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ALL RIGHTS ARE RESERVED © REPSOL, S.A. 2017 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.
©
1. Company overview and strategy
2. Our commitments to sustainability
3. Main challenges in Repsol
4. Sustainability plans
5. Corporate Governance
6. Annexes
3 Repsol S.A.EM Division of Economy, Finance and Development. 09/05/2017
Challenge: a volatile, uncertain and complex environment
• Keep financial and operating discipline: synergies and efficiencies
• Consolidate and extract the current
value of our assets • Manage portfolio to capture maximum
value • Review of projects with a long-term
pay back • Be ready to diversify/adapt traditional
businesses
Long term value capture
• Capex flexibility • Portfolio rationalization
• Synergies and company-wide Efficiency Program
• Shift from growth to value delivery • Competitive and sustainable
shareholder remuneration
• Integrated model • Self-financing strategy even in a
stress scenario • FCF breakeven reduction
Efficiency
Portfolio Management Value
Resilience
Strategic Plan 2016-2020
1. Company overview and strategy 2016 to 2020: Value and Resilience
5
Transformation Program
Upstream main projects
Both
~700 kboepd production ~1 Million bpd refining
capacity
Core businesses: Upstream and Downstream
~2.4 billion boe proved reserves (*)
20% stake in GNF
(*) As at 31/12/2016
Our shareholders
1. Company overview and strategy Through the value chain and across the globe
6
Company Strategy gives
priority to Sustainability
issues
Sustainability Policy
Sustainability Committee established on May 27th 2015.
Policy on Sustainability approved on December 2015 and a New Sustainability model approved by the Executive Committee on October, 2016.
Sustainability Global Plan for the whole company approved on June 2017. It stablishes specific goals for 2020.
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
Participation of the Senior Management in setting strategic objectives for social, safety and environmental, 2020
Establishment of objectives linked to social, safety and environmental targets, for all employees with variable remunetarion (global weight of 10%)
Periodic review of the Companys’ Sustainability performance by senior Management
2. Our commitments to Sustainability Repsol: a company fully committed to Sustainability
8
A sustainable Company: A company that is able to anticipate risks in order to manage them properly, minimizing the impact of its activities and generating value for its stakeholders
Commitment to Zero Accidents by 2020 Embedded safety culture
Strict asset integrity procedures
Implementation of circular economy projects. Excellence in spill prevention and response Optimized water & waste management
Biodiversity action plans
Achieved reduction of 4.3 million tons CO2 by 2016 Objective: reduction of 5 million tons CO2 emissions by 2020
Promoting non-fossil fuel energy initiatives
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
Policy on respect for human rights based on the UN Guiding Principles on Business and Human Rights Grievance Mechanisms
Our Goal: zero incidents with communities by 2020 Objective: proportion of women in leadership positions to 30% by 2020
1.- EITI: Extractive Industry Transparency Initiative
2. Our commitments to Sustainability
9
Safety operations
Ethics and Transparency
People Management of impacts and resources
Innovation and Technology Climate Change
Promoting innovation and development Use of new technologies
(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).
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
We have established targets to reduce PSIR1 and occupational safety (LTIFR2 and TRIR3)
No fatalities in 2017 • In 2016, two fatalities occurred. One of them happened during a 3D seismic in Indonesia, due to a tree that fell over a worker.
The other one occurred during a LPG inspection installation in Madrid.
2. Our commitments to Sustainability Safety operations
10
Our ambition: zero accidents
0
2
4
6
2008 2009 2010 2011 2012 2013 2014 2015 2016
OCCUPATIONAL SAFETY
LTIFR
TRIR
2012 2013 2014 2015 2016
Tier 1+2 123 93 58 46 32
Tier 1 24 16 10 4 5
Tier 2 99 77 48 42 27
N hours 31.016.119 34.638.711 37.241.382 45.526.525 49.485.180
PSIR Tier 1+2 4,0 2,7 1,6 1,0 0,65
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.
PEOPLE
Strengthening the principle of Integrated Safety in operations, ensuring the correct implementation of safety processes.
2016: Focus on those critical processes that require specific management actions
Focusing on people, their values and beliefs, their behaviours and attitudes on safety, to reduce accidents caused by human factors .
