Sustainability governance

Sustainability-related topics (including issues relating to climate change mitigation) are fully integrated into the overall governance structure of the Company. These topics have the same weight as any other business consideration and, following the Company’s responsible approach to business, are integrated into the daily operation and management processes of the Company.

In the diagram, we map the coverage of the five OMV Sustainability Strategy focus areas (HSSE, Carbon Efficiency, Innovation, Employees, Business Principles and Social Responsibility) by corresponding Group functions. Group functions continuously develop and steer the processes relevant to the implementation of activities relating to social and environmental performance, and propose an action plan to functional experts in related business units on the ground. The functional experts remain in continuous communication regarding progress on the planned implementation. Each Group function reports directly to the Executive Board on the relevant social and environmental issues. They include reporting on progress in the implementation of the Sustainability Strategy targets, presenting important events with regard to the material topics, and submitting for approval the implementation of sustainability initiatives.

In 2019, we expanded the HSSE function to HSSE & New Energy Solutions (NES). HSSE & NES is made up of the HSSE, Carbon Management, NES Scouting & Portfolio Management, and New Energy Technology Development & Implementation departments. HSSE & NES manages the following climate-change-related issues:

• Making a meaningful transition to low-emission technologies in order to reduce the carbon footprint of our existing business and to develop innovative energy solutions
• Consolidating responsibility for OMV’s portfolio of new energy solutions in one central location to achieve harmonized, cross-divisional results
• Ensuring close cooperation and joint efforts between Corporate and the business divisions in developing the most promising proposals for efficient carbon reduction
• Promoting a “startup culture” to create the right environment and encourage colleagues to come up with ideas aimed at reducing OMV’s environmental footprint

The Business and Other Group Functions leadership team has a general overview and control over the implementation of all Company functions on the ground, and ensures that environmental and social aspects are integrated into the business activities. The Executive Board reports to the Supervisory Board on a regular and ad-hoc basis. Members of the leadership team also comprise the Risk Committee, chaired by the CFO, which ensures that material financial and non-financial risks are properly identified and managed. (For more information on the risk management process, see the Annual Report 2019 under Risk Management.)

The Executive Board is the highest managing body of the Company. The Supervisory Board appoints members of the Executive Board, monitors and supervises its decisions, and advises the Executive Board on strategy development. The Executive Board approves the Sustainability Strategy as part of the Corporate Strategy and is accountable to the Supervisory Board for its implementation. (For more information on the functions and composition of the Executive Board and Supervisory Board, see the Annual Report 2019 under Consolidated Corporate Governance Report.)

The Supervisory Board appoints among its members qualified expert committees that support the decision-making of the Supervisory Board. The Remuneration Committee is authorized to determine the Executive Board’s remuneration, including the structure of the remuneration system and the actual target achievement. The Executive Board remuneration consists of fixed and variable remuneration elements. The variable remuneration – the Long-Term Incentive Plan (LTIP) and the annual bonus – includes performance criteria related to the Company’s sustainability performance. The sustainability multiplier as part of the annual bonus is determined at the discretion of the Supervisory Board based on a predefined set of criteria that are selected due to their importance for OMV’s sustainability performance.

These criteria include, but are not limited to, the Lost-Time Injury Rate, the number of work-related fatalities of employees and contractors, the number and volume of oil spills, and the Reserve Replacement Rate. The LTIP includes a Health, Safety, Security, or Environmental (HSSE) malus that may be applied to the overall target achievement. In situations where a severe HSSE breach has occurred, the Supervisory Board can reexamine the level of the LTIP payout and, depending on the extent of the infraction, reduce it at its reasonable discretion, if necessary to zero. An external audit of the actual target achievement is performed by the Company’s Group auditor, and the results are communicated to the Remuneration Committee and Supervisory Board. More details on the remuneration structure and the complete list of performance criteria are provided in the Annual Report.

The Sustainability & Reporting department is part of Corporate Affairs and has a Group-wide coordination function. It is responsible for steering, providing advice on, and reporting on sustainability-related topics to internal and external stakeholders. Sustainability & Reporting steers and coordinates the development and the implementation of the Sustainability Strategy.

With the support of external sustainability experts, OMV evaluated sustainability maturity to fulfill the reporting recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Based on this evaluation, we further enhanced our disclosure of climate-related financial issues in line with the TCFD recommendations.

We consult with internal and external stakeholders through various engagement channels across different levels of the governance structure. Additional information on the engagement channels is provided in the Stakeholders’ Engagement Details.

The Investor Relations department coordinates the communication of OMV’s sustainability performance and strategy at the request of socially responsible investors (SRIs) with the Sustainability & Reporting department. OMV presented the newly developed SRI capital market story at an ESG/SRI conference in Paris and engaged with investors from the investor initiative “Climate Action 100+” among others. The SRI presentation is available at:  https://www.omv.com/en/roadshows-and-conferences

In 2019, senior management performed a half-year review of the progress in relation to the Sustainability Strategy targets and the status of the initiatives. The status of the Sustainability Strategy targets and a deep dive into carbon management were discussed in a meeting with Supervisory Board, Executive Board and senior management representatives. The Executive Board and Supervisory Board approved the Company’s Sustainability Report.

Our commitment to international sustainable development standards

OMV is a signatory to the United Nations (UN) Global Compact and is fully committed to the UN Guiding Principles on Business and Human Rights. OMV adheres to the recommendations of the OECD Guidelines for Multinational Enterprises – the only government-supported international instrument for responsible business conduct with an integrated grievance mechanism. The recommendations relate mainly to information disclosure, human rights, employment, environment, and anti-corruption efforts.

We continue to support the UN Sustainable Development Goals (SDGs) through our projects and initiatives. The key SDGs supported by OMV through its activities are SDG 7 – Affordable and clean energy, SDG 13 – Climate action, SDG 8 – Decent work and economic growth, and SDG 16 – Peace, justice, and strong institutions.

OMV recognizes that climate change is one of the most important global challenges and acknowledges the goals set forth by the Paris Climate Change Agreement and the EU climate targets. As part of our carbon strategy, we have endorsed the international World Bank initiative “Zero routine flaring by 2030” to end the routine flaring and venting of associated gas during oil production by 2030.

In line with the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), we disclose, where possible, climate-change-related considerations in the operational elements of governance, strategy, risk management, and metrics and targets. The TCFD Index, published as an annex to this report, outlines disclosures throughout this report that illustrate our reporting in accordance with TCFD Recommendations. OMV is a supporter of the Task Force on Climate-related Financial Disclosures (TCFD).