Risks and Impacts

ConocoPhillips activities and operations can directly or indirectly contribute to nature impact drivers, including:

• Land or sea-use change through activities and operations resulting in habitat disturbance, reduced habitat intactness and impacts on species distribution.
• Pollution associated with unplanned events including water, chemical, air or other emission releases.
• Unintentional introduction of invasive species.
• Resource use through fresh water withdrawal.

In 2022, we continued exploring different ways for assessing the state of nature at our operated assets using geospatial data layers. This included using assessment indicators which include geospatial datasets such as the Integrated Biodiversity Assessment Tool’s (IBAT) Species Threat Abatement and Restoration (STAR) metrics and Key Biodiversity Areas, the International Union for the Conservation of Nature’s (IUCN) Red List of Threatened Species and Red List of Ecosystems, the World Wildlife Fund (WWF) Biodiversity Risk Filter, the World Resources Institute’s (WRI) Aqueduct Water Risk Atlas, and the World Conservation Monitoring Center’s (WCMC) Ecological Integrity Index. Implementation of an assessment methodology based on consistent, recognized, global data sources will enable us to identify assets located in or near low integrity or high importance ecosystems and support prioritization of mitigation actions.

Our operated assets are located within eight biomes and 14 ecoregions:

Biome1	Operated Asset	Ecoregions
Boreal Forest/Taiga	Surmont	Mid-Canada boreal plains forests
Deserts and Xeric Shrublands	Eagle Ford Delaware Basin Midland Basin Uinta Basin	Tamaulipan mezquital Chihuahuan desert Colorado plateau shrublands
Marine Shelfs	Greater Ekofisk Area	North Sea Southern Norway
Temperate Broadleaf and Mixed Forests	Eagle Ford	East central Texas forests
Temperate Grasslands, Savannas and Shrublands	Anadarko Basin Bakken Eagle Ford Delaware Basin Midland Basin	Northern shortgrass prairie Texas blackland prairies Western shortgrass prairie
Temperate Conifer Forests	Montney	Alberta-British Columbia foothills forests
Tropical and Subtropical Grasslands, Savannas and Shrublands	APLNG	Brigalow tropical savanna
Tundra	Kuparuk Western North Slope	Arctic coastal tundra Arctic foothills tundra

 

_{1 Source: RESOLVE Ecoregions and Biomes dataset.}

As described in Assessing and Managing Risks, we evaluate and track our nature-related risks through our SD Risk Register. Historically, nature-related impacts and associated risks broadly fall into the following categories:

• Water sourcing, produced water disposal and seismicity.
• Threatened or valued species and protected areas.
• Cumulative effects.
• Policy and regulations.
• Disclosure and reporting.

The time horizons we use for nature-related assessment are based on the time taken for the risk consequences to manifest themselves and our planning time horizons. We group risks into near-term (0-5 years), mid-term (5-10 years) or long-term (10-25 years). While cumulative effects tend to be mid-to long-term risks, other risk categories can be short-, mid- or long-term depending on location and the development stage of the asset.

Nature-related risks identified in our annual SD risk assessment process and characterized as significant or high are included in the corporate SD Risk Register. For each risk, we track the progress of mitigation actions, identify future/planned mitigation actions, action owners and action or milestone target dates. Actions relate to specific business unit risks unless indicated as “global.” Nature-related risks in our 2022 SD Risk Register are summarized below.

Risk	Time Horizon	Mitigation Actions
Physical Risks (business unit-specific)
Threatened/valued species	Near- to mid-term	Maintaining over 360,000 acres of voluntary conservation agreements. Completing development reviews for ecological sensitivity. Conducting wildlife surveys including population monitoring. Supporting proactive conservation through bird joint ventures.
Produced water disposal	Near- to mid-term	Sharing of treated produced water with other operators. Conducting studies to identify additional produced water disposal alternatives. Initiating research to develop and pilot technologies and processes to treat produced water for potential beneficial reuse opportunities. Increasing produced water storage capacity. Ongoing engagement with local/Indigenous communities.
Transition Risks – Policy and Legal (global)
Nature-related policy changes and regulations	Mid-term	Initiating local priority species pressure-state-response assessment for global operated assets. Engaging with organizations developing nature-related frameworks, metrics and targets. Completing assessment of alignment and gaps for evolving nature disclosure recommendations.

Read more about our assessment processes.

Dependencies and Opportunities

We identify ecosystem services, or dependencies, for each operated asset as well as for local communities in the vicinity of our activities and operations. We consider ecosystem services for operations and communities including:

• Provisioning services like water supply.
• Regulating services including flood and storm mitigation.
• Cultural services such as recreation, spiritual value and education.

We also identify opportunities during the risk assessment process which are mitigation actions designed to avoid, minimize or restore impacts consistent with the mitigation hierarchy. Opportunities are implemented to mitigate nature-related risks at the business unit level or as a strategic corporate priority. Read more about opportunities implemented by business units and proactive conservation collaboration with strategic partners.

Business and Strategy

Nature-related risks have the potential to impact our business in several ways. Our SD risk management process facilitates identifying those risks and enables determining the potential consequence severity, likelihood and timing of occurrence of each. Impacts to biodiversity, habitats, ecosystems and dependencies or those associated with fresh water withdrawal, water stress, offshore produced water discharges and onshore produced water disposal can lead to business risks through:

• Restricting access to water supply, exploration or operational areas resulting in project delays or business interruption. 
• Limiting production techniques such as hydraulic fracturing or restricting produced water discharge/disposal to address basin-level cumulative effects.
• Increasing costs associated with policy changes and regulations.
• Actions by investors, the financial sector and regulators including increased reporting expectations related to environmental and social performance and shareholder resolutions.

We have tested the robustness of our nature-related corporate water and biodiversity strategies using plausible future states. The objective of the assessment was to identify strengths and weaknesses of valid strategy alternatives. The planning considered factors including biodiversity loss, exposure to water stress and the evolution of regulations or expectations from regulators, investors and the financial industry.