2016; development of safety trainings to reduce accidents caused by human factors
A proper Design, implementation and maintenance of safety barriers guarantees the integrity of our facilities, preventing failures on these barriers, an therefore reducing accidents.
PLANTS
[ Three axes ]
PROCESSES
2. Our commitments to Sustainability Safety operations
A proactive safety plan accompanying the Company´s Strategic Plan together with other actions under the safety strategy of Repsol.
SMArt keys Program
11
2. Our commitments to Sustainability Safety operations
Culture Project: •Developed our own Culture model and diagnose methodology: HSE Culture model defined in 2013. Maturity levels and diagnose methodology to be defined in 2014.
• Four pilot projects already developed in order to test the above mentioned diagnosis methodology: Bolivia E&P business, LPG business in Spain, petrochemical business in Portugal (Sines facilities) and Cartagena refinery.
•Safety culture workshops carried out in Norway, Canada and USA as initial studies prior to theirs diagnose culture project
•HSE leadership Plan and safety and environment training •Keep on working on the HSE leadership Plan (initiated in 2012): 223 employees trained in 2016
•Training in safety and environment: In 2016, the number of hours given on these topics came to 221,521 and 16,350 employees trained.
•Training programs in safety and the environment for contractors around 200,490 hours taught.
•Increasing the number of training hours. Training should reach all employees and all business units.
•Keep on working on the smart Key Programs: safety culture workshops, culture diagnosis projects, company culture improvement projects and integration of culture in organizational processes.
Progress
Next Steps
“The development of a Safety and Enviromental culture, embedded and shared by the whole company, is crucial to achieve our goals”
Our ambition: Embedded safety culture
12
In 2016, the number of spills has decreased 50% compared to the previous year. The amount of hydrocarbon spilled was 40 tons, higher than the previous year, due to a relevant spill that occurred at marketing business in Peru.
(1) We had four significant spills in 2014: a hydrocarbon spill in the Pampilla refinery in Peru, a diesel spill in Marketing Perú, a diesel spill in Ecuador and a synthetic drill mud spill in Angola. (2) One significant ocuured at Peru marketing bussiness. Quantity of spillage amounted to 31 tons.
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.
2. Our commitments to Sustainability Management of impacts and resources
13
Our ambition: neutral environmental impact of resource management
Spill prevention and response
2014 2015 2016
Number of spills 17 21 11
Quantity spilled (tonnes) 316(1) 23 40(2)
Various measures have been implemented to prevent accidental spills:
o Reviewed procedures o Improved management systems o Reviewed of control mechanisms o Best available technologies
2. Our commitments to Sustainability
14
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
Circular Economy
Progress
Next Steps
Management of impacts and resources
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 external companies that can contribute to the definition and start-up of projects. o Active participation in national and international work groups on Circular Economy (CEOE1, Chamber
of Commerce, CEPS 2, World Economic Forum, European Commission, etc). 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 (CIC).
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 maximum efficiency criteria, maximum transparency and less environmental impact.
1.- Conferederación española de organizaciones empresariales 2.- CEPS:
1.- IPIECA: Global Oil and Gas Industry Association for Environmental and Social Issues 2.- GEMI: Global Environmental Management Initiative (GEMI)
2. Our commitments to Sustainability
15
•Keep on working on the inclusion of new actions to go forward with the current action plans
•We have developed our own tool, Repsol Water Tool (RWT), which incorporates aspects of the Global Water Tool (adopted by IPIECA1) and Local Water Tool (Adopted by GEMI2), the two main methodologies developed and adapted to the oil and gas industry to identify and evaluate the impacts and threats associated with water.
•This tool has enabled us to draw up a water management map, which we have used to work on defining the company’s baseline, and to define a 2015-2020 water management improvement action plan.
•Implementation of the action plan: the 85% goal has been surpassed thanks to the efforts of the various businesses, reaching an implementation of close to 95% in 2016.
•Pilot project developed in Spain (Puertollano refinery) focusing on the use of water optimization. Identification of improvements and proposal of different measures to reduce water consumption.
•In 2016, RWT was adapted to identify and assess the main risks associated with water management
in the unconventional assets acquired of Talisman.
Progress
Next Steps
Repsol has defined a water management improvement action plan for 2015-2020 that is specific to each installation, establishing for 2016 a company goal of 85% compliance with the work lines
Resource Use Efficiency: Water
Management of impacts and resources
2. Our commitments to Sustainability
16
• Company waste map redesigned.
