Delivering Value and Resilience through Sustainability - May, 2018 - Repsol
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Delivering Value and Resilience through Sustainability May, 2018
Disclaimer
ALL RIGHTS ARE RESERVED
© REPSOL, S.A. 2018
Repsol, S.A. is the exclusive owner of this document. No part of this document may be reproduced (including photocopying), stored,
duplicated, copied, distributed or introduced into a retrieval system of any nature or transmitted in any form or by any means without
the prior written permission of Repsol, S.A.
This document contains statements that Repsol believes constitute forward-looking statements which may include statements
regarding the intent, belief, or current expectations of Repsol and its management, including statements with respect to trends
affecting Repsol’s financial condition, financial ratios, results of operations, business, strategy, geographic concentration, production
volume and reserves, capital expenditures, costs savings, investments and dividend payout policies. These forward-looking
statements may also include assumptions regarding future economic and other conditions, such as future crude oil and other prices,
refining and marketing margins and exchange rates and are generally identified by the words “expects”, “anticipates”, “forecasts”,
“believes”, estimates”, “notices” and similar expressions. These statements are not guarantees of future performance, prices, margins,
exchange rates or other events and are subject to material risks, uncertainties, changes and other factors which may be beyond
Repsol’s control or may be difficult to predict. Within those risks are those factors and circumstances described in the filings made by
Repsol and its affiliates with the Comisión Nacional del Mercado de Valores in Spain and with any other supervisory authority of those
markets where the securities issued by Repsol and/or its affiliates are listed.
Repsol does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it
clear that the projected performance, conditions or events expressed or implied therein will not be realized.
This document does not constitute an offer or invitation to purchase or subscribe shares, pursuant to the provisions of the Royal
Legislative Decree 4/2015 of the 23rd of October approving the recast text of the Spanish Securities Market Law and its implementing
regulations. In addition, this document does not constitute an offer to purchase, sell, or exchange, neither a request for an offer of
purchase, sale or exchange of securities in any other jurisdiction.
The information contained in the document has not been verified or revised by the Auditors of Repsol.
2
1. Company overview and strategy
2. Our commitments to sustainability
3. Main challenges in Repsol
4. Sustainability plans
5. Corporate Governance
6. Annexes
Repsol S.A.EM Division of Economy, Finance and Development. 09/05/2017
3
©
Company
Overview
1
1. Company overview and strategy
2016 to 2020: Value and Resilience
Challenge: a volatile, uncertain and complex environment
Strategic Plan 2016-2020 Long term value capture
Portfolio
Value • Keep financial and operating
Management
discipline: synergies and efficiencies
• Shift from growth to value
• Capex flexibility delivery • Consolidate and extract the current
• Portfolio rationalization • Competitive and sustainable value of our assets
shareholder remuneration
• Manage portfolio to capture maximum
value
Efficiency Resilience
• Review of projects with a long-term
• Integrated model pay back
• Synergies and • Self-financing strategy even
company-wide in a stress scenario • Be ready to diversify/adapt traditional
Efficiency Program
• FCF breakeven reduction businesses
Transformation Program
Strategic update scheduled for June 2018
© 5
1. Company overview and strategy
Through the value chain and across the globe
Core businesses:
(2) Our shareholders 9.5%
Caixabank S.A.
Upstream and 7.9%
Sacyr Vallehermoso, S.A.
Downstream
4.0% Temasek
~700 kboepd Free Float
production
78.6%
~2.4 billion boe ~1 Million bpd refining
proved reserves (1) capacity
© (1) As at 31/12/2017 (2) As of 21/02/2018
6
Our commitments
to Sustainability
2
2. Our commitments to Sustainability
Repsol: a company fully committed to Sustainability
Sustainability Committee established on May 27th 2015.
Looking to develop
a multi- energy Policy on Sustainability approved on December 2015 and a
New Sustainability model approved by the Executive
strategy with the Committee on October, 2016.
aim to be an actor Sustainability Global Plan for the whole company approved on
in mobility in June 2017. It stablishes specific goals for 2020.
natural markets Existence of a Sustainability Division, reporting directly to
the CEO. It demonstrates the importance that company gives to
Sustainable development in the present and future of our
Bussiness
Company
Strategy gives
priority to Participation of the Senior Management in setting strategic
Sustainability objectives for social, safety and environmental, 2020
issues
Establishment of objectives linked to social, safety and
environmental targets, for all employees with variable
Sustainability remunetarion ( weight between 10-20%)
Policy
Periodic review of the Companys’ Sustainability performance by
senior Management 8
2. Our commitments to Sustainability
The following axes represent Repsol’s Sustainability Model
Safe operations
Commitment to Zero Accidents by 2020
Embedded safety culture
Strict asset integrity procedures
People Environment
Policy on respect for human rights based on the UN Guiding Principles Implementation of circular economy projects.
