Pioneer recognizes that climate change is a global issue that will impact the way we operate our business. As such, we continue to seek ways to improve our understanding of climate-related risks and opportunities and integrate these variables into our overall risk management process.
ERM Process
Pioneer utilizes a comprehensive ERM process to identify, assess, manage and report our risks and opportunities, with the objective of integrating our risk management policies and procedures into our strategy.
The Board oversees Pioneer’s ERM program, while the Executive Committee evaluates, manages and executes day-to-day management activities across the major risk categories comprised of general business and industry, operational, financial, HSE, and regulatory risks. Each principal risk identified has an assigned owner, generally an officer of the company. Each owner is responsible for managing the overall risk and the associated mitigation plan in conjunction with relevant management or external support.
Our ERM process is summarized below:
- Company Strategy: Align company goals and risk identification with the strategic objectives of the Executive Committee and Board
- Risk Identification: Identify uncertainties/risks that could impact the achievement of the company’s business objectives
- Risk Assessment: Evaluate the risks identified and the possible impact to the company
- Risk Response: Determine risk mitigation plans and responses to address identified risks
- Monitor and Report: Report identified risks in the ERM matrix and continuously monitor those risks and associated mitigation plans and responses
Our Internal Audit organization facilitates an annual risk identification and assessment process that includes input from all business groups and corporate functions. During this process, existing risks are evaluated for continued relevance and new risks are identified and discussed based on company, industry, global and regulatory developments. During this process, risk ratings, the likelihood and potential impact of all identified and assigned risks, as well as mitigation plans, are reassessed and updated by the owners. The updated ERM matrix is then distributed to the Executive Committee for a holistic review to achieve alignment on risk identification, assessment and response. Following the review by the Executive Committee, the updated ERM matrix is presented to the Board. Although the risk identification and assessment processes are formally executed on an annual basis, the ERM program is embedded into our day-to-day culture and the risk assessment is updated throughout the year as needed.
Integration of Climate-related Risk Assessment into the Overall Risk Management Process
Pioneer recognizes that climate change is a global issue that will impact the way we operate our business. As such, we continue to seek ways to improve our understanding of climate-related risks and opportunities and integrate these variables into our overall risk management process.
Pioneer believes the most effective approach to managing climate-related risks is by integrating the assessment of these risks into our existing ERM process. The company reviews each principal risk for associated climate-related risk. Potential climate-related risks are further divided into transition risks that stem from the world’s transition to a lower-carbon economy or physical risks that result from acute and chronic physical impacts of climate change. Many of the physical risks (e.g., increased frequency and severity of storms) and transition risks associated with climate change have been previously identified as part of our ERM process and categorized according to the underlying risk to the company. We believe the most robust management of enterprise risks occurs by fostering a corporate culture that encourages regular discussion and consideration of identified and emerging risks.
To capture the increasing importance of climate-related risks in the company’s risk assessment, Pioneer has identified the following key focus areas:
HSE CULTURE
Promoting a strong HSE culture through employee engagement activities, training and communication. These programs are used to educate, empower and encourage Pioneer employees to focus on safety and environmental stewardship in their daily lives, both at work and at home.
See HSE Culture.
EMISSIONS MITIGATION PRACTICES
Designing and constructing infrastructure, implementing operational best practices, and incorporating new technologies that provide better and more efficient emission control.
See: Emissions Management.
WATER MANAGEMENT
Minimizing the use of freshwater in completion activities by using reclaimed water and reusing produced water.
See: Water Management.
LANDSCAPE STEWARDSHIP
Engaging with third parties, including government agencies, researchers, consultants and others to source and explore new solutions for protecting local habitats and species in the areas where we operate.
See: Landscape Stewardship.
INDUSTRY COLLABORATION
Working in a collaborative and transparent manner with industry peers and other energy companies to discuss climate-related risks and promote alignment on policies and procedures, should an event occur.
See: Emissions Management - Advocacy and Stakeholder Collaboration.
SUPPLY CHAIN MANAGEMENT
Working with providers whose core values and climate-related policies align with our own. Our supplier onboarding process now incorporates EcoVadis, which provides data that benchmarks our suppliers on a variety of ESG criteria, including human rights, social and governance standards, as well as environmental policies and sustainable procurement methods. This program is designed to identify suppliers who are aligned with our ESG goals and policies and to monitor the relationship between our spend with those suppliers and their ESG scores.
See: Supplier Onboarding.
Pioneer factors climate-related risks into our corporate decision-making processes, including the evaluation of potential acquisitions or other business development opportunities. In evaluating acquisitions, we complete due diligence procedures assessing the impact on our GHG emissions, emission-intensity reduction targets and flaring-reduction commitments. We consider the historical emissions performance of prospective companies or assets and how those align with our own. We also evaluate the type of mitigation efforts that would need to be implemented following the potential acquisition.