Specific Sustainability Risks and Opportunities

We have summarized the potential risks (divided into threats and opportunities), mitigation measures, and net risks and opportunities of OMV activities, structured by our material topics and related concerns in the table below. Materiality in this context is defined as issues having a potentially significant impact on the environment or society (for more information, see Materiality). Risks reported were selected based on their magnitude using impact and probability, and at least one relevant example for each material topic was selected.

Focus Area: Climate Change

Material Topic
(NaDiVeG)

Risk Description

Effect Description (Inside-Out or Outside-In)

Mitigation Measures

Energy Transition
(Environmental concerns)

Threat (Transition Risks):
Risk arising from the organization’s inability to implement and manage new technology and products to reduce carbon intensity impact

Inside-Out:
OMV’s total GHG carbon footprint (Scopes 1, 2, 3) in 2021 amounted to 171 mn t CO2 equivalent. The global CO2 emissions in 2021 were 36.4 Gt,1 Source: Global Carbon Project, Global Carbon Budget 2021 thus OMV contributed 0.5% to overall global emissions in 2021.

Outside-In:
Lower demand for OMV’s fossil fuel generation, limited utilization of refining capacities, loss of licenses, significant revenue losses as well as reputational damage

  • Decarbonization strategy, including carbon reduction targets for the product portfolio and an investment portfolio as well as an innovation portfolio
  • Adjusting internal hurdle rates

For more information, see Energy Transition

 

Threat (Transition Risks):
Emerging regulations aimed at the decarbonization of economic activities pose a substantial and wide-ranging threat to our carbon-intense value chain, thereby leading to both direct and indirect risks for OMV.

Outside-In:
Implementing new mandatory changes in the value chain would have significant financial implications for OMV, for example, either limiting the ability to shift to a more sustainable business faster, or resulting in significant additional costs.

  • Developing new business opportunities
  • Carbon reduction targets for the product portfolio
  • Carbon reduction targets integrated into the Executive Board’s Long-Term Incentive Plan

For more information, see Energy Transition

Carbon Emissions Reduction
(Environmental concerns)

Threat (Transition Risk):
Risk of imbalance between certificates allocated and emissions volumes required for Company activities

Additional risk of inability to adapt to the rapid changes to emerging routine flaring requirements. With the upcoming stricter policies and regulations requiring zero routine flaring conditions, certain field development concepts based on routine flaring might not be feasible (e.g., early production facilities in remote areas) or may only be possible with higher investments and operating costs.

Outside-In:
Risk of failing to improve energy efficiency could result in higher costs generated by the uncertainties concerning allowance demand and abatement costs as well as energy consumption and GHG emissions

Reputational damage could be triggered by pressure from local communities for reductions beyond the applicable legislation on flaring and emissions intensity and/or certain field developments might not be feasible and/or only with higher investments and operating cost.

Inside-Out:
OMV’s 2021 total Scope 1 GHG emissions amounting to 13.9 mn t CO2 equivalent increased the CO2 concentration in the atmosphere by 0.0008 ppm.

  • Boosting energy efficiency and reducing internal fuel consumption by increasing renewable energy supplies, such as the Company’s own photovoltaic plants
  • ISO 50001 certifications for Refining and partly for E&P
  • Implementing tools to run plants as optimally as possible, such as introducing an Energy Trend Board, which helps operators continuously focus on energy consumption
  • Continually optimizing plant design and control, and implementation of improvement projects to remove potential barriers to optimization
  • Phasing out routine flaring and venting as a major contribution to reducing GHG emissions
  • Carbon reduction targets integrated into the Executive Board’s Long-Term Incentive Plan

For more information, see Energy Efficiency and Sourcing Renewable Energy, and Flaring, Venting, and Fugitive Methane Emissions

Energy Transition and Carbon Emissions Reduction
(Environmental concerns)

Opportunity (Transition Opportunity):
Contribute to a sustainable energy system with innovative and successfully implemented projects. OMV develops viable businesses based on hydrogen, bioenergy, carbon, and geothermal models, e.g., as part of the clean energy transformation process to tackle the impact of climate change.

In the context of the current strategy, there is potential for substantial new business, e.g., intensifying strategic energy cooperation with various partners to generate renewable energy for OMV’s own energy consumption, or developing new technologies and products in order to reduce the carbon intensity of conventional oil and gas products in the Company’s portfolio.

Inside-Out and Outside-In:
This will generate new revenue streams to compensate for a reduction in conventional product demand with climate-friendly, innovative products and services; support growth of new sustainable solutions in the chemical business and energy supply; create long-term value for OMV and its shareholders; and reduce OMV’s carbon footprint. Furthermore, this would also create new opportunities for local communities, creating upskilled jobs and protecting workers and their incomes (during the transition).