on Business and Human Rights Excellence in spill prevention and response
Grievance Mechanisms Optimized water & waste management
Our Goal: zero incidents with communities by 2020 Biodiversity action plans
Objective: proportion of women in leadership positions to 30% by 2020
Innovation and
Technology Climate Change
Promoting innovation and development Achieved reduction of 4.5 million tons CO2 by 2017
Investing in Start ups and new Technologies : 85 M € Objective: reduction of 5 million tons CO2 emissions by 2020
committed for the period 2016-2020 Promoting non-fossil fuel energy initiatives
Ethics
and Transparency
Objective: 30% of women on the Board of Directors
Code of Ethics and Conduct recently reviewed
Anticorruption policy
Remuneration disclosure
No presence in Tax havens
9
2. Our commitments to Sustainability
Safe operations
Our ambition: zero accidents
We have established targets to reduce PSIR1 and occupational safety (LTIFR2 and TRIR3)
No fatalities in 2017
7
Occupational Safety Process Safety
6
2012 2013 2014 2015 2016 2017
5
Tier 1+2 123 93 58 46 32 25
4
LTIFR
3 Tier 1 24 16 10 4 5 8
TRIFR
2 Tier 2 99 77 48 42 27 17
1 N hours 31.016.119 34.638.711 37.241.382 45.526.525 49.485.180 40.418.251
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 PSIR Tier 1+2 4,0 2,7 1,6 1,0 0,65 0,62
Systemic Risk ManagemVent
Risk assessment through the entire safety process lifecycle to prevent impacts on people, environment and assets.
Operations control through work permits and identification of critical elements of our facilities
Focus on Process Safety
Process Safety allows Repsol to address its main safety-related challenges
Focus on avoiding accidents that could have grave consequences
In 2014, the company base line of process safety accidents was created to define 2015-2020 specific goals
(1) PSIR (Process safety incident rate): number of accidents from Tier 1 and Tier 2 processes accumulated over the course of the year, for every million hours worked.
(2) LTIFR (Lost Time Injury Frequency Rate).
(3) TRIR (Total Recordable Incident Rate). 102. Our commitments to Sustainability
Safe operations
SMArt keys Program
A proactive safety plan accompanying the Company´s Strategic Plan together with other
actions under the safety strategy of Repsol.
Designed to prevent major industrial accidents. Focus on safety process.
Systematize the monitoring of leading indicators and the continued implementation of prevention
plans, reducing the possibility of major industrial accidents.
[ Three axes ]
PEOPLE PROCESSES PLANTS
Focusing on people, their values and Strengthening the principle of A proper Design, implementation and
beliefs, their behaviours and attitudes Integrated Safety in operations, maintenance of safety barriers
on safety, to reduce accidents caused ensuring the correct implementation guarantees the integrity of our facilities,
by human factors . of safety processes. preventing failures on these barriers, an
therefore reducing accidents.
2017: Focused on culture plans and 2017: Focus on those critical 2017: Focused on maintain a right
safety training processes that require specific behavior of the safety systems.
management actions
112. Our commitments to Sustainability
Safe operations
Our ambition: Embedded safety culture
“The development of a Safety and Enviromental culture, embedded and shared by the whole
company, is crucial to achieve our goals”
Culture Project:
• Developed our own evaluation methodology on safety culture, based on questionnaires,
interviews, focus groups and on-the-job support to assist in identifying strong and weak points. The
results enable the development of improvement plans and the identifying of cross-cutting projects
that can help the organization as a whole advance towards excellence
• Seven diagnostics have been carried out so far: Bolivia E&P business, LPG business in Spain,
petrochemical business in Portugal (Sines facilities) Cartagena, A Coruña and Puertollano refinery.
Progress • Workshops have also been conducted in Norway, Canada and the US
Safety and environment training:
In 2017, the number of hours given on these topics came to 213,793 and 16,619 employees trained
• Comply with the Company's 2018 Smart Keys program
• Improve the quality of our incident investigations by further professionalizing the role of
investigator with differentiated training
• Make headway with the implementation of the Company's Crisis Plan by carrying out a crisis
Next Steps management drill exercise in the Downstream area.
• Publish the White Paper on Safety Culture.
122. Our commitments to Sustainability
Environment
Our ambition: neutral environmental impact of resource management
2015 2016 2017 Two significant spills in 2017:
Peru marketing business (46.35 tons)
Number of spills 21 11 17
E&P Business (15.84 tons)
Quantity spilled
23 40(1) 85
(tons)
Various measures have been implemented to prevent
Spill accidental spills:
o Reviewed procedures
prevention o Improved management systems
o Reviewed of control mechanisms
and response o Best available technologies
Drills carried out in E&P, refining, chemical facilities and LPG.
Capability review: E&P protocol used to check the emergency response capacity
Repsol has developed and patented an early detection system for oil spills, using proprietary
technology that uses advanced detection software and complex algorithms to interpret spill signals
Developing response capabilities against large marine spills, as part of our Global Critical
Management Programme (GCMP)
Agreements with means and service providers, such as: 1.- Oil Spill Response (OSRL)→ entered
into an agreement to collect the spillage and to recover the affected area. 2.- Wild Well control
→as part of our global strategy based on containing wells. Agreement entered into for the
installation of capping stack systems to control the outflow of hydrocarbons in the event of a spill.
