“We know that producing oil has an impact on the environment, as does the consumption of oil. That’s why it’s so important for us at Cenovus to look for new ideas and new approaches to reduce our impact in all areas of our operations.”
Brian C. Ferguson
President & Chief Executive Officer
At Cenovus we take our commitment to responsible energy development seriously and are doing our utmost to live up to that commitment. As a Canadian oil company with a focus on Alberta’s oil sands, we understand the concerns people have about the development of this vast resource because we share those concerns.
We know producing oil has an impact on the environment, as does the consumption of oil. That’s why it’s so important for us at Cenovus to look for new ideas and new approaches to reduce our impact in all areas of our operations.
Canadian ingenuity helped us figure out how to get the thick oil from deep underground in the oil sands – by drilling for it, heating it up and pumping it to the surface. That same kind of innovative thinking is now helping us minimize the impact our production has on the environment. In this report, you’ll read about some of the accomplishments in our environmental performance in areas such as land reclamation, water use and greenhouse gas emissions intensity at our oil sands operations.
You’ll also see how we seek out different points of view from independent researchers, academics, other companies and even our critics to help us be better at what we do. We want to be the best we can be at how we develop Canada’s resources.
That’s important because as the world’s population grows and the standard of living improves for people in developing countries, the demand for energy will continue to increase. And while all forms of energy will be needed to help meet growing demand over the coming decades, oil will continue to play a significant role. That’s because it’s so versatile. It can be used as a building block for the thousands of products we use and rely on every day, like plastics and antibiotics. It can also be used to heat our homes and generate electricity. And, it’s the primary source of energy keeping the global economy moving – transporting people, products and services around the world. Its central role in people’s lives means it’s not going to be easily replaced.
We applaud the advancements being made in renewable energy, which will enable other energy sources to play a larger role. And one day smart people will come up with ways to produce energy that haven’t even been dreamed of yet. Energy that is as affordable, as available and as versatile as oil.
Until that happens, you can count on us to continue to develop oil responsibly.
All of our achievements are a result of the energy of our people. We pride ourselves on being a company where people want to work. Our people have passion for what we do and the responsible way in which we do it. And because of that, I believe our culture is a huge competitive advantage.
We keep our momentum by reinforcing and embedding the essence of our purpose, promise and values in how we do our work – today, and as we grow. They speak to the pride we have in the work we do and in the way we do it. But, most importantly, they speak to the kind of company we are. The kind of company we want to be.
Take safety for example. Nothing we do is more important than keeping our people and neighbouring communities safe. In 2013, we sharpened our focus on safety, launching our Start Safe campaign to remind us all to keep safety as our first thought. Our increased efforts saw a 12 percent improvement over our 2012 total recordable injury frequency. However, we recognize that we can still be much better. With more people working at our project sites, there continues to be an increase in the total number of incidents. We'll be putting even more effort into turning that around in 2014.
In this report, you’ll find more detail about the progress we’ve made in 2013 and the areas that still need improvement. You’ll also learn about the Cenovus story through examples of how we incorporate corporate responsibility into our daily work.
We’ve come a long way in a short time and look forward to sharing our continued progress in the years ahead.
Brian C. Ferguson
President & Chief Executive Officer
Our Corporate Responsibility Policy helps guide our approach to operating our business responsibly. We're putting those commitments into action by:
Our Executive Team ensures that safety, health, environmental, social, ethical and financial considerations are integrated into our business decisions. Leading by example, our Executive Team makes sure that performance expectations across the company are consistent with our corporate responsibility commitments and are communicated to all staff.
Strong governance is the foundation of our business and is fundamental to delivering long-term value. Our governance framework is directed at protecting all our assets, including financial, physical, intellectual, informational and reputational, as well as the people who work for us and those in the communities where we operate. Our Board of Directors works with our Executive Team to oversee our strategy development and risk management.
Health and safety are core values at Cenovus and apply to everyone involved directly and indirectly in our activities. We want everyone to focus on being safe not only at work but also at home. We're also committed to building a healthy organization. We want to create a work environment that attracts employees and helps them grow throughout their careers.
Responsible development is about finding the right balance between economic, social and environmental performance. When that balance is achieved, we believe everyone stands to benefit. It's challenging work, but we're determined to continue building and operating our projects efficiently and continuously improving our environmental performance. We're tackling these challenges every day so we can be even better at what we do.
Whether we're meeting with community leaders, non-governmental organizations or landowners, working with Aboriginal communities, presenting to investors or government officials, or conducting media interviews, we remain committed to listening to our stakeholders, understanding their perspectives and telling our story. We work with our stakeholders so they have a better understanding of our company, the quality of our asset base, the strength and expertise of our teams, our solid financial position and our commitment to operating safely and responsibly.
We're a company that's committed to ensuring the communities where we live and work are stronger and better off as a result of us being there. We want these communities to share in the benefits associated with our operations. One of the ways we do this is through our community investment program, where we look to create shared value by investing in community programs that help address local needs and challenges.
