2012 Social Responsibility Report RESPONSIBILITY REPORT 2012 1 Tesoro is dedicated to operating in a socially responsible manner. Our Core Values are ... Tesoro’s Code of Business

2012 Social Responsibility Report

Table of Contents

1 Message from Our CEO

2 Tesoro at a Glance

4 How We Conduct Business

10 Our People

14 Our Communities

18 Health and Safety

24 The Environment

32 Performance Summary

34 Reporting Index

35 Report Parameters

As used in this report, the terms “Tesoro,” “we,” “us,” “the Company” or “our” may refer to Tesoro Corporation, one or more of its consolidated subsidiaries, or all of them taken as a whole. This includes Tesoro Logistics LP (“TLLP”) and its subsidiaries as consolidated subsidiaries of Tesoro Corporation.

SOCIAL RESPONSIBILITY REPORT 2012 1

Tesoro is dedicated to operating in a socially responsible manner. Our Core Values are

reflected in the way we run our business, with commitment to integrity, respect, the

environment and safety. Our 2012 Social Responsibility Report provides updates on

our progress in meeting our commitments to our people and our communities, and

to operating in a manner that is safe and environmentally responsible.

Our People: In 2012, we continued building a diverse

workforce—one that reflects the markets in which we

operate and broadens our ability to address the needs of

our stakeholders. We encouraged employees to take an

active role in their own career development, and supported

them with training and development opportunities, and

our educational assistance program. We also encouraged

them to actively manage their own health through a

growing wellness program.

Our Communities: During the year, employees and the

Company contributed to many significant community

causes around education, the environment and community

vitality. In 2012, Tesoro and its employees donated more

than $1.9 million to local United Way organizations and

agencies, and contributed more than 25,000 volunteer

hours serving the communities where we operate.

Health and Safety: In keeping with our commitment

to operating our facilities in a manner that promotes

the health and safety of our employees, customers and

communities, we continued to implement process safety

improvements throughout our operations. Complementing

these preventative measures, we continued to provide

robust emergency response training, including special

training for our first responders at each refinery. In 2012,

65 first responders attended Texas A&M’s Corporate Fire

School and acquired valuable new skills.

Environment: Consistent with our commitment to

protecting the environment, in 2012, we continued to

improve energy and process efficiencies, reduce waste

and emissions, and sustain the ecosystems in which we

do business. We completed upgrades at several power

generation units and converted a number of steam-

operated turbine pumps to more energy-efficient,

electricity-operated pumps. We continued our work to

reduce greenhouse gas emissions to below 1990 levels by,

among other things, reducing flare activity and minimizing

energy loss. Furthermore, in keeping with our commitments

to safety and prevention, we conducted extensive spill-

response drills, including the simulation of a spill in a

remote area of Alaska.

While much progress has been made in all these areas, we

strive for continuous improvement. To this end, we actively

promote a culture of accountability that is integral to being

a trusted and valued business partner, a good corporate

citizen and a high-performing company.

We appreciate your interest and look forward to sharing

updates on our 2013 progress.

Sincerely,

Greg J. Goff President and Chief Executive Officer

Greg J. GoffPresident and Chief Executive Officer

Tesoro CorporationTo Our Stakeholders

TESORO CORPORATION2

FEEDSTOCKSAcquire refinery feedstocks.

TRANSPORTATION REFININGTransport crude oil and feedstocks

to refineries via ships, barges, pipelines and trucks.

Manufacture transportation fuels.

Tesoro at a Glance (As of 12/31/2012)

Tesoro Corporation (NYSE: TSO), a Fortune 150 company headquartered in

San Antonio, Texas, is an independent refiner and marketer of petroleum products. In

2012, our refinery operations included seven refineries in the western United States

with a combined capacity of approximately 675,000 barrels per day, which refine

crude oil and other feedstocks into transportation fuels, such as gasoline, diesel, jet

fuel and other products, including heavy fuel oils, liquefied petroleum gas, petroleum

coke and asphalt.

Our retail operations sold transportation fuels and

convenience products in 18 states through a network of

over 1,400 retail stations, primarily under the Tesoro®,

Shell® and USA GasolineTM brands. Our marine operations

chartered U.S.- and foreign-flag tankers to optimize the

transportation of crude oil, other feedstocks and refined

products within our refinery system.

Tesoro Logistics LP (NYSE: TLLP), headquartered in

San Antonio, Texas, is a master limited partnership formed

by Tesoro Corporation to own, operate, develop and

acquire logistics assets to gather crude oil and to distribute,

transport and store crude oil and refined products.

In 2012, Tesoro Logistics LP’s assets included:

A crude oil gathering system in North Dakota,

Eight refined products terminals in the midwestern and

western United States,

A crude oil and refined products storage facility and five

related short-haul pipelines in Utah,

Two marine terminals in California, and

A rail car unloading facility in Washington.

For more information on Tesoro and Tesoro Logistics LP, particularly financial data, please refer to each company’s 2012 Form 10-K available at www.tsocorp.com and www.tesorologistics.com, respectively.