(1) One significant ocuured at Peru marketing bussiness. Quantity of spillage amounted to 31 tons. 132. Our commitments to Sustainability
Environment
Circular Economy
Our objective is to implement circular economy projects that will have a positive impact on both
society and the company in all the business units by 2020
Repsol’s strategy on Circular Economy was approved by the CEO on December 12th, 2016. We
continue by summarizing activities underway and the progress in each of them:
• Broadcasting of the Circular Economy Strategy through a Sustainability Report and the “ad-hoc”
webpage, repsol.net on Circular Economy.
• Network generation:
o Collaboration with 46 external companies that can contribute to the definition and start-up of
Progress projects.
o Active participation in national and international work groups on Circular Economy (CEOE1, Chamber
of Commerce, CEPS 2, World Economic Forum, European Commission).
o Establishment of an internal network with experts of different businesses and areas from the
Company (accounting more than 70 people).
• Creation, promotion and development of projects: generation of new circular projects on matters
regarding water, waste and raw materials, development of initiatives with external partners, elaboration
of the Circular Initiative Catalog (120 initiatives to be developed in the next years) .
Repsol works in the development of projects that already exist within the Initiative Catalog. Moreover, we are
searching for innovative projects within the field of efficient natural resources management that fulfill
Next Steps maximum efficiency criteria, maximum transparency and less environmental impact.
To Use life-cycle assessment and eco-design processes Downstream projects.
1.- Confederación española de organizaciones empresariales 14
2.- CEPS: Fundación Centro de Estudios Políticos y Sociales2. Our commitments to Sustainability
Environment
Resource Use Efficiency: Water
Repsol has defined a water management improvement action plan for 2015-2020 that is specific
to each installation
•Keep on working on the Repsol Water Tool (RWT)1
•RWT has enabled us to draw up a water management map, which we have used to work on defining both
the company’s baseline, and a 2015-2020 water management improvement action plan
•In 2016, RWT was adapted to identify and assess the main risks associated with water management in the
unconventional assets acquired of Talisman
•On the Upstream side, the 2017 integrated water management action plan aims significant cost savings in
the short and long term, minimizing operational and social risks and reducing environmental impacts in the
Progress natural resources. Specific actions were focused on reuse and secure long-term produced water
management, transportation and storage plan, improvement water infrastructure via surface waterline and
plan and construct impoundments in all key operating areas
•On the Downstream side, the 2017 integrated water management action plan defines the use of municipal
waters in the refining activities
•Finding alternatives to guarantee water supply
•Becoming competitive in the generation of products, reducing the tons of water used per barrel processed
to improve operational efficiency
•Prepare the White Paper on Water in Downstream operations with a view to improving water
Next Steps management in our facilities
1.- Repsol Water tool incorporates aspects of the Global Water tool adopted by IPIECA (Global Oil and Gas Industry Association for Environmental
and Social Issues and and Local Water Tool ,Adopted by GEMI (Global Environnemental Management Initiative) the two main methodologies 15
developed and adapted to the oil and gas industry to identify and evaluate the impacts and threats associated with water2. Our commitments to Sustainability
Environment
Resource Use Efficiency: Waste
Our objective: Minimize the amount of waste sent to landfill in the Refining and Chemicals business units
• Company waste map redesigned
• 2017: The company reduced hazardous waste led to elimination (including landfill) by 11,639
tons. Specific improvement steps were taken in management of mud and drill cuttings in the
Upstream business
• Improvement goals in E&P through the implementation of the company's EPPs: 100% of the
Environmental Performance Practice (EPPs) planned were implemented
• Reduction actions carried out in all areas:
Progress 1.- Refining and Chemical facilities: Reduction of crude tank waste through better
efficiency in tank cleaning
2.- Chemical facilities: Improving conditions of waste plastic pellets to transform it into a
byproduct enabling its use in a secondary market
2.- E&P: implementation of actions to reduce the volume of drilling waste placed into
landfills increasing the dewatering rate as well as the recovery of used bases
3.- Lubricants: substitution of 1.2 and 5 liter wiper-washer containers for others with lower
weight, using lower amount of plastic and therefore producing less waste.
• Implementation of good practices which derive from the action plan in other parts of the company
Next Steps • Identification of opportunities for valuing waste
162. Our commitments to Sustainability
Management of impacts and resources
Biodiversity and Ecosystem Services
Our objective: the Prevention and minimization of any negative environmental impact in all our
operations, especially in sensitive, biologically diverse and protected natural environments
• First O&G company to put into practice the IPIECA1 and IOGP2 management framework on biodiversity
and ecosystem services (BES) to integrate the management of BES across the life cycle of O&G
operations and embed the concept of BES issue management within operational practices and
management systems.
•Ecosystem Services Reviews carried out in Peru (Block 57) and Colombia, in collaboration with
the Fauna and Flora International NGO. The study has provided a number of recommendations that aim
to strengthen Repsol’s environmental systems and to incorporate ecosystem services reviews.
