Strategy

Impacts

ConocoPhillips recognizes that our activities and operations can have direct or indirect impacts on nature. The concept of "nature impact drivers," introduced by IPBES, offers a framework for characterizing and quantifying the impact of company activities. There are five key areas contributing to potential impacts to nature including: land, fresh water or ocean-use change, resource use, invasive species, pollution and climate change. 

Land, fresh water or ocean-use change¹: Our activities and operations involve the conversion or modification of land cover or ocean floors to accommodate infrastructure such as wells, pads, access roads, pipelines or marine platforms. Land cover modification 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 impacts from 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. We identify and evaluate ecosystem services for each of our operated assets as part of the state of nature assessment. The Task Force on Nature-related Financial Disclosures (TNFD) refers to ecosystem services that society or a company rely on to function as dependencies. 

We also assess ecosystem services that local or Indigenous communities situated in proximity of some operated assets rely on which include water supply, biomass resources, recreation, education, spiritual well-being, pollination and flood mitigation.

Opportunities

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

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: Actions taken by investors, the financial sector, and regulatory bodies may require us to meet increased reporting expectations regarding environmental and social performance. Additionally, shareholder resolutions may demand specific measures to address nature-related risks, further impacting our business strategy and operations.

Nature-related strategy

We test the robustness of our nature-related corporate water and biodiversity strategies using four plausible future states. The objective of the annual 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. Our approach to the review is informed by the TNFD Guidance on Scenario Planning and completed with local experts from all operated assets. The scenario planning considered two key uncertainties: 

• Severity of habitat loss, biodiversity loss and exposure to water stress affecting biodiversity and water management risks for our operated assets.
• Degree of alignment between regulations, policy, legal, market and reputational risks.