  • Identifying and executing green and viable business opportunities, which offer significant upscale potential and match OMV’s capabilities
  • Increasing energy efficiency, generating REDII-compliant electricity for green H2 production, and reducing internal fuel consumption by using renewable energy supplies such as OMV’s own photovoltaic plants
  • Carbon reduction targets integrated into the Executive Board’s Long-Term Incentive Plan
  • Scaling up engagement in renewable energy sources

For more information, see Zero-Carbon Products and Energy Efficiency and Sourcing Renewable Energy

1

Source: Global Carbon Project, Global Carbon Budget 2021.

Focus Area: Natural Resources Management

Material Topic
(NaDiVeG)

Risk Description

Effect Description (Inside-Out or Outside-In)

Mitigation Measures

Circular Economy
(Environmental concerns)

Opportunity:
OMV identifies opportunities that would limit emissions beyond regulatory carbon emissions requirements in various countries where we operate. Utilize carbon as a valuable feedstock for energy solutions and industrial processes, and capture CO2 processing it into synthetic fuels, plastics, or other chemicals. Utilizing carbon as a valuable feedstock is included in the opportunities identified.

Inside-Out:
New climate-friendly, innovative products and services developed especially for industrial applications lead to opportunities related to employment and the supply chain. Additionally, significant positive environmental benefits from reducing CO2 emissions and instead turning it into a feedstock for a circular economy.

  • Creating cross-sectoral value chains and operating a full-scale plant

For more information, see Circular Economy and Neutralization Measures

 

Threat:
Plastic waste is a growing concern globally and is receiving increased political and societal attention in Europe; if not collected, sorted, and disposed of properly, it poses a threat to the environment.

Inside-Out:
Plastic waste, if not collected, sorted, and disposed of properly, could end up in the environment, causing environmental pollution (this includes plastic incineration), posing a major threat to biodiversity, and ultimately ending up as microplastics in drinking water and food. Additionally, plastics are too valuable a resource to end up in the environment and not be reused.

  • Borealis actively supports Ellen McArthur Foundation
  • Sustainability step in innovation portfolio
  • New business development for sustainable material solutions
  • Demonstrating chemicals safety
  • Demonstrating sustainable sourcing
  • CES strategic program

For more information, see Circular Economy

Environment
(Environmental concerns)

Threat (Physical Risk):
Risk of insufficient water availability to continue operations or water degradation due to failure to perform safety operations

Outside-In:
The impact of periods of low or no precipitation on surface or subsurface water supplies could lead to the inability to access water for normal operations (internal consumption) and for local communities in areas of low water availability.

  • Improving integrity through aging water pipeline/facility replacement programs, preventive maintenance, water management plans, reduced water consumption, and water efficiency improvements
  • Water management is a key component of our social license to operate. We engage and cooperate with local communities, and act as a responsible partner. OMV’s water management activities pursue socially equitable water use.

For more information, see Water

 

Threat:
Risk of soil and water contamination due to improper waste management triggered either by the failure to comply with internal regulations by employees, suppliers, and contractors or by the failure of asset integrity

Inside-Out:
Soil and water contamination could trigger a negative chain effect on the healthy ecosystem, like environmental pollution, with a negative impact on plants and animals as well as on people’s well-being.

  • Improving waste management
  • Training of staff

For more information, see Waste

Focus Area: Health, Safety, Security1 One material topic under the focus area Health, Safety, and Security is Security, Emergency, and Crisis Resilience. There are, however, no risks pertaining to this material topic detailed in the risk register. OMV analyzes risks to physical and IT security as a part of its risk management processes but cannot disclose details on these as that would in itself be a risk to the Company. Risks stemming from potential physical and information security breaches are considered in other material topics, e.g., within process safety.

Material Topic
(NaDiVeG)

Risk Description

Effect Description (Inside-Out or Outside-In)

Mitigation Measures

Health, Safety, and Well-Being
(Environmental concerns, employee and social concerns)

Threat:
Property damage offshore or onshore (processing and treatment facilities) caused by perils outside of normal operations or normal maintenance, e.g., fires and explosions, and the subsequent disruption of production

Inside-Out and Outside-In:
Risks such as integrity failure or unsafe process safety conditions could lead to business interruption, pollution, harm to employee safety, reputational damage, and third-party fatalities, and endanger bio­diversity and ecosystems.

  • Audits (internal and third party)
  • Preventive maintenance
  • Inspections
  • Rejuvenation program (plant improvement projects)
  • Planned turnaround
  • Qualified and trained personnel

For more information, see Process Safety

 

Threat:
Loss of integrity of a pipeline due to pressure control systems failing or annular gas migration as a result of poor cementing of surface casings, resulting in a major accident (explosion, major fire, major oil spill)

Inside-Out and Outside-In:
A major accident event could lead to a major oil spill event, production stoppage, and reputational damage.