Progress • BAP3 in Bolivia, Brasil, Colombia, Ecuador, España, Noruega, Perú y Venezuela
• 100% of E&P sites have been evaluated
• Working lines to conserve and /or improve the biodiversity, with 100% of implementation so far.
• Active participation in different international environmental and social forums, such as IPIECA,
IOGP, Cross-Sector Biodiversity Initiative or the Proteus consortium with UNEP4-WCMC5.
• Inclusion of ecosystem services criteria into the operational management system. It comprises the
revision of Repsol rules for the management of biodiversity and ecosystems services and its
implementation in the company, along with identification and minimization of possible impacts and
application of KPI’s.
Next Steps
1.- IPIECA: Global Oil and Gas Industry Association for Environmental and Social 4.- UNEP: United Nations Environment Programme
Issues 5.- WCMC: World Conservation Monitoring Center
2.- IOGP: International Association of OIL& Gas producers 17
3,-BAP: Biodiversity Actions Plans2. Our commitments to Sustainability
Climate Change
Our position on climate change
In Repsol we believe that two global goals have to be pursued:
To fight against climate change and
To provide access to affordable energy in order to support economic growth and development
We set up and deploy ambitious energy efficiency programs to reduce energy consumption and GHG
emissions as one of the key elements of our strategy. These programs pursue long term targets which have
been made public in order to facilitate their progress by the stakeholders.
We consider natural gas as the most cost effective solution to promote a structured transition to a low
emissions future, specifically in the power generations field. In this sense, our upstream portfolio evolves
towards greater percentage of gas versus oil (about 65% in production and 75% in reserves).
We are convinced that innovation and technological development are essential for ensuring reliable and
sustainable energy supply in the long term.
Carbon Capture, Utilization and Storage is a key element to hold the increase in the global average
temperature well below 2ºC above pre-industrial levels. Repsol supports the deployment of these
technologies, working to allow projects to be technically and economically feasible, sustainable and socially
acceptable.
182. Our commitments to Sustainability
Climate Change
Our Strategy
We promote the role of Natural Gas Energy Efficiency
1 2
• Our objective: to reduce 1.9 million tons of CO2
• 65% of our production and 75% of our reserves are annual run rate by 2020 (as part of our energy
gas efficiency program 2014-2020)
• Committed to mitigate methane emissions associated • 4.5 Mt CO2 have been reduced since 2006.
with our production Achieve reduction of 5 M tons CO2 by 2020
• LDAR programs implemented to detect and repair • 37.5 M€ invested in reduction actions in 2017.
methane leaks • Endorsed the World Bank Zero Routine Flaring
• Endorsed United Nations Climate and Clean Air by 2030 Initiative
Coalition – O&G Methane Partnership initiative • Repsol continues implementing a global energy
• Participating in different engagement initiatives with management system (EnMS) under ISO 50001
investors: PRI Initiative on Methane Emissions standard: 8 of our main facilities and a
Institutional Investors Group on Climate Change (IIGCC), multicenter business certified so far.
Climate Action 100+
Carbon Capture, Use and Storage (CCUS) Renewable energy
3 4
• Investing in Sustainable mobility
• Working with our OCGI partners on pathways for • Development of advanced biofuels projects to
marketing commercialization, capture technologies, cost reduce CO2
reduction and availability of storage capacity
• Participate in some investments in the OGCI Climate
Investments
192. Our commitments to Sustainability
Climate Change
Carbon pricing as a company tool to improve
resilience in a low emissions future
• Repsol supports worldwide carbon pricing policies as a global policy
Carbon framework that will provide our businesses with a clear roadmap for low
pricing emissions future investments
• In any carbon pricing scheme or climate policy implemented by governments
industry, competitiveness has to be a central piece
• Carbon price will ensure the resilience of our portfolio, encouraging energy
efficiency and low emission technologies
• Repsol includes a carbon pricing in their strategic plans:
2018: 25 USD ton/ CO2
2025: 40 USD ton/ CO2
2
202. Our commitments to Sustainability
Climate Change
Scenario analysis
Scenario Our ambition: to commit to 2D Scenario
There is no single pathway to a low emission future. Finding these pathways is a task for
Analysis many actors from all sectors of society over the short, medium and long term.
Nevertheless, three elements are common to most of the projected pathways:
• Improving efficiency and saving energy: The most cost effective method of
reducing GHG emissions is to save energy.
• Reducing emissions from power generation: In the near term, one of the most
cost-effective and impactful steps that society can take is to switch from coal to gas.
In this sense, at Repsol we are well positioned with respect to our competitors. 65%
of our production and 75% of our reserves are gas.
CO2
• Reducing emissions from remaining end-use sectors. Alternatives to
electrification include hydrogen, biofuels, industrial CCUS and bioenergy with CCUS.
Scenario analysis is one of the recommendations of the Task Force Climate related
financial disclosure (TFCD).
212. Our commitments to Sustainability
Climate Change
Green Bond
Repsol has been the first OIL& gas company issuing a Green Bond
• On 9th May 2017, Repsol successfully priced a € 500 M Green Senior Bond, coupon 0.5%,
maturity 2022.