• 15.5 Kilotons of waste reduced through 2016, almost 50% of total objective already achieved
• Improvement goals in E&P through the implementation of the company's EPPs: 100% of the Environmental Performance Practice (EPPs) planned were implemented.
• Developed an extended waste map for the entire Company, which includes characterization, current disposal and new options for improving our waste management
• Reduction actions carried out in all areas:
1.- Refining and Chemical facilities: efficiency in tank cleaning increased, improvements in waste drying and internal flows reused.
2.- E&P: actions to reduce the quantity of waste landfilled through our own recovery or that of third-parties.
3.- Lubricants: participation in the Ecoembes Integrated Management System (IMS), an inverse logistics system implemented.
• Compliance and revision of the potential reduction of some of the actions identified for the period 2015-2020.
• Implementation of good practices which derive from the action plan in other parts of the company
• Identified 11 opportunities for valuing waste, which we will develop in 2017 by order of priority.
Our objective: reduce waste by 50 kilotons by 2020. Working to improve waste management throughout the life cycle of our processes in order to minimize our impact on the environment.
Resource Use Efficiency: Waste
Progress
Next Steps
Management of impacts and resources
1.- IPIECA: Global Oil and Gas Industry Association for Environmental and Social Issues 2.- IOGP: International Association of OIL& Gas producers 3,-BAP: Biodiversity Actions Plans
2. Our commitments to Sustainability
17
• 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.
• BAP3 in Bolivia, Peru, Ecuador and Trinidad &Tobago
• 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.
Our objective: the Prevention and minimization of any negative environmental impact in all our operations, especially in sensitive, biologically diverse and protected natural environments
Biodiversity and Ecosystem Services
Progress
Next Steps
Management of impacts and resources
4.- UNEP: United Nations Environment Programme 5.- WCMC: World Conservation Monitoring Center
2. Our commitments to Sustainability Climate Change
Our position on climate change
18
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.
2. Our commitments to Sustainability Climate Change
Our Strategy
19
We promote the role of Natural Gas
• 65% of our production and 75% of our reserves are gas
• Committed to mitigate methane emissions associated with our production
• LDAR programs implemented to detect and repair methane leaks
• Endorsed United Nations Climate and Clean Air Coalition – O&G Methane Partnership initiative
• Participating in different engagement initiatives with investors: PRI Initiative on Methane Emissions and Institutional Investors Group on Climate Change (IIGCC)
Carbon Capture, Use and Storage (CCUS)
• Working with our OCGI partners on pathways for marketing commercialization, capture technologies, cost reduction and availability of storage capacity
• Participate in some investments in the OGCI Climate Investments
Energy Eficciency
• Our objective: to reduce 1.9 million tons of CO2 annual run rate by 2020 (as part of our energy efficiency program 2014-2020)
• 4.3 Mt CO2 have been reduced since 2006. Achieve reduction of 5 M tons CO2 by 2020
• 357 M€ invested in reduction actions out of 500 M € committed until 2020
• Endorsed the World Bank Zero Routine Flaring by 2030 Initiative
• Repsol continues implementing a global energy management system (EnMS) under ISO 50001 standard: 8 of our main facilities and a multicenter business certified so far.
Renewable energy
• Investing in Sustainable mobility • Development of advanced biofuels projects to
reduce CO2
1
2
3
4
2 20
2. Our commitments to Sustainability
Carbon pricing as a company tool to improve resilience in a low emissions future
• Repsol supports carbon pricing as a policy framework that will contribute to provide our businesses with a clear roadmap for future investment.
• We believe carbon pricing encourages the most efficient ways of reducing emissions widely and increases investment in low carbon technologies.
• To be effective carbon pricing should be embedded in a coherent policy frameworks which safeguards a sector’s international competitiveness.
• Repsol includes a carbon pricing in their strategic plans:
Carbon pricing
Climate Change
2018: 10 USD ton/ CO2
2025: 40 USD ton/ CO2
CO2 21
2. Our commitments to Sustainability
Scenario analysis
Climate Change
Scenario Analysis
Our ambition: to commit to 450 ppm Scenario. There is no single pathway to a low emission future. Finding these pathways is a task for 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.
• 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).