  • Process safety measures and maintenance
  • Emergency preparedness measures and maintenance
  • Training of staff

For more information, see Process Safety and Spills

 

Threat:
If customers do not get the correct hazard information on labels, there is a risk that they may use products without taking the necessary precautions and get exposed.

This could be triggered due to regulatory changes resulting in more severe hazard classifications and product safety concerns and/or country/region-specific hazard labels deviating in language, but also in legally required content.

Inside-Out:
Chemical substances, if not handled properly and according to their intended use, could lead to unintentional health impacts for people coming into contact with those substances.

  • As a signatory of the chemical industry’s Global Charter for Responsible Care®, Borealis is committed to ensuring the safety of its products along the entire value chain.
  • Borealis Product Stewardship follows up closely on application-related product safety requirements, so that products going into separately regulated applications such as food contact, drinking water contact, or medical applications are also fully in line with applicable legislation and standards, and serve as a basis for customer product safety.
  • The Borealis Product Stewardship Committee evaluates the potential health, safety, and regulatory risks of all substances the company uses and defines risk mitigation measures.
  • Borealis assesses all new and changed raw materials and products in terms of classification and labelling, and prepares country-specific Safety Data Sheets and workplace safety cards for all classified materials.
  • To apply the correct label in the correct language to our PO products, the global SAP label management tool has been installed in all EU and NAM locations.

For more information, see Product Safety

1

One material topic under the focus area Health, Safety, and Security is Security, Emergency, and Crisis Resilience. There are, however, no risks pertaining to this material topic detailed in the risk register. OMV analyzes risks to physical and IT security as a part of its risk management processes but cannot disclose details on these as that would in itself be a risk to the Company. Risks stemming from potential physical and information security breaches are considered in other material topics, e.g., within process safety.

Focus Area: People

Material Topic
(NaDiVeG)

Risk Description

Effect Description (Inside-Out or Outside-In)

Mitigation Measures

Diversity, Equity, and Inclusion
(Employee and social concerns)

Threat:
Risk of failing to reach the Group’s diversity target and failing to foster and actively maintain an inclusive and diverse workforce

Outside-In:
Failure to reach the Group’s diversity target increases the risk of reducing employee engagement and attrition as well as the risk of losing female top talent. This could lead to reputational damage as the Company could be perceived to be a poor employer with discriminatory behavior, and promote a poor corporate culture.

Inside-Out:
Higher levels of psychological distress and health-related problems for employees facing discriminatory behavior; limited impact on social cohesion, validation, and acceptance for diverse members of our communities

  • Increasing the percentage of women in senior management positions through a range of initiatives, e.g., mentoring, training on unconscious bias, and maintaining a work environment supporting work-life balance and parenthood
  • Embedding our diversity targets in succession planning, with a preference for female candidates when identifying top talent
  • Gender is one of the diversity criteria we apply when selecting members of the Supervisory Board and of the Executive Board.
  • Ensuring compliance with the Code of Conduct

Employees
(Employee and social concerns)

Threat:
The industry is bracing for a serious shortfall of experienced technical professionals over the next several years due to attrition and retirement. The risk is both about the number of workers retiring and about the number ready to replace them.

Risk of not attracting and/or failing to retain competent staff in countries where acquiring and retaining skilled mid-career staff is a challenge. Notice periods and common practice in some countries lead to staff leaving the organization quickly.

Lack of motivation, lack of engagement, and the risk of losing talented professionals following the increasing pressure to reduce costs on learning and development projects

Outside-In:
OMV might face the risk of key roles not being filled, with short or negative handovers resulting in the risk that the plants may not be able to operate reliably. Department or Company performance may decline. Additionally, the industry might also face reduced attractiveness leading to limited headcount.

  • Developing new projects to prepare young students for trade schools in various specialties in the oil, gas, and petrochemical industry
  • Building robust talent pipelines by cooperating with universities and offering internships and other programs
  • Striving for long-term employment relationships and offering competitive compensation and benefits packages
  • Ensuring competitive compensation and benefits by continuously monitoring market trends and international best practices. A new Group-wide recruiting standard has been implemented to ensure a high-quality recruitment process to attract top professionals.
  • Strengthening the culture of feedback and increasing training for leaders

For more information, see Diversity, Equity, and Inclusion

Communities
(Respect for human rights, employee and social concerns)

Threat:
Risk of failing to fulfill the expectations of local communities and local administrations regarding economic benefits and contributions to the development of local areas by implementing community development projects as per local needs

Outside-In:
Deterioration in OMV’s relationships with local stakeholders, including local administration, leading to non-cooperation in business activities

Further consequences to OMV include: production delays, security issues, blockages of OMV’s activities, loss of social license to operate, damage to OMV’s reputation