• Repsol Green Bond Framework (verified by Vigeo) has been developed with the aim of
providing transparency, disclosure, integrity and clarity to investors, and follow the ICMA’s Green
Bond Principles:
o Repsol is committed to ensure the responsible management and sustainable value of the
financed projects through the integration of ESG criteria , at project level, applying to the
whole business divisions of the group, according to its Sustainability Policy.
o Proceeds of the bond will be allocated to investment projects aimed to decrease GHG
emissions by 1.2 millions of tons of CO2eq.
o Repsol will be committed to disclose a report on an annual basis verified by an external
auditor to show the progress of the investments financed through the Green Bond.
• Transactions Highlights:
o Net Roadshow presentation available, ESG one-on-ones and group calls investors
o 5x times oversubscribed
o 45% Sustainable and Responsible investors among initial subscribers (without the
participation of the ECB, the percentage of Green Investors would be 51%)
222. Our commitments to Sustainability
Climate Change
Moving from stakeholders engagement to partnerships
Transparency Historical results
CDP is one of the most important
questionnaires about climate change. It
requests information on the risks and
opportunities from the world’s largest
companies on behalf of 827institutional Repsol has been recognized as one of the best O&G companies for its Carbon Strategy.
investor signatories with a combined Our company has been included in the group of “leaders” 8 times in the last 11 years. In 2016
US$100 trillion in assets. and 2017, Repsol has achieved an A- score and has attained the Leadership level.
Climate Change Initiatives
OGCI is an industry-driven initiative
officially launched at the UN Climate
Summit in 2014. It aims to catalyze
action on climate change. IPIECA is the global oil and gas industry association
for environmental and social issues.
Repsol joint the initiative in June 2015. We are working in 3 different focus areas:
Repsol is actively involved in several work streams:
• Low Emissions Roadmap: We are researching what scenarios intended to limit the
global temperature rise to 2°C or below mean concretely for the oil and gas industry. • Low Emissions Pathways.
• Methane emissions.
• Managing Methane Emissions: We are collaborating on research to fill the gaps in • Adaptation and resilience.
methane data and detection technology to help both companies and policy-makers • Energy efficiency.
act more effectively. • Climate reporting.
• Carbon Capture, Utilization and Storage: CCS projects are already underway, but
large-scale deployment will require us to reduce costs, develop viable market
mechanisms and improve our understanding of geological storage capacity.
Repsol takes part at the OGCI Investment fund, established to invest one billion dollars over
the next decade to accelerate the development of innovative technologies that, once 23
commercialized, have the potential to reduce GHG emissions on a significant scale.2. Our commitments to Sustainability
Ethics and Transparency (I)
Our ambition:
No cases of corruption in the activities carried out by the Repsol Group:
Ethics and Repsol has taken yet another step towards integration with the approval of the new Code of
Ethics and Business Conduct that is adapted to the most up-to-date international standards. It
Conduct applies to both employees and contractors
Regulation
2017 objective: mandatory training to all employees in Ethics and Conduct regulation. 11,296
employees trained so far
The mission of the Ethics and Compliance Committee is to manage monitoring and compliance
Ethics and system of the Repsol Group’s Ethics and Conduct Code, and it is also Repsol’s Crime Prevention
Compliance Body for the purposes of the Crime Prevention Model
Committee
The new Repsol Ethics and Compliance Channel replaces the existing whistleblowing channels
and it allows employees and third parties to ask questions and report concerns about the Code
Ethics and of Ethics and Business Conduct without fear of retaliation. It is administered by an independent
Compliance company (NAVEX Global) and is available 24 hours a day, seven days a week, by telephone and
Channel online.
23 concerns received in 2016 and 45 during 2017
242. Our commitments to Sustainability
Ethics and Transparency (II)
Repsol has always been very active in ensuring compliance
Chief Compliance The company has given one further step in the strengthening of the role of compliance through
Office the appointment of the Chief Compliance Officer in the CD legal affairs and CCO
Reinforcing our compliance commitments contributes to the strategic objectives of efficiency and
control of the Company
Repsol is firmly committed to strictly complying with regulations that prevent and combat
corruption, according to the principles outlined in the Code of Ethics and Business Conduct
Anti-corruption Repsol also expand compliance not only to all of the employees belonging to the companies the
policy Repsol Group manages directly or indirectly , but also to our business partners
Repsol rejects all forms of corruption and will apply a zero-tolerance approach in respect to any
breach of this policy
A formal framework of regulations, procedures and controls, that provide a means of reasonably
Crime ensuring that the risks of crimes being committed are suitably identified, monitored, evaluated and
Prevention controlled
Model In 2017: a Crime Prevention Manual was designed, to explain what conduct is prohibited, and what
Repsol expects from all its employees in this regard, with the aim of completing existing rules and
regulations and improving their dissemination and comprehension.
