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Task Force on Climate-related Financial Disclosures

We support the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which was established by the Financial Stability Board with the aim of improving the reporting of climate-related risks and opportunities

For our 2021 climate-related financial disclosures, we are reporting in line with the FCA listing rule for premium listed companies LR 9.8.6(8), which requires us to report on a ‘comply or explain’ basis against the TCFD Recommendations and Recommended Disclosures for the year ended 31 December 2021.


We consider our climate-related financial disclosures to be consistent with all of the TCFD Recommendations and Recommended Disclosures and are therefore compliant with the requirements of Listing Rule 9.8.6(8).


Although this is our first year of disclosing in compliance with the listing rule, our disclosures build on previous years. In preparing them we have made several judgements, and while we are satisfied that they are consistent with the Recommendations and Recommended Disclosures, we will continue to evaluate our options for future TCFD disclosures. We took account of the range of TCFD guidance, including the TCFD implementation guidance ‘Annex: Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures (June 2017)’. All of which are available from fsb-tcfd.org/publications/.


You can find our disclosures against each TCFD Recommended Disclosure and the related Recommendation covering Governance, Strategy, Risk Management and Metrics & Targets in the bp Annual Report 2021 – pages 55-66.

Testing the resilience of our strategy

In our annual report we describe how we have conducted a scenario analysis to test our view of the resilience of our strategy to different climate-related scenarios, including those classified by the World Business Council for Sustainable Development (WBCSD) to be consistent with well below 2°C and 1.5°C outcomes.


For the purposes of the scenario analysis, the resilience of our strategy to climate-related transition risks and opportunities was considered through three lenses – our ability to continue to:

 

  1. deliver shareholder value,
  2. maintain a strong balance sheet and
  3. invest in the energy transition under a range of possible transition pathways, including those that are Paris-consistent.


The scenario analysis and resilience test were designed to identify the most relevant transition risk variables for each in-scope business area, and the most extreme range in 2030 for each of those variables across all of the scenarios included in the WBCSD Catalogue as of January 2022.


Oil price was the only variable we considered to have the potential to adversely affect the resilience of our strategy in the timeframe of the analysis. We therefore conducted a quantified test of the resilience of our strategy against the most extreme downside of that range for the oil price from 2023-2030.


While the results of this analysis must be treated with caution – because each is dependent on many assumptions and methodological choices, and each has its own limitations – overall, this resilience test reinforced our confidence in the resilience of our strategy to a wide range of ways in which the energy system could evolve throughout this decade, including in scenarios consistent with limiting temperature rise to 1.5°C.


The analysis also reinforced our recognition that in a sustained very low oil price environment mitigating actions may be necessary, while highlighting that there is no clear-cut correspondence between oil price and the temperature goal with which a scenario is associated. Notably, while the lowest oil price was associated with a 1.5°C scenario, in four of the six 1.5°C scenarios we used – and in four of the six 2°C scenarios used – the oil price in 2030 was found to be higher than bp’s own oil price planning assumption for 2030.

 

The full details of the resilience test and scenario analysis can be found in the bp Annual Report 2021 as part of our Strategy disclosures. See the index below for page references.

 

Participating in work to create industry scenarios

In 2021 we contributed to work requested by the TCFD of the World Business Council for Sustainable Development (WBCSD) to develop a ‘Climate Scenario Analysis Reference Approach for Companies in the Energy System’. This work, due to be published in March 2022, is intended to provide business-relevant approaches to climate scenario analysis that support and inform disclosures about strategic resilience.


Read more about how we have used the WBCSD Scenario Catalogue to inform our own scenario analysis on page 61 of the bp Annual Report 2021.

TCFD index table

Our expanded TCFD disclosures can be found on the following pages

Find more information in bp’s 2021 Annual Report

Governance

Disclose the organization’s governance around climate-related issues and opportunities.

a) Describe the board’s oversight of climate-related risks and opportunities.

Pages 55-57.

b) Describe the management’s role in assessing and managing climate-related risks and opportunities.

Pages 57-58.

Strategy

Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s business, strategy and financial planning where such information is material.

a) Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.

Pursuing a strategy that is consistent with the Paris goals, page 30.

Strategy, pages 58-60.

Risk factors, page 76.

b) Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning.

Risk factors, page 76 – description of principal risks.

Strategy, pages 58-60.

c) Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.

Strategy, pages 58-60.

Pursuing a strategy that is consistent with the Paris goals, page 30.

Risk management

Disclose how the organization identifies, assesses and manages climate-related risks.

a) Describe the organization’s processes for identifying and assessing climate-related risks.

Risk management, page 65.

How we manage risk, page 73.

Risk factors, page 76.

b) Describe the organization’s processes for managing climate-related risks.

Risk management, page 65.

How we manage risk, page 73.

c) Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organization’s overall risk management.

Risk management, page 65.

How we manage risk, page 73.

Risk factors, page 76.

Metrics and targets

Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.

a) Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process.

Our strategic focus areas and metrics, page 16.

Our group-wide principal metrics and relevant targets, page 66.

b) Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 GHG emissions, and the related risks.

GHG emissions data, pages 51-54.

c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.

Our net zero targets and aims at a glance, page 51.