We account for the cost of carbon in significant new capital investment decisions. We conduct scenario planning that includes the SDS, developed by the IEA, to test the resilience of Hess’ portfolio against a range of energy supply and demand, environmental policies and market conditions. According to the IEA’s 2020 World Energy Outlook (WEO), oil and gas are essential to meet the world’s growing energy demand through 2040 – even with the ambitious GHG reductions assumed within the IEA’s well below 2°C scenario (the SDS). In 2020, we once again tested Hess’ portfolio under the SDS and confirmed the robustness of our portfolio and our inventory of forward investments. These 2020 IEA scenarios, although they are long term in nature, reflect the global impact of COVID-19 on short term energy supply and demand. We also consider potential physical risks associated with climate change, such as increased severity of storms, drought and flooding, for new projects and existing operations.
See the results of our portfolio-specific scenario planning exercise.
We understand that a substantive climate strategy requires companies to look beyond a five year timeframe. We have established an executive led task force to consider our medium and longer term climate strategy.
Hess’ strategic priorities – to grow our resource base, achieve a low cost of supply and sustain cash flow growth – are aligned with the energy transition needed to achieve the IEA SDS and position us well for the coming decades. Our business planning includes actions we will undertake to continue reducing our carbon footprint consistent with the aim of the Paris Agreement to limit global average temperature rise to well below 2°C.
Hess has consistently been recognized as a leader in the oil and gas industry for our disclosure and transparency relating to sustainability and we participate in a number of voluntary initiatives related to climate change disclosure. In addition to preparing this sustainability report in accordance with the Global Reporting Initiative’s Standards at the Core reporting level and establishing our alignment with the TCFD recommendations, we participate in a number of voluntary initiatives related to climate change disclosure.
Hess is the only U.S. oil and gas company to be awarded the highest rating (Level 4-star) by the Transition Pathway Initiative (TPI), a global initiative that assesses companies’ preparedness for the transition to a low carbon economy and their efforts to address climate change. TPI complements and aligns with existing climate reporting initiatives and frameworks such as the TCFD.
We also achieved leadership status in CDP’s 2020 Global Climate Analysis, a position we have held for 12 consecutive years. CDP’s ranking recognizes our continued leadership in transparency and performance as we address climate related risks and opportunities. Hess is one of only two U.S. oil and gas producers to achieve leadership status in the 2020 analysis, earning an A-. According to the 2020 CDP Score Report, our score is higher than the oil and gas extraction and production sector average (C), the North America regional average (D) and the global average (C). In addition, CDP evaluated organizations on engagement with their suppliers on climate change. Hess earned a CDP Supplier Engagement Rating of A- in 2020, compared to the average Supplier Engagement Rating for the oil and gas extraction and production sector (C), the North America regional average (B-) and the global average (C). We obtained an A- on both of these evaluations by CDP by earning high marks in many of the leadership categories critical to the TCFD.
Our Level 4-star rating by TPI and our A- rating by CDP confirms, through external review, our leadership in transparency and disclosure on climate related issues in our industry, as well as our alignment with the TCFD’s recommendations.
For the 11th consecutive year, we were included in the Dow Jones Sustainability Index North America, which highlights public companies with outstanding performance across economic, environmental and social factors, including those related to climate change. Hess is one of only three oil and gas producers in the Energy Industry group listed in the North America Index.
Read our latest CDP Climate Change Response
Access our archived CDP Climate Change Responses