22
2. Our commitments to Sustainability
Repsol has been the first OIL& gas company issuing a Green Bond
Green Bond
Climate Change
• 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 1.3 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%)
Repsol joint the initiative in June 2015. We are working in 3 different focus areas:
• 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.
• Managing Methane Emissions: We are collaborating on research to fill the gaps in methane data and detection technology to help both companies and policy-makers act more effectively.
• 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 OCGI Investment fund, established to invest 1 BN USD in the development of low emissions technology.
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 investor signatories with a combined US$100 trillion in assets.
Repsol has been recognized as one of the best O&G companies for its Carbon Strategy. Our company has been included in the group of “leaders” 8 times in the last 11 years. In 2016 and 2017, Repsol has achieved an A- score and has attained the Leadership level.
Historical results
Repsol is actively involved in several work streams:
• Low Emissions Pathways. • Methane emissions. • Adaptation and resilience. • Energy efficiency. • Climate reporting.
2. Our commitments to Sustainability
Moving from stakeholders engagement to partnerships
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.
Climate Change
23
Transparency
Climate Change Initiatives
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 Conduct Regulation
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 applies to both employees and contractors.
2017 objective: mandatory training to all employees in Ethics and Conduct regulation.
Ethics 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 of Ethics and Business Conduct without fear of retaliation. It is administered by an independent company (NAVEX Global) and is available 24 hours a day, seven days a week, by telephone and online.
23 concerns received in 2016 and 37 during 2017
Chief Compliance Office
Repsol has always been very active in ensuring compliance.
Repsol has given one further step in the strengthening of the role of compliance through the appointment of the Chief Compliance Officer in the CD Corporate Governance Affairs and CCO, the creation of the D. Compliance Processes and the appointment of a Chief Compliance Officer for North America.
Reinforcing our compliance commitments contributes to the strategic objectives of efficiency and control of the Company.
24
2. Our commitments to Sustainability Ethics and Transparency (II)
25
Audit and Control Corporate Division
Supports non-compliance investigation
Evaluates control processes efficiency
Anti-corruption policy
Applies to all employees
The “Code of Ethics and Conduct for suppliers’’ includes special clauses and application of best practices (FCPA2 and UK bribery Act) to ensure observance of anticorruption issues
Set of regulations that develops mechanisms for the prevention, detection and investigation of corruption
Crime Prevention Model
A formal framework of regulations, procedures and controls, that provide a means of reasonably ensuring that the risks of crimes being committed are suitably identified, monitored, evaluated and controlled
*1.- Due to the integration of Talisman, Ethics and Conduct regulation has been reviewed in 2016 to unify it with the other ethics codes of the group and adapt it to the company’s new circumstances 2.- FCPA: Foreign Corrupt Practices Act
2. Our commitments to Sustainability Ethics and Transparency (III)
26
EITI* and other initiatives
Support for initiatives to promote financial transparency in the international extractive sector and in the countries where we operate
We support EITI since its foundation in 2003: We belong to the Peru group since 2011 and cooperate with Trinidad Tobago working group since 2015
Code of Best Tax Practices
Adherence to the Code of Best Tax Practices, evidencing our opposition to the use of non-transparent tax structures
EU and US lobbies Repsol is registered at the US lobby register and at the European Union Transparency register.
Disclosure Transparency
Continuous improvement on remuneration disclosure
Disclosure of engagement report
*EITI: Extractive Industry Transparency Initiative
Our ambition: Be publicly recognized as an honest and transparent company in tax- related matters
2. Our commitments to Sustainability People: respect for Human Rights (I)
27
Policy on Respect for Human rights
Based on the UN Guiding Principles on Business and Human Rights “ Protect, Respect and Remedy”
Community Relations and Human Rights Management Framework
Development of a NEW Global Framework and management system as a result of the integration between Repsol and Talisman, based on leading International Standards (IFC, UNGP, OECD guidelines)
Updated Policy on human rights and Community Relations
Development of a new Community relations and Human Rights Standard.
10 workshops developed in 2016 based on the application of the new legal framework, with specific focus on risk and impacts management, and the application of constructive dialogue between parties.
Disclosure Transparency
A community relations and human rights focus and capacity must be present in the due-diligence processes prior to acquisitions, to identify and assess the associated social risks at all stages of the life cycle of projects 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.
