Risk management and climate scenarios

Two employees working in an office at the Montreal refinery. The woman is seated at the desk holding a piece of large paper and the man is standing beside her pointing at the paper.

Climate risks and opportunities are embedded throughout our management and Board of Directors organizational structure and processes, including strategy development, business planning, risk oversight, scenario analysis, executive compensation, skills development and external engagement. An enterprise risk matrix supports the assessment and prioritization of risks and opportunities using a common measure of likelihood and consequence, along financial, regulatory, reputational, safety and environmental dimensions.

We consider key transition risks, such as new policies and regulations, evolving market forces and changes in consumer preferences, using three future scenarios and the integration of carbon pricing into business plans and decisions.

Climate scenarios

We use three energy future scenarios to 2050 to test and assess the resilience of our business strategy against inherent uncertainty. All scenarios are developed using distinct, challenging, relevant and plausible world trajectories that illustrate a wide range of outcomes.

The three energy future scenarios to 2050 are typically updated annually and use variables adjusted in a consistent manner, including demographics, economics, environment, geopolitics, legal, social and cultural, and technology.

Our scenarios are used by the executive leadership team and the board to assess our business strategy and identify alternate strategies. They are also used by internal teams to evaluate projects and opportunities. The scenarios are not used as forecasts or predictions. This process continues to be a useful tool for stress-testing our business on several key dimensions, including climate risk.