2.- FCPA: Foreign Corrupt Practices Act
252. Our commitments to Sustainability
Ethics and Transparency (III)
Our ambition:
Achieve public recognition as a responsible and transparent company in tax matters
Responsible compliance Prevention of significant tax risks
1 • Application of the Spanish Code of Good Tax Practices
• Implementation of immediate reporting system with Spanish
tax agency (AEAT)
3 • Incorporation of tax risks to Group’s comprehensive risk
management system
• Reporting to Board of Directors of tax strategy and
• Streamlining of Group’s corporate structure, not using tax management during year. Submission to approval of
havens or non-transparent structures Board of Directors of any transaction which may entail
• Transfer prices in line with value creation and principle of full a special tax risk.ƒ
ƒ
competition • Conclusion of amicable proceedings and agreements
• First submission of country-by-country report (CBC) to the with tax administrators in different matters (certainty
Spanish tax agency (AEAT) on tax positions)
4
Transparency
2
Tax efficiency • Leaders in Spain in transparency and tax responsibility
• Tax planning aligned with Business and oriented toward according to studies by different social analysis
legitimate optimization observatories.
• Application of tax benefits in accordance with letter and • Incorporation of tax objectives to Repsol Global
spirit of law and accessible to all economic operators (R&D Sustainability Plan
deductions, freedom of amortization, capitalization reserve, • Member of B-Team working group and signatory of group’s
etc.) good tax governance principles.
• Active dialogue with NGOs
Cooperative relations • Publication of tax payments by country
5 •
•
•
Voluntary submission to Spanish tax agency of 2015 and 2016 tax transparency report
Participation in joint work forums with authorities (Spain, Portugal, Singapore, United Kingdom, Netherlands)
Signatories to Good Tax Practices in Spain and Portugal.
• Participation in the pilot program of the International Compliance Assurance Programme ICAP (BEPS initiative)
• Members of tax forums of the EU, OECD and the UN.2. Our commitments to Sustainability
People: respect for Human Rights (I)
Our ambition:
To establish solid relationships based in recognition, trust, mutual respect and
shared value through active dialogue with communities
Policy on Respect
for Human rights Based on the UN Guiding Principles on Business and Human Rights “ Protect, Respect and Remedy”
and Community
Relations
Community Global Framework and management system as a result of the integration between Repsol and Talisman,
based on leading International Standards (IFC, UNGP, OECD guidelines)
Relations and
Development of a new Community relations and Human Rights Standard
Human Rights
Management In 11 especially important countries in social matters, 11 workshops were conducted, with the participation of
nearly 200 people, to shore up the management of risks, impacts and social opportunities, and to consolidate a
Framework network of professionals who manage these relations with communities
A community relations and human rights focus and capacity must be present in the due-diligence processes
Disclosure prior to acquisitions, to identify and assess the associated social risks at all stages of the life cycle of projects
Transparency operated by the Company (operated activity); and also in projects not operated by the Repsol Group, as social risks
associated with these projects (non-operated activity) may also exist
1.- IFC: International Finance Corporation ( World Wide Group ) 2.-UNGP: United Nations Guding principles on Business and Human Rights 27
3.-OECD: Organisation for Economic Co-operation and developmen2. Our commitments to Sustainability
People: respect for Human Rights (II)
Our ambition:
Guarantee people’s security with full respect for human rights
Repsol is a signatory to the Voluntary Principles on Security and Human Rights initiative on 2014
Voluntary principles
on Security and Implementation of the action plan launched in 2015, to be applied in all countries
Human Rights Development of internal audits in Bolivia, Colombia, Ecuador , Peru and Venezuela, to measure
evolution of implementation
Definition of additional actions to keep on progress on the implementation plan during 2017
Online training program on Human Rights (10,670 employees trained since 2012)
Training on
Face to Face workshops on specific processes related to the Community Relations and Human
Community Relations Rights framework such as : community grievance mechanisms; human rights impact assessments,
and Human Rights risk management and stakeholder engagement
98% of contracted security personnel trained in human rights
100% of significant operations manage opportunities and risks by taking into account at least one of the
Human Rights following mechanisms: development mechanisms, impact assessments, or the participation of stakeholders
Impact Assessment Support Business Units in the implementation process following the internal Guidance targeted for
practitioners based on pilots carried out previously
Community Grievance Mechanisms already stablished in most of our projects, to allow local communities,
contractors and other stakeholders to communicate any queries or concerns related to our operations
Grievance
Diagnosis of existing Community Grievance Mechanisms in assets ( Bolivia and Peru)
Mechanisms
Support Business implementation and improvement processes, following the internal Guidance
targeted for practitioners (based on lessons learned in Pilot Project in an operated asset jointly with
28
IPIECA ( Peru) and one existing project in Bolivia)2. Our commitments to Sustainability
Community relations and Human Rights Management
Framework: respecting Indigenous Rights
• Indigenous communities in Bolivia, Canada, Colombia, Ecuador, Papua New Guinea, Peru and Russia
Bolivia, • Repsol recognizes and respect the unique nature of indigenous, tribal and aboriginal peoples and
Canada, their rights, in accordance with existing legislation, and the obligations established by International
Labour Organization (ILO) Convention 169, whether incorporated into the national legislation of the
Colombia, countries in which we operate or not
Ecuador, • First O&G company operating in Latin America with an official policy explicitly supporting indigenous
rights defined by ILO Covenant 169, including right to free, prior and informed consultation (FPIC).