All social risks, impacts and opportunities linked to an operated/non operated activity will be regulated under our policy, its fulfilment defined though specific objectives and KPIs.
1.- IFC: International Finance Corporation ( World Wide Group ) 2.-UNGP: United Nations Guding principles on Business and Human Rights 3.-OECD: Organisation for Economic Co-operation and developmen
Our ambition: Zero incidents with local communities as a result of our operations
2. Our commitments to Sustainability People: respect for Human Rights (II)
Voluntary principles on Security and Human Rights
Formal adherence to the Voluntary Principles on Security and Human Rights initiative on 2014
Implementation of the action plan launched in 2015, to be applied in all countries
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
Training on Community Relations and Human Rights
Online training program on Human Rights ( 1,015 employees through September 2016)
Face to Face workshops on specific processes: community grievance mechanisms; human rights impact assessments
Human Rigths Impact Assesment
3 projects carried out, 2 additional downstream projects
Develop internal guidance on HRIA to support internal practitioners
Support Business Units in the implementation process
Community Grievance Mechanisims
Pilot Project in an operated asset jointly with IPIECA ( Peru) and one existing project in Bolivia
Diagnosis of existing Community Grievance Mechanisms in assets ( Bolivia and Peru)
develop an internal guidance on How to support internal practitioners
Support Business implementation and improvement processes
Our ambition: Guarantee people’s security with full respect for human rights
28
• Indigenous communities in Bolivia, Canada, Colombia, Ecuador, Papua New Guinea and Peru
• Repsol recognizes and respect the unique nature of indigenous, tribal and aboriginal peoples and 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 countries in which we operate or not
• 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). Recently, a new Community relations policy has been approved, based on the same principles than the previous one.
• Repsol establishes enduring relationships and long-term agreements 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 indigenous peoples task force since 2014 and participates in the ARPEL2 Indigenous Peoples Working Group
2. Our commitments to Sustainability Community relations and Human Rights Management Framework: respecting Indigenous Rights
Bolivia, Canada, Colombia, Ecuador, Papua New Guinea and Peru
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
29
Caixabank S.A.
Sacyr Vallehermoso, S.A.
Temasek
Free Float
Retail Investor
Institutional Free Float
9.69%
8.03%
4.25%
78.03% 18.0%
5. Corporate Governance Shareholder structure
31
Total number of shares as of July 2017: 1,527 million(*)
(*) Post settlement of scrip dividend
Directors may not hold more than 4 mandates
in other listed companies*
Presence of External Directors
The majority of the Board (87.5%) consists of Non Executive Directors
Market Practice: The tendency is to decrease the presence of Executive directors
Rotation of independent
Directors
None of the Independent Directors have been on the Company’s board for more than 12 years
Implementation of the international standard (12 years cap) in our legal framework and in our internal regulations (art. 13.2.j) of the Regulations of Board of the Directors)
% of Board independence
1/2 of the Board is independent
Market Practice: Good Governance Code for Listed Companies recommends having 1/2 of the Board Independent
% of Committee Independence
Audit and Control Committee: Composed exclusively of independent directors
Nomination Committee: Majority independent / Chairman is independent
Compensation Committee: Majority independent / Chairman is independent Sustainability Committee: Composed exclusively of Non Executive Directors (2 independent and 2
proprietary) / Chairman is independent
The company's Board of Directors recognizes that a solid commitment to corporate governance is critical to establishing trust and credibility with investors.
*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.
5. Corporate Governance Board of Directors
32
Gender Diversity
Geographical diversity
Separated roles of CEO and Non
Executive Chairman
Transparency on
remuneration
The roles of the CEO and Chairman are been separated since 2014.
Repsol has appointed two female directors at its last AGM
Female directors make up 12.5% of the Board’s Directors.
Repsol has committed to increase the proportion of women in leadership 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 with solid international experience, such as Rene Dahan (Dutch) and J. Robinson West (United States).
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 2017 AGM the Report was approved by 97.089% of the share capital attending the meeting.
The 2017 AGM approved also 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 regulatory framework and reflects best practices on good governance and also Repsol's unflinching commitment to ensuring the utmost transparency.
