Corporate responsibility reporting: Environmental performance

Corporate responsibility reporting

As part of our commitment to operating in a responsible manner, we recognize the importance of reporting to stakeholders in a transparent and accountable way. We disclose not only the information that's required by law and regulation, but also information that more broadly describes our activities, policies, opportunities and risks. Read our Corporate Responsibility Policy.

Below are some highlights from our 2010 Corporate Responsibility report. Click on the tabs and graphics to get more information from our performance in our key commitment areas. Read our full report.

We welcome your feedback. Send your comments or inquiries to our corporate responsibility team.

We have committed to implement at least one new commercial innovation each year and plan to invest an average of about $100 million in research and development every year for the next five years.

Since 2007, we have committed about $23 million to energy efficiency and emissions reduction projects in our operations.

Developing baselines and forecasts for key environmental issues and incorporating them into our long-range plan
Developing targets for future years
Conducting a thorough environmental opportunity assessment at our oil sands operations
Investing in new environmental technologies and alternative energy, including nuclear fusion and water desalination
Piloting technology to reduce NO_x emissions

We're focused on limiting our emissions through the implementation of facility and process improvements, and new technologies

Carbon emissions - Improved our oil sands greenhouse gas emissions (GHG) intensity by 26 percent over the last six years - as we increased our oil sands production there was an increase in our direct GHG emissions over 2009

Air quality - Decreased NOx emissions by nine percent over 2009 due to a decrease in fuel use in our gas production as well as improvements in the accuracy of allocating facility fuel in our Suffield gathering system

Land footprint - 7,598 hectares under active reclamation

Water use - Reduced fresh water use intensity company-wide by 26 percent and our oil sands fresh water use intensity by 25 percent over 2009

The average well pad in our oil sands operations only covers about five percent of the surface when compared to the underground area that well is accessing for oil production.

Our strategic approach

As a company we're committed to maximizing value for our shareholders while achieving a balance of good governance and economic, social and environmental performance. This commitment guides the way we conduct our business across all our operations.

We're putting this commitment into action with:

Leadership: Our Executive Team ensures that safety, health, environmental, social, ethical, financial and fiscal considerations are integrated into our business decisions. Leading by example, our Executive Team also ensures that performance expectations across the company are consistent with our corporate responsibility commitments and are communicated to all staff.

Governance: Strong governance is the foundation of our business and is fundamental to the generation of long-term shareholder value. Our governance framework protects 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.

Ethical business practices: We have policies and practices in place, including our Corporate Responsibility Policy and Code of Business Conduct & Ethics, that provide a clear statement of our values and guide the behaviour that we expect of our directors, employees and contractors.

Continuous improvement and innovation: Our company's culture is built on the pursuit of new ideas and new approaches. We're focused on finding practical and creative solutions to improve our performance - to make our work safer and more efficient and demonstrate measurable improvements in greenhouse gas emissions, air pollutants, land impact and water use. We're working hard to do this through, alignment of our business systems and practices, new technologies and front line initiatives with our employees.

Our strategic approach

All energy development has environmental challenges. At Cenovus, we recognize those challenges. That's why we're focused on finding new ways to reduce our environmental impact.

For us, environmental issues are strategic business issues. We have combined our strategic planning and environment teams to ensure environmental performance is integral to our long-range planning and approach to resource development. We target measurable improvements in carbon emissions, air quality, land footprint and water use in an effort to ensure that we enable the continued competitiveness of the company. We believe we can improve productivity and competitiveness through a progressive approach to energy development that integrates environmental performance into our decision making.

In 2010, we established these four guiding principles to drive our commitment to environmental excellence:

Relationships
Energy and environment are two sides of the same coin. These matters are complex and concerns won't be resolved with a battle of competing facts and images. Rather, new ideas, innovation, and thoughtful and constructive engagement will move us forward.

Culture
We're creating a culture where limiting our impact on the environment is a consideration in the decisions we make at Cenovus. From our Executive Team members to our operators, we all have a collective responsibility for improving our environmental performance.

Performance
Leading performance and competitive advantage can be driven by actively integrating environmental perspectives into our business plans to improve performance. Reducing the environmental footprint and energy intensity of our operations starts with a focus on efficiency, which can also benefit the bottom line.

Innovation and technology
Cenovus is a leader in the development and use of innovative technology. We helped pioneer commercial scale steam-assisted gravity drainage (SAGD) production of oil sands and we continue to refine the technology to improve recovery and environmental performance. We also foster research and development of new technologies both inside and outside our company to reduce environmental impact and progress cleaner energy.

2010 corporate responsibility report (pdf)

Complete report

Non-GAAP measures

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 from continuing operations, both of which are defined on the Consolidated Statement of Cash Flows in Cenovus's interim consolidated financial statements, available at www.cenovus.com. Debt is defined as the short-term borrowings and the current and long-term portions of long-term debt excluding amounts with respect to the Partnership Contribution Payable or Receivable. Capitalization is defined as debt plus shareholders' equity. For further information, refer to our most recent Management's Discussion & Analysis (MD&A) available at www.cenovus.com.

Oil and gas information

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.

Forward-looking information

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 "anticipate", "believe", "expect", "plan", "forecast", "target", "project", "could", "focus", "vision", "goal", "proposed", "committed", "potential", "may" or similar expressions and includes suggestions of future outcomes, including statements about our growth strategy and related schedules, projected future value or net asset value, forecast operating and financial results, 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 Quarter 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 www.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 www.cenovus.com.

Corporate responsibility