Papua New Recently, a new Community relations policy has been approved, based on the same principles than
Guinea and the previous one.
Peru • Repsol establishes solid relationships with indigenous communities in the area of influence of our
projects and assets, based on principles of respect, cultural sensitivity, integrity, responsibility,
transparency and good faith.
• Repsol carries out human rights impact assessments as part of the due diligence process and
develops community grievance mechanisms adapted to distinctive features of indigenous peoples
• Repsol performes with special preventive measures, such as anthropological contingency plans, in
operations close to areas inhabited by indigenous peoples living in voluntary isolation
• Repsol leads this issue in the O&G Sector: Repsol co-chairs the IPECA1 Community Engagement &
Indigenous Peoples task force since 2014 and participates in the ARPEL2 Indigenous Peoples Working
Group
1.-IPIECA: Global Oil and Gas Industry Association for Environmental and Social Issues
2.-ARPEL: Asociación regional de empresas del sector petróleo, Gas y Biocombustibles en Lationoamerica y el Caribe
29Corporate
Governance
55. Corporate Governance
Shareholder structure
9.5%
7.9%
4.0%
Institutional
Free Float Retail
Investor
78.6% 18.0% Caixabank S.A.
Sacyr Vallehermoso, S.A.
Temasek
Total number of
Free Float
shares as of
January 2018:
1,556 million(*)
(*) Post settlement of scrip dividend
315. Corporate Governance
Board of Directors
The company's Board of Directors recognizes that a solid commitment to corporate
governance is critical to establishing trust and credibility with investors.
Directors may not hold more than 4 mandates
in other listed companies*
The majority of the Board (87.5%) consists of Non Executive Directors
Presence of Market Practice: The tendency is to decrease the presence of Executive directors
External
Directors
None of the Independent Directors have been on the Company’s board for more than 12
years
Rotation of
independent Implementation of the international standard (12 years cap) in our legal framework and in
Directors our internal regulations (art. 13.2.j) of the Regulations of Board of the Directors)
1/2 of the Board is independent
% of Board Market Practice: Good Governance Code for Listed Companies recommends having 1/2 of the Board
independence Independent
Audit and Control Committee: Composed exclusively of independent directors
Nomination Committee: Majority independent / Chairman is independent
% of Committee Compensation Committee: Majority independent / Chairman is independent
Independence Sustainability Committee: Composed exclusively of Non Executive Directors (2 independent and 2
proprietary) / Chairman is independent
*According to Repsol’s internal regulations all mandates held in companies within the same group or held as proprietary director proposed by a company of the same group will be
considered as one single mandate.
325. Corporate Governance
Board of Directors
The roles of the CEO and Chairman are been separated since 2014.
Separated roles Repsol has appointed two female directors at the 2017 AGM and another one in
of CEO and Non 2018 AGM.
Executive
Chairman Female directors make up 18.75% of the Board’s Directors.
Gender Repsol has committed to increase the proportion of women in leadership
Diversity positions in Spain to 30% by 2020 as recommended in the Good Governance
Code for Listed Companies.
Repsol’s Board recognizes that the presence of foreign Directors can add value to the decision-taking
process.
In line with the multinational nature of Repsol, the Board is committed to include foreign born members
Geographical with solid international experience, such as Rene Dahan (Dutch) and J. Robinson West (United States).
diversity
The Company continues improving the disclosure on the remuneration issues and the
implementation of international best practices.
The Remuneration Report is submitted annually to the General Shareholders Meeting. On 2018
AGM the Report was approved by 94.491% of the share capital attending the meeting.
The 2017 AGM approved the Remuneration Policy for the Directors for the years 2018, 2019 and
2020 (majority of 95.890%). This Remuneration Policy was prepared in response to the new
Transparency regulatory framework and reflects best practices on good governance and also Repsol's
on unflinching commitment to ensuring the utmost transparency.
remuneration Since 2009 the fix pay for Directors has increased a total of 2.5%.
The Company applies the limit of 2 years severance payment when proposing the appointment of
new Executive Directors (as is the case of the CEO).
Shareholding policy for Executive Directors equivalent to 2 times salary.