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
5. Corporate Governance Board of Directors
33
Social Indicators
6. Annexes Main KPI Evolution
35
Social 2013 2014 2015 2016 Repsol personnel (number) 24,214 24,46 27,166 24,532 Accident frequency rate (Repsol and contractor staff) 0.59 0.85 0.92 0.96 Training in safety and occupational health (hours) 208,891 234,51 220,831 221,521 Deaths (number) 0 0 2 2 Women staff (percentage) 32 33 33 35 Women in management posts (percentage) 15 15 15 26.7 Women on the Board of Directors (number) 2 2 1 1 Total turnover rate (percentage) 7 7 7 13 Investment in training (millions of euros) 19.63 17.5 17.8 11.9 Training per employee (hours) 40 44 45 41
Repsol staff who receive performance evaluations (percentage) 60 63 67 68
Disabled persons (number) 671 656 663 586 Teleworking staff (number) 1,222 1,411 1,716 1,811 Voluntary social investment (millions of euros) 24.58 26.03 22.74 19.83 Local purchases as percentage of total purchases 85.3 83 82.13 82
Evaluations of the performance of contractors and suppliers (number) 1,261 2,237 4,369 3,526
Audits on contractors and suppliers (number) 171 100 59 33
Expenditure on private and public security (millions of dollars) 44.11 40.53 38.39
Litigation due to allegations of anticompetitive behaviour (number of cases initiated) 2 2 1 0
Communications received under the Ethics and Conduct Regulation (number) 8 2 8 32
Dismissals for failure to comply with the Ethics and Conduct Regulation (number) 69 64 63 60
Enviromental Indicators
6. Annexes Main KPI Evolution
36
Environmental Indicators 2013 2014 2015 2016
Spills
Number of spills that reach the environment 14 17 21 11
Volume of hydrocarbon spills that reach the environment (tons) 15 316 23 40
Energy and Carbon Management
Energy Consumption (106 GJ) 176.8 178.4 214 256
Direct emissions of CO equivalent (million tons) 14.2 13.9 21.07 24.9
Water Management
Fresh water withdrawn (kilotons) 54,203 54,729 57,303 52,022
Reused water (kilotons) 9,473 9,945 8,964 10,292
Water discharged (kilotons) 38,965 35,920 49,859 42,250
Hydrocarbons in water discharged (tons) 460 199 384 245
Waste Management
Hazardous waste (tons) 66,315 66,430 49,097 56,920
Non-hazardous waste (tons) 182,693 167,200 94,453 217,552
Lost time injury frequency rate 1 Total recordable injury frequency rate 2
Own Employees
Contractors Employees
Combined
3.- As of 3Q 2015
6. Annexes Safety indicators
37
0.6 0.92 1.12 0.73 0.55 0.78 0.79 0.66
0.59
0.85 0.92
0.69
2013 2014 2015 2016
1.-Lost time Injury Frequency rate: Number of lost time accidents and fatal accidents recorded over the year, per million work hours
2.59 2.38 2.25 1.46 0
0,5
1
1,5
2
2,5
3
2013 2014 2015 2016
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
2
6. Annexes GHG Long Term Target 2020
38
-0,58
-0,27 -0,16 -0,20
-0,38
-0,62
-0,44 -0,44
-0,51
-0,38 -0,31
-5,0
-4,5
-4,0
-3,5
-3,0
-2,5
-2,0
-1,5
-1,0
-0,5
0,0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CO2 Mt reduced
Achieved 2006-2013:
-3,1 Mt CO2 e
2006-2013 objective: -2,5 Mt CO2 e
Bussiness as usual scenario
2014-2020 progress -1,2 Mt CO2 e
2014-2020 objective:
-1,9 Mt CO2 e
Scenario achieved through reduction measures adopted
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
6. Annexes Main Sustainability Indexes and Initiatives
39
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
(*) 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-
Historical Results
6. Annexes Main Sustainability Indexes and Initiatives
Repsol has been recognized as one of the best O&G companies for its Carbon Strategy. In 2016 and 2017, Repsol has achieved one of the 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.
40
2010 2011 2012 2013 2014 2015
Maximum Energy sector score 90 92 98 98 100 100
Minimum score for Energy
sector companies to be eligible
for the CDLI
88 90 95 97 98* 100*
Repsol’s score 88 89 98 98 96 100
Repsol´s evolution CDLI A B A- B B B
Repsol 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. 09/05/2017
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