Inside-Out:
Consequences for rights holders and communities:
deterioration in health conditions of impacted communities leading to social unrest, protest, and blockages

  • Carrying out social and human rights impact assessments, including baseline and community needs assessments at the planning stage to identify potential impact areas to be addressed in the design phase
  • Developing and applying local content strategy and education and skill development programs for locals, including local contractors
  • Education and awareness sessions about local norms and customs for site staff, including contractors and subcontractors
  • Regular stakeholder engagement, including communities on site
  • Establishing and effectively applying community grievance mechanisms
  • Defining social indicators and integrating them into regular HSSE audits

For more information, see Community Impacts and Grievances and Community Investments

Human Rights
(Respect for human rights, employee and social concerns)

Threat:
Risk of poor labor practices in supply management such as the failure to pay decent wages in the supply chain (human rights). The supplier pays wages below standards established by international human rights bodies (e.g., 60% of the national net average earnings of a full-time worker).

Inside-Out:
Poor labor practices will have an impact on workers’ mental and physical health, even a low life expectancy.

  • Human Rights Country Entry Check before launching operations in a country as well as regular human rights assessments in our countries of operations, including labor rights aspects
  • Training for employees (focus on high-risk countries)
  • HSSE contractor management considers human rights aspects (including labor rights) in the prequalification and auditing phase
  • ESG supplier assessments
  • Code of Conduct, including labor rights

For more information, see Human Rights

Focus Area: Ethical Business Practices

Material Topic
(NaDiVeG)

Risk Description

Effect Description (Inside-Out or Outside-In)

Mitigation Measures

Economic Impacts and Business Principles
(Corruption prevention, environmental concerns)

Threat:
Abuse of entrusted power for individual unlawful gain/advantage, personal interest prevailing over Company interest, or other forms of unethical business conduct

Outside-In:
The risk of unethical business conduct could lead to reputational damage and pecuniary losses as well as criminal consequences in isolated cases.

  • Implementing a Compliance Management System

For more information, see Business Ethics and Anti-Corruption

 

Threat:
Non-compliance with environmental, emissions, and water laws or internal rules and regulations caused by unexpected changes or different interpretations of the legislation

Outside-In:
This would lead to additional OPEX or CAPEX needed to upgrade facilities or extra taxes having to be paid.

  • Engagement with regulators to ensure laws are correctly interpreted and upheld
  • Process safety measures and maintenance
  • Training of staff
  • Implementation of best available technologies

For more information, see Environment

 

Threat:
The risk of the OMV Group or one or more of its affiliates not being compliant with EU Regulation 2016/679 regarding Data Protection caused, e.g., by IT security breaches, enforcement actions driven by political motivation, unintended breach by the employees responsible for data handling procedure, and/or interpretation of the laws by regulators, leading to inability to demonstrate compliance with GDPR requirements

Inside-Out and Outside-In:
The risk of failing to protect general personal data could lead to exposure of personal information of customers, employees and/or other stakeholders. Additionally, the risk of non-compliance with GDPR could lead to reputational damage and pecuniary losses.

  • To ensure the responsible handling of data in the interest of OMV’s customers, employees, and other stakeholders, various measures need to be taken to achieve these objectives. This requires an ongoing process where OMV implements different measures to handle and process personal data according to definitions in the EU Regulation.

For more information, see Information and Cybersecurity, and Human Rights

Supply Chain
(Environmental concerns, employee and social concerns)

Threat:
Risk of not meeting OMV’s carbon management and climate change targets by purchasing more carbon-intensive products and services than planned

Outside-In and Inside-Out:
This could lead to OMV not being acknowledged as a sustainable business partner, which would have a negative impact on the business with financial consequences and higher GHG emissions.

  • New concept for Sustainable Procurement defined
  • Increasing transparency through carbon management reporting (Scope 3 of purchased goods and services)
  • Engaging with suppliers on carbon management topics through CDP Supply Chain
  • Performing supplier audits and evaluations as part of Together for Sustainability
  • Including sustainability performance as part of awarding criteria

For more information, see Supply Chain and Carbon Footprint of the Supply Chain

 

Opportunity:
OMV enhances local safety regulations by requiring the integration of best practice HSSE aspects in all phases of the life cycle of contracts and contractor management.

Inside-Out:
Shared knowledge stays within the local community and increases safety and environmental awareness in these communities, which leads to a positive impact on the environment and society.

  • Improving the HSSE performance of OMV contractors through, e.g., HSSE requirements in the scope of work, HSSE prequalification of contractors, HSSE requirements in annexes to contracts, audits, HSSE induction, joint HSSE trainings, joint HSSE walks, inspections, etc.

For more information, see Supply Chain and Occupational Safety

NaDiVeG
Austrian Sustainability and Diversity Improvement Act