Partial payment of the multiannual variable remuneration in shares for Executive Directors 33Annexes
66. Annexes
Main KPI Evolution
Social Indicators
Social Indicators 2015 2016 2017
Repsol personnel (number) 27,166 24,532 25085
Lost time injury frequency rate (LTIF IF) (Repsol and contractor staff) 0.92 0,69 0,71
Training in safety and occupational health (hours) 208,883 211,182 200,080
Deaths (number) 2 2 0
Women staff (percentage) 33 35 36
Women in management posts (percentage) 15 26,6 28.2
Women on the Board of Directors (number) 1 1 2
Total turnover rate (percentage) 7 13 9
Investment in training (millions of euros) 17.8 11.9 12.4
Training per employee (hours) 45 41 40
Repsol staff who receive performance evaluations (percentage) 67 65 64
Disabled persons (number) 663 586 576
Teleworking staff (number) 1,716 1,811 2003
Voluntary social investment (millions of euros) 22.74 19.83 23.5
Local purchases as percentage of total purchases 86.4 78.6 63.3
Evaluations of the performance of contractors and suppliers (number) 4,045 4,051 2,699
Audits on contractors and suppliers (number) 59 33 24
Litigation due to allegations of anticompetitive behaviour (number of cases initiated) 1 0 1
Communications received under the Ethics and Conduct Regulation (number) 8 32 45
Dismissals for failure to comply with the Ethics and Conduct Regulation (number) 63 60 91
356. Annexes
Main KPI Evolution
Enviromental Indicators
Environmental Indicators 2015 2016 2017
Spills
Number of spills that reach the environment 21 11 17
Volume of hydrocarbon spills that reach the environment (tons) 23 40 85
Energy and Carbon Management
Energy Consumption (106 GJ) 238 248 247
Direct emissions of CO equivalent (million tons) 21.07 24.9 22,8
Water Management
Fresh water withdrawn (kilotons) 57,303 52,022 53,497
Reused water (kilotons) 8,964 10,292 14,995
Water discharged (kilotons) 49,859 42,250 33,450
Hydrocarbons in water discharged (tons) 384 245 166
Waste Management
Hazardous waste (tons) 49,097 56,920 40,065
Non-hazardous waste (tons) 94,453 217,552 352,148
366. Annexes
Safety indicators
Lost time injury frequency rate 1 Total recordable injury frequency rate 2
3
0.85 2,5
0.92
0.69 0,71 2
0.59
1,5
1
0,5
0.6 0.55 0.92 0.78 1.12 0.79 0.73 0.66 0.78 0.65
2.59 2.38 2.25 1.46 1.43
0
2013 2014 2015 2016 2017
2013 2014 2015 2016 2017
Own Employees
Contractors Employees
Combined
1.-Lost time Injury Frequency rate: Number of lost time accidents and fatal accidents recorded over the year, per million work hours
2.- Total Recordable Injury Frequency Rate: Number of accidents without lost time, with lost time and fatal accidents over the year, per million hours worked
376. Annexes
GHG Long Term Target 2020
CO2 Mt
reduced 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0
-0.27 Bussiness-as-usual scenario
-0.58
-500.000 -0.16
-0.20
-1.000.000 -0.38
-0.62
-1.500.000
2006-2013
-2.000.000 -0.44 Objective:
-2,5 Mt CO2 e
-2.500.000
-0.44 Scenario achieved
-3.000.000 through reduction
Achieved 2006-2013: measures adopted
-3.500.000 -3,1 Mt CO2 e
-0.51
-4.000.000
2014-2020
-0.38
Progress
-0.31 2014-2020
-4.500.000 -1.4 Mt CO2 e
-0.21 Objective:
-1,9 Mt CO2 e
-5.000.000
€ 37.5 million 1.4 Mt 4.5 Mt
Invested in GHG avoided GHG avoided
reduction actions in between 2014 between 2006
2017 and 2017 and 2017
386. Annexes
Main Sustainability Indexes and Initiatives
The company belongs to:
FTSE4Good Index and FTSE Russell ESG Rating
Ethibel Sustainability Index (ESI) Excellence Europe, and the Ethibel Sustainability Index (ESI) Excellence Global
Euronext Vigeo index (Europe 120) y Euronext Vigeo index (Eurozone 120)
MSCI Global Sustainability: Repsol scored AA
Sustainalitycs: Repsol scored AA
Other recognitions and awards:
• EXTEL Survey 2016- INVESTOR RELATIONS RANKINGS- FIRMS BEST FOR ESG AND SUSTAINABILITY
Repsol ESG IR team ranked number 2 (out of 79 companies)
• ENCUESTA EXTEL 2015- SRI CONNECT
Repsol ESG team ranked by more than 700 companies and 1,300 PM, as the 3rd best company in communication with ESG investors
396. Annexes
Main Sustainability Indexes and Initiatives
Historical Results
Repsol has been
recognized as one of the 2010 2011 2012 2013 2014 2015
best O&G companies for its Maximum Energy sector score 90 92 98 98 100 100
Carbon Strategy. Minimum score for Energy
sector companies to be eligible 88 90 95 97 98* 100*
for the CDLI
In 2016 and 2017, Repsol Repsol’s score 88 89 98 98 96 100
has achieved one of the Repsol´s evolution CDLI A B A- B B B
highest scores and has
attained the Leadership
level, with an A- score.
Our company has been included in the group of “leaders” 8
times in the last 10 years.
(*) Since 2016 Companies will no longer receive a ‘number score’, Disclosure will be integrated into a single overall score; each reporting company will be placed in a letter band from A to D-
40Repsol Investor Relations contact details:
Mr. Paul Ferneyhough, Corporate Director, Investor Relations
paul.ferneyhough@repsol.com
+ 34 91 7536315
Ms. Leticia Padura, ESG Manager
lpadurafn@repsol.com
+34 91 7535988
Repsol S.A.EM Division of Economy, Finance and Development. 09/05/2017Thank you May, 2018
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