We’ve continued to advance our approach to corporate responsibility reporting by reviewing our performance indicators and reporting process annually to ensure they align with stakeholder expectations in addition to our business strategy.
We use a process known as a materiality assessment to help identify the corporate responsibility issues that could have a significant impact on our business. The assessment also allows us to engage with our key stakeholders and continue to understand the issues that are of significant interest to them from a governance, social, environmental or economic perspective. We do this by working with an independent corporate responsibility advisory firm to facilitate internal and external stakeholder workshops. We identify a list of corporate responsibility issues based on topics and indicators that may be of concern to our stakeholders, with specific emphasis on issues related to the oil and gas industry. We then gather feedback from our stakeholders on these issues.
In 2013, we also refined our reporting materiality process in the following ways:
Using the feedback we received from materiality assessment workshops, we finalized a materiality matrix which helps inform our reporting approach and identify topics we discuss in this year’s Corporate Responsibility report. The feedback has also been used across our company to influence business processes such as our annual environment planning process.
The data and charts in our corporate responsibility report are based on available information from January 1, 2009 until December 31, 2013. Some of the stories we've highlighted in this report cover activities across the company up until April 30, 2014. We use the Global Reporting Initiative G3.1 guidelines as a framework for reporting and align our performance metrics with the standards set out by the Canadian Association of Petroleum Producers' Responsible Canadian Energy program. View our Global Reporting Initiative content index.
We're committed to ensuring the report is accurate, balanced and complete. We did this through:
We welcome your feedback - it's important to us that we continuously improve our performance and corporate responsibility reporting practices.
Stakeholder reporting materiality assessment matrix
As a Canadian oil company committed to developing the oil sands responsibly, we contribute to the economy and to the wealth and prosperity of the communities where we operate. Our contributions include:
We pay the following taxes in Canada and the United States:
In response to increasing awareness by stakeholders of tax-related issues we have established an internal code of conduct for income taxes, which is intended to guide the way we do business in relation to tax law.
|2013 contributions||$ (millions)|
Procurement of goods and services
from Aboriginal businesses
|Gross employee salaries, bonuses and short-term benefits1||705|
|Pension and other post-employment costs||33|
|Current income tax expense||188|
1Employee salaries and benefits are recorded in either operating and general and administrative expenses, as well as property, plant and equipment and exploration and evaluation assets, corresponding to the type of service provided
2Includes premium on redemption of long-term debt
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Fitness for work requires that staff be in a condition to carry out their day-to-day job duties safely and effectively without putting at risk their own health and safety or the health and safety of other staff members, customers, the public or the environment. We revised our Fitness for Work Practice in 2013 and will recommence the program in late 2014.
Cash flow, debt and capitalization are non-GAAP measures described and presented in this report in order to provide shareholders and potential investors with additional information regarding Cenovus's liquidity and its ability to generate funds to finance its operations. Cash flow is defined as cash from operating activities excluding net change in other assets and liabilities and net change in non-cash working capital, both of which are defined on the Consolidated Statement of Cash Flows. In Cenovus's interim and annual consolidated financial statements, available at cenovus.com, debt is defined as short-term borrowings and long-term debt, including the current portion, excluding any amounts with respect to the partnership contribution payable and receivable. Capitalization is defined as debt plus shareholders' equity. For further information, refer to our most recent Management's Discussion and Analysis available at cenovus.com.
The estimates of reserves were prepared effective December 31, 2013 by independent qualified reserves evaluators in accordance with National Instrument 51-101.
Certain natural gas volumes have been converted to barrels of oil equivalent (BOE) on the basis of one barrel (bbl) to six thousand cubic feet (Mcf). BOE may be misleading, particularly if used in isolation. A conversion ratio of one bbl to six Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
This report contains certain forward-looking statements and other information (collectively "forward-looking information") about our current expectations, estimates and projections, made in light of our experience and perception of historical trends. Forward-looking information in this report is identified by words such as "believe", "expect", "plan", "forecast", "target", "could", "focus", "goal", "committed", "potential", "may" or similar expressions and includes suggestions of future outcomes, including statements about our growth strategy and related schedules, environmental plans, targets and goals, forecast operating and financial results, estimates of total and bitumen proved reserves, planned capital expenditures, expected future production, including the timing, stability or growth thereof, future use and development of technology and projected increasing shareholder value. Readers are cautioned not to place undue reliance on forward-looking information as our actual results may differ materially from those expressed or implied.
Developing forward-looking information involves reliance on a number of assumptions and consideration of certain risks and uncertainties, some of which are specific to Cenovus and others that apply to the industry generally. The factors or assumptions on which the forward-looking information is based and the risk factors and uncertainties that could cause our actual results to differ materially are discussed under "Risk Management" and "Advisory" in our most recent quarterly report. For a full discussion of our material risk factors, see "Risk Factors" in our most recent Annual Information Form/Form 40-F available at cenovus.com. Readers should also refer to the risk factors described in other documents we file from time to time with securities regulatory authorities, available at www.sedar.com, www.sec.gov and cenovus.com.