Our Approach to Governance
Our Approach to Governance
As a responsible energy producer, Vermilion believes that we can best deliver long-term value by operating in an economically, environmentally and socially sustainable manner that recognizes the importance of all our stakeholders.
We believe that integrating sustainability principles into our business increases shareholder returns, enhances development opportunities, reduces long-term risks, and supports the wellbeing of key stakeholders including the communities in which we operate.
Vermilion has established a leadership position in sustainability performance and disclosure, launching our first CDP Climate submission and our first Sustainability Report encompassing ESG impacts in 2014, with data to 2012, aligned with the Global Reporting Initiative (GRI). We have since aligned our sustainability reporting with additional recommendations from the Task Force on Climate-related Financial Disclosure (TCFD), the Value Reporting Foundation (VRF) including the Sustainability Accounting Standards Board (SASB), and the International Sustainability Standards Board (ISSB).
Of note this year, we have maintained our discussion of Governance in this Circular and moved the discussion of Strategy, Risk Management, and Metrics and Targets to our Annual Report. This recognizes the importance of climate-specific disclosure while reflecting its intersectionality with other environment-related risks and opportunities, social factors such as safety and community engagement, and governance-related matters.
Integrated Sustainability is one of six strategic objectives that link together in our long-range business plan (as referenced at sustainability.vermilionenergy.com, under “About Vermilion” and “Our Approach to Business”). The Board therefore has responsibility for overseeing Vermilion’s sustainability- and climate-related strategy and performance, including direction, goals and targets, with Board committees providing additional sustainability-related expertise in their areas of focus:
Financial information, risk management, internal control systems and audit processes
Governance and Human Resources
Corporate governance and performance, including ethics; and People practices, including diversity, succession and development; and compensation philosophy and practices
Health, Safety and Environment (HSE):
Occupational, process and asset safety; environmental stewardship; risk management; and HSE-related sustainability initiatives;
Reserves and production
Energy transition, including emission reduction targets; and social impacts, including human rights, community investment, and government and other stakeholder relations.
The Board and Sustainability Committee receive briefings and performance reports quarterly that include ESG performance, sustainability activities, updates from business unit leaders, environmental and social trends, and strategic community investment activities. These are augmented with continuing education from third parties in fields such as climate change and the energy sector, the energy transition, and ESG factors in institutional investment.
The Sustainability Committee provides oversight for the long-range sustainability strategy, its implementation, progress including key performance indicators, and methods of communicating sustainability policies and performance. The committee also identifies and reviews emerging risks and opportunities associated with sustainability issues, and their integration into Vermilion’s enterprise risk management framework and policies.
The committee Chair reports to the Board on the committee’s work; in addition, reflecting the holistic way in which sustainability issues impact the Company, most members of the Board attend Sustainability Committee meetings. Thus, sustainability- and climate-related information is considered when the Board oversees major decisions, such as long-range planning, budget and capital allocation, and mergers, acquisitions and divestments. In 2021, for example, the Board used the results of Vermilion’s climate-related scenario analysis to inform its guidance and approval of our emission reduction targets.
Organizational responsibility for sustainability- and climate-related issues flows from the Board to our Executive Committee. This comprises the President, Executive Chairman, Vice President and Chief Financial Officer, Vice President, Business Development, Vice President, International and HSE, Vice President, North America, and Vice President, European Operations.
The President has direct responsibility for sustainability, including climate-related risks. Our Vice President, Sustainability reports to the President, and is responsible for developing sustainability strategy and reporting, including identifying, assessing and overseeing management of sustainability- and climate-related issues, working in partnership with corporate teams and business units to ensure the Company’s approach reflects the goals within our long-range business plan.
The Vice President, Sustainability also provides updates to and receives guidance from the Board and the Sustainability Committee at least quarterly, and the Executive Committee monthly, on strategy, issues, performance and reporting.
Our Vice President, North America and our Vice President, International and HSE lead the operationalization of sustainability, with business unit leaders responsible for strategy and activities, including managing climate-related risks and opportunities, with the support of sustainability leads in each business unit. The sustainability leads, along with the corporate sustainability team, meet quarterly to discuss related issues, trends and learnings. In addition, various departments within the Company report sustainability- and climate-related priorities and progress as frequently as weekly to management, and quarterly to the full Board or Board committees, on issues such as governance and ethics, HSE targets and performance, risk management, regulatory changes, and public and government relations.
Corporate Sustainability Team
The corporate sustainability team provides a centre of excellence approach, advising the business on all aspects of sustainability, including environmental, climate and social issues, based on extensive research and inputs from the business. The team is also responsible for external sustainability reporting, based on data from our HSE, People and financial information systems.