Sustainability Governance

Sustainability-related topics (including issues relating to climate change mitigation and adaptation) 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. The Carbon, Energy & ESG Management team within the HSSE & NES department is responsible for sustainability reporting and ESG governance and management.

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. In 2020, senior management performed a half-year review of progress on Sustainability Strategy targets and the status of the initiatives. Members of the leadership team also form 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 2020 under Risk Management.)

Engagement on OMV’s sustainability performance and strategy, including with socially responsible investors, is coordinated by HSSE & NES and Investor Relations. The Executive Board and Supervisory Board approve the Company’s Sustainability Report. (More details on the engagement with stakeholder groups can be found here.)

The Executive Board is the highest managing body of the Company. The Executive Board reports to the Supervisory Board on a regular and ad-hoc basis. 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 2020 under Consolidated Corporate Governance Report.)

Executive Remuneration

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.

Following shareholder engagement and feedback during corporate governance roadshows in autumn 2019, the Remuneration Committee decided to put an even stronger emphasis on sustainability and environmental topics. This is being achieved by introducing new, clearly defined criteria to the sustainability multiplier in the annual bonus calculation along with a greenhouse gas (GHG) emissions reduction target, as well as a diversity target in the Long-Term Incentive Plan. 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. The set of criteria for the sustainability multiplier includes workplace accidents involving fatalities, LTIR, Reserve Replacement Rate (three-year average), number and volume of oil spills as well as progress on concrete sustainability projects including, but not limited to, carbon reduction measures.

In addition to including a GHG emissions reduction target and diversity target in the LTIP, a Health, Safety, Security, and Environmental (HSSE) malus may also be applied to the overall target achievement. In situations where a severe health, safety and security, or environmental breach has occurred, the Remuneration Committee can reexamine the level of the LTIP payout and, depending on the extent of the infraction, reduce it at its reasonable discretion, to zero if necessary.

Selected employees at senior management level are also eligible to participate in the LTIP.

An external audit of the actual target achievement is performed by the Group’s auditor, and the results are communicated to the Remuneration Committee and Supervisory Board.