Our Targets & Metrics
Sustainability- and Climate-Related Risks and Opportunities
Our reporting describes significant economic, environmental, social and governance measures, which are reported with reference to SASB/ISSB and GRI. These include but are not limited to:
- Climate: energy consumption and intensity; investment in and generation of renewable energy; greenhouse gas emission and intensity, including flaring and venting, and avoided emissions; and water withdrawal, including from areas of high baseline water stress, and discharge.
- Environment: Waste generation and management; Asset integrity and spills; abandonment and reclamation liabilities, and Environmental investment
- Social: Health and Safety; People; and Community investment
- Governance: Ethics
These metrics contribute to a sustainability contribution of 10% of the Corporate Performance Scorecard for our Long-term Incentive Plan, comprised of progress towards our 2025 emission intensity reduction target and 2027 ARO liability reduction target, along with select ESG rating agency scores.
HSE metrics also comprise 10% of the scorecard for our Short-Term Incentive Plan. These are industry-typical leading and lagging indicators reflective of responsible, safe and sustainable operations:
- Leading indicators (inputs) include elements such as HSE inspections and audits, finding closeout, compliance and regulatory inspections, and emergency response exercises.
- Lagging indicators (outputs) include elements such as lost time incidents, total recordable injuries, motor vehicle accidents, and liquid spills and releases. These plans apply to all employees, including our executive team.
These plans apply to all employees, including our executive team. Thus, sustainability- and climate-related performance is linked not only to executive but to all employee compensation. We report on this externally through our Information Circular each year.
We also track carbon pricing, and have identified actual and likely pricing scenarios for all of our operations based on current government policies and published research relating to the Paris Agreement. For example, in Canada, the 2022 carbon tax was $50 per tCO2e, and in Ireland, carbon pricing was 81 € per tCO2e.
We also gain an external perspective on our performance via third-party ESG rating agencies, including:
- CDP Climate Change and Water Security: CDP Climate and Water scores of “A-” and “B” in 2022
- ISS ESG QualityScore: Recognized as a leader in managing risk in our industry with a decile rating of “1” for Environmental and “2’ for Social practices in June 2023.
- MSCI ESG Rating: In 2023, Vermilion maintained our AAA rating.
- S&P Global Corporate Sustainability Assessment: Vermilion was top of our peer group in the 2022 Assessment
We report Scopes 1, 2 and 3 emissions, which are externally verified under ISO 14064-3. Historical, corporate and business unit data can be found in our Performance Metrics section.
Vermilion has two emission-related targets:
- A commitment to net zero emissions in our own operations, including Scope 1 and Scope 2 emissions, by 2050. We are transparent that this is an aspirational goal, and that we will build the plan to achieve this target over time.
- As a first step, we set a near-term target to reduce Scope 1 emissions intensity from our operations by 15 to 20% by 2025, using a baseline year of 2019. We intend to set new targets every five years at minimum, building on this foundation while exploring broader options, including the potential to reduce Scope 3 emissions.
We developed, and the Board approved, these targets following our climate scenario analysis and extensive internal assessment. There are significant inherent uncertainties in how the energy transition will accelerate over the next three decades. Our intention is to manage these by focusing on responsible production of essential oil and natural gas for as long as these forms of energy are needed, while developing opportunities in other areas that are an economic and synergistic fit for our business.
Committing to an aspirational net zero target was important, but setting a company-wide nearer term target as the first step in creating a clear pathway was even more so. We looked at our own operations – from how we manage emissions data to options for emission reduction – and at how our peers and the majors are approaching this. From, this, we identified emissions intensities and opportunities for reduction within our business units, and set our second target.
This is being achieved, starting with our business units with higher emissions intensities, with an initial focus on efficiency, including process changes, venting reductions, instrumentation upgrades from gas to air and power efficiency options, along with improved metering and field measurements.
All of these factors are now being considered as we work on our net zero transition plan through 2023. Based on our scenario analyses, we have identified four key pillars to support both a Net Zero by 2050 target for Scope 1 and 2 emissions, and the establishment of our mid-term 2030 Scope and 2 emission intensity reduction target:
- Reduce emissions, with methane a priority, by reducing flaring, venting and fugitive emissions; driving operational and energy efficiencies; electrifying operations where grids are low-intensity; and assessing new technologies as they become viable.
- Convert higher emitting elements of our portfolio to lower intensity production, considering both divestment and end-of-life fields.
- Adapt our portfolio to new energy, considering carbon capture and storage, renewable energy associated with our core operations such as biogas, hydrogen and geothermal production, and other new technologies.
- Offset as a solution for the emissions that cannot be eliminated.
Technology use is already driving significant operational efficiencies.
We anticipate that our plan will be complete in 2024, and that it will constitute a living document - one that will be updated as economic, technological and regulatory landscapes evolve.
Category | Target | Progress (see Energy and Emissions Reduction page for details) |
|---|---|---|
Scope 1 – flaring and venting | Set in 2014: Reduce flaring emissions at our light-oil assets in southeast Saskatchewan acquired in 2014 by 50% by 2020 | Achieved above target: 88% reduction in annual emissions as of end 2020 |
Scope 1 – methane | Set in 2014: Methane reduction target included in the target above to reduce flaring emissions at our light-oil assets in southeast Saskatchewan acquired in 2014 by 50% by 2020 | Achieved above target: 86% reduction in annual methane emissions as of end 2020 |
Scope 1 – flaring and venting | Set in 2014: Reduce flaring emissions at one of our major facilities in France by 65% by 2015 | Achieved: 65% reduction in emissions (avoiding the flaring of 14,500 tCO2e annually) by implementing a gas export system |
Scope 2 – renewable energy | Set in 2015: Exceed 5% of our total power consumption coming from renewable sources (replacing traditionally generated electricity) by 2017 | Achieved above target: Reduced Scope 2 emissions in Netherlands from 41% of our 2015 gross Scope 2 emissions to 2% in 2016 and 0% in 2017. This program has been extended through 2023, and has now been adopted in our Ireland and Germany business units. |
Renewable Heat Energy Target | Set in 2015: Generate 31,380MWh of renewable geothermal energy annually in our France Business Unit from our Parentis battery’s tomato greenhouse project until at least 2035 | Above Target: 2022 production was 59,144 MWh of geothermal energy from four sites |
Scope 1- flaring and venting | Set in 2018: reduce the flaring and venting emissions, including methane, associated with the Spartan assets acquired in 2018 by 50% by 2024 | Target exceeded in 2021 and assets partially divested in 2023. |
Scope 1 – methane | Set in 2018: Similar to our 2014 acquisition of Elkhorn, this is a proportional target associated with our program to reduce methane emissions for our 2018 acquisition of Spartan by 50% by 2024. | Target exceeded in 2021 and assets partially divested in 2023. |
Scope 1 GHG emissions | Set in 2021: Reduce Scope 1 intensity by 15-20% from our 2019 baseline year by 2025. | On track: 10% reduction achieved in 2022 |