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Climate Change and Energy

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Hess’ Climate Change Position

We see climate change as one of the greatest scientific challenges of the 21st century. We believe climate risks can and should be addressed while at the same time providing the safe, affordable and reliable energy necessary to ensure human welfare and global economic development in the context of the United Nations (U.N.) Sustainable Development Goals. We support the aim of the Paris Agreement, as well as a global ambition to achieve net zero emissions by 2050. Governments, businesses and civil society must work together on cost effective policies. We support a carbon price to encourage the investments needed to accelerate decarbonization across all sectors of the economy while keeping energy affordable. We believe that a market based mechanism will drive innovation for new technologies and lead to a more efficient end use of hydrocarbon products.


Our Board of Directors is climate change literate, and our Board’s Environmental, Health and Safety (EHS) Committee, comprised of independent directors, has a mandate to identify, evaluate, monitor and report to the full Board on climate change issues, trends, risks and opportunities. This committee is actively engaged in overseeing Hess’ sustainability practices and works alongside senior management to evaluate climate change risks and global scenarios in making strategic decisions. Furthermore, the Board’s Compensation and Management Development Committee has tied executive compensation to advancing the company’s EHS and climate change goals.


Our climate strategy is closely aligned with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), established by the G20 Financial Stability Board, and its implementation is led by senior members of our leadership team. Our efforts to support the transition to a low carbon economy and mitigate climate change in line with TCFD recommendations have been independently assessed by the Transition Pathway Initiative. We were the only U.S. oil and gas company to be awarded a Level 4-star rating in their September 2020 report.


We set aggressive 2020 targets to reduce Scope 1 and 2 greenhouse gas (GHG) emissions intensity by 25% and flaring intensity by 50% from our operated assets compared to 2014 levels, which we significantly surpassed (see below).


operated-green-house-gas-emission
hess-flaring-rates

As part of our updated EHS & SR strategy, Hess leadership and our Board have set new five year GHG reduction targets for 2025 (see below). These targets are designed to exceed the 22% carbon intensity reduction by 2030 in the International Energy Agency’s (IEA’s) Sustainable Development Scenario (SDS), which is consistent with the Paris Agreement’s less than 2°C ambition. Flaring reduction – particularly from our Bakken operations – is a key driver to reducing our overall GHG emissions intensity. For 2021, continued Bakken flaring reduction is one of the performance metrics in the company’s annual incentive plan.


2020_Operated Emissions Reduction Targets

In addition to addressing our direct emissions, we also seek to fund innovation with the potential to mitigate societal emissions. In 2020, we announced a gift of $12.5 million over five years to help fund the Salk Institute’s Harnessing Plants Initiative, a research and development program aimed at developing plants with larger root systems that are capable of absorbing and storing potentially billions of tons of carbon per year from the atmosphere (see below). We also address 100% of the indirect emissions from our purchased electricity through a combination of renewable energy generated from the grid and the purchase of renewable energy certificates.


2020_Contribution Salk Institute Development of Plant Based Carbon Capture and Storage

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.

Transparency


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.


2020_CPD Scoring Levels_ONLINE


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

Hess Greenhouse Gas Inventory Protocol

The Hess GHG Inventory Protocol identifies and describes the processes and methodologies we use to calculate our GHG inventory and ensure its reliability and validity. The Hess GHG Inventory Protocol also establishes a set of acknowledged conventions and practices for the identification of GHG sources and supports the creation of a robust data collection system that ensures consistency, comparability and transparency in the GHG inventory.

Read the Hess Greenhouse Gas Inventory Protocol