks, standards, metrics and targets directly or through Ipieca, the global oil and gas industry association.

Impacts

ConocoPhillips recognizes that our activities and operations can have direct or indirect impacts on nature. The concept of nature impact drivers offers a framework for characterizing and quantifying impacts. There are five key areas contributing to potential impacts:

• Land, fresh water or ocean-use change²: Our activities and operations involve the conversion of land cover or ocean floor to accommodate infrastructure such as wells, pads, access roads, pipelines or marine platforms. Land or sea conversion may result in habitat disturbance, reduced habitat connectivity and impacts on species distribution. Read more about how we avoid, minimize, restore or offset impacts.

• Resource use: Our activities and operations involve fresh water withdrawal and consumption. We disclose a comprehensive set of water metrics. Read more about how we manage water-related risks.

• Invasive species: Our operated assets have adopted location-specific approaches to managing invasive species in accordance with local regulations and landowner expectations.

• Pollution: Non-greenhouse gas (GHG) air emissions and unplanned events involving water, chemical, air or other emission releases may result in pollution impacts. We disclose a comprehensive set of metrics, including non-GHG air emissions and liquid hydrocarbon spills to the environment.

• Climate change: Read more about our approach to managing climate-related risks.

Dependencies

Our operations rely on water and our facilities design takes advantage of flood and storm mitigation provided by nature. These are examples of ecosystem services, also called dependencies. We identify and evaluate ecosystem services for our operated assets as part of the state of nature assessment. We also assess ecosystem services relied on by local or Indigenous Peoples communities who live near some of our operated assets.

Opportunities

We implement actions to mitigate impacts to biodiversity and water resources. We also work to create positive outcomes through contributions to conservation. These include examples of opportunities for avoiding, reducing or mitigating nature-related risks. Opportunities can be implemented as mitigation measures at the BU level or as a strategic corporate priority.

State of nature

We assess the conditions of ecosystems and biodiversity, along with their relative sensitivity, in areas where our activities and operations contribute to nature impact drivers. This information is used to inform risk assessment and mitigation planning. State of nature changes not only influence habitats and species but also have broader implications on ecosystem services, which are critical to various aspects of human and economic activities. 

At the BU level, our understanding of the local ecosystem condition and biodiversity importance is informed by habitat and species distribution assessments, wildlife surveys and species monitoring. Examples from our portfolio include Alaska North Slope environmental field studies, Australian seabird and mangrove monitoring, Canada’s use of acoustic and ultrasonic recording units, Lower 48 sharp-tailed grouse GPS tagging and Norway glider field studies using unmanned autonomous vehicles (UAVs). At the corporate level, we use geospatial indicators to assess biodiversity importance, ecosystem integrity and exposure to water stress.

Nature-related strategy

Nature-related risks have the potential to impact our business, leading us to:

• Assess how our business impacts nature.

• Identify ecosystem services we rely on. 

• Implement risk reduction opportunities at the BU level or as a strategic corporate priority.

We test the robustness of our nature-related corporate water and biodiversity strategies using multiple scenarios. The objective of the assessment is to identify suitability, strengths and weaknesses of current strategies, looking at time frames of less than three years, three to five years and five to 10 years.  The scenario planning considers two key uncertainties: 

• Severity of habitat loss, biodiversity loss and exposure to water stress affecting nature-related risks for our operated assets.

• Degree of alignment between regulations, policy, legal, market and reputational risks.

Effect on business and strategy

Nature-related risks have the potential to impact our business in a variety of ways. Our SD risk management process plays a crucial role in identifying these risks and enables us to assess potential severity, likelihood and timing. Risks characterized as significant or high in the SD Risk Register may have the capacity to introduce risks to our business, including:

• Constraints on access: Nature-related risks may restrict our access to exploration and operational areas and/or to essential resources like water supply, potentially leading to project delays or business interruptions.

• Production limitations: These risks can also impose restrictions on our production techniques, such as hydraulic fracturing, or limit our ability to discharge or dispose of produced water. 

• Increased costs: In response to changing policies and regulations aimed at mitigating nature-related risks, we may face heightened operational and compliance costs.

• Stakeholder actions: Investors, the financial sector, or regulatory bodies may ask us to take specific actions either through resolutions or other financial sector pressures.

External collaboration and engagement

Working with external stakeholders is a key component of our risk and impact management approach. We focus our external engagement on:

• Developing industry leading practices and guidance with industry organizations.

• Collaborating with local and regional communities, peer companies and industry groups.

• Supporting research and educational initiatives.

We collaborate with the Environment, Biodiversity and Ecosystem Services and Water working groups of Ipieca, the global oil and gas industry association for environmental and social issues and the International Association of Oil & Gas Producers (IOGP). We also collaborate with local, regional and international stakeholders and industry groups across our operated assets.

• In Australia, engagement and collaboration focuses on the Gas Industry Social & Environmental Research Alliance, Gladstone Healthy Harbour Partnership, Port Curtis Integrated Monitoring Program and LNG Proponents Port Curtis Turtle Health Monitoring Program.

• For the Australia Otway exploration program, we supported and engaged with the Dolphin Research Institute to expand their citizen science and whale protection programs into Western Victoria and strengthened relationships through provision of cetacean activity datasets to the Australian research institutes. We also continued support for southern right whale aerial surveys along the Victorian Coast for the second successive year and committed funding to continue this program into 2025. Further, we committed to support a process to enhance protections for cultural heritage of Indigenous Peoples.

• In Canada, we focus on industry collaboration and engage with Canada’s Oil Sands Innovation Alliance (COSIA), Northern Alberta Institute of Technology (NAIT) Centre for Boreal Research, Canadian Association of Petroleum Producers (CAPP) and the Northeast British Columbia Montney Operators Group.

• In Norway, we collaborate with other operators on the Norwegian Continental Shelf (NCS) through Offshore Norge (industry organization) to engage with the Norwegian Environmental Agency (NEA) regarding potential change in oil-in-water (OIW) regulation and future risk-based monitoring guidelines.

• In the U.S. Lower 48, collaboration and engagement primarily focus on produced water management and habitat restoration and conservation. Produced water-related engagement includes the National Alliance for Water Innovation, New Mexico Produced Water Research Consortium, Texas Produced Water Consortium, Texas Oil and Gas Association Water Committee, the Energy Water Initiative and PARETO – The Produced Water Optimization Initiative. Restoration and conservation-related engagement includes Texas Parks and Wildlife, Texas A&M Natural Resources Institute, Texas A&M University-Kingsville Caesar Kleberg Wildlife Research Institute Texas Native Seeds Program, Texas A&M AgriLife Research, Sul Ross State University Borderlands Research Institute, Rio Grande Joint Venture, Bureau of Land Management, New Mexico LPC/DSL Technical Committee, CEHMM (environmental organization in Carlsbad, New Mexico), North Dakota Petroleum Council, Ducks Unlimited, Sibley Nature Center and West Texas Mesonet.

<sub>1. Actions relate to specific BU risks unless indicated as “global.”
2. Refers to disturbances of terrestrial land, fresh water aquatic or marine environments.</sub>