OPERATIONAL DATA UNIT OF MEASURE 2010 2011 2012

Refinery Crude Throughput Barrels per day 480,000 579,000 585,000

Crude Capacity Barrels per day 665,000 665,000 675,000

Crude Oil Source – Domestic1 % 65 58 59

Crude Oil Source – Foreign2 % 35 42 41

Refined Products – Gasoline, Diesel and Jet Fuels % 79 82 82

Refined Products – Heavy Fuel Oils, Residual Products, Internally Produced Products and Other % 21 18 18

Retail Fuel Sales Million gallons per year 1,336 1,526 1,740

FINANCIAL DATAUNIT OF MEASURE 2010 2011 2012

Revenues $ millions 20,583 30,303 32,974

Capital Expenditures $ millions 287 320 559

Turnaround Expenditures $ millions 140 109 261

Debt to Capital % 38 30 25

Diluted Earnings (loss) $ per share (0.21) 3.81 5.25

1 – Domestic crude oil sources are primarily from California, North Dakota and Alaska.2 – Foreign crude oil sources are primarily from South America, Russia and Canada.

HEADQUARTERS Tesoro Corporation, Tesoro Logistics LP

RETAIL STATIONS

REFINERIES

LOGISTICS

STORAGE MARKETINGTRANSPORTATIONTransport refined products via ships,

barges, pipelines and trucks to terminals and storage.

Manage inventory for marketing or process needs.

Sell products through retail and wholesale outlets.

Logistics operations depicted on this map include assets operated by Tesoro Corporation and Tesoro Logistics LP

How We Conduct Business


We conduct business at Tesoro based on a strong culture that is grounded in our Vision,

Strategic Priorities and Guiding Principles. Our culture drives the characteristics and

behaviors we expect from our employees, and is integral to being a high-performing

company, a trusted and valued business partner, and a good corporate citizen.

TESORO’S CULTURE

Our culture begins with our Vision, which is to be the

premier low-cost provider of transportation fuels in

our markets, providing value for our customers, while

delivering industry-leading returns for our shareholders and

conducting ourselves responsibly in the communities where

we operate.

Building on this Vision, our Strategic Priorities include:

Operational Efficiency and Effectiveness in the areas

of Safety and Reliability, Cost Leadership and

System Improvements,

Commercial Excellence,

Financial Discipline,

Value-driven Growth and

High-performing Culture.

We pursue these Strategic Priorities

according to our Guiding Principles,

which include:

Always abiding by our Core Values,

Recruiting, retaining and developing

Exceptional People,

Operating with a Shared Purpose,

Fostering Powerful Collaboration and

Focusing on Superior Execution.

These Core Values—Safety and Environment,

Respect and Integrity—are an important part of our culture

and the foundation of our Code of Business Conduct, our

guide governing daily behavior.

TESORO CORPORATION6

TESORO’S BOARD OF DIRECTORS

Tesoro’s Board of Directors represents shareholders

and delegates authority to management to pursue the

Company’s business. The Tesoro Board consists of nine

independent directors and the Chief Executive Officer. The

Chairman of the Board is an independent director.

The Board is diverse in composition, with members

possessing expertise in many different areas. Each director

must disclose to the Board any business and personal

relationships that could create an appearance of a conflict

of interest, even if there is no actual conflict.

To support shareholders’ ability to communicate with

directors, the Board has established a policy under which all

written communications from shareholders are sent to the

Chairman of the Board at the Company’s principal office,

and the Chairman reviews all relevant communications with

the Board. The Board further believes that management

speaks for the Company and that, in general, management

should handle requests from investors, the media, the

public and other stakeholders.

The Board of Directors oversees four standing committees:

Governance; Environment, Health, Safety and Security

(EHS&S); Audit; and Compensation. Each committee,

consisting entirely of independent directors, adheres to a

written charter that outlines the committee’s clearly defined

purpose and principal responsibilities.

In addition to its oversight of the Board’s organizational

structure and composition, the Governance Committee semi-

annually reviews the Company’s charitable contributions, as

well as its direct and indirect political contributions.

The EHS&S Committee is committed to reviewing, at least

annually, the Company’s year-over-year performance on

social responsibility issues related to health, safety and

environmental matters that may affect Tesoro’s reputation.

For detailed information about each standing committee’s charter and responsibilities, please visit our Investor Relations page at www.tsocorp.com/investors.


CODE OF BUSINESS CONDUCT

All directors, officers and employees are expected to

understand and follow our Code of Business Conduct, and

we offer online and instructor-led training classes supporting

this Code. Every employee is required to complete training

classes each year, while members of management are

required to complete additional leadership training.

We provide multiple ways for employees to report if they

see or hear something improper, including reporting to

their supervisor, Human Resources, the Business Conduct

Helpline, the Business Conduct Office, the Compliance

Officer and the General Counsel. We will not tolerate

retaliation against anyone who needs help, asks questions

or reports concerns about workplace conduct or conditions.

We expect our suppliers, contractors and business partners

to be familiar with our Code of Business Conduct and to

support effective compliance programs within their own

organizations. Our suppliers and contractors are bound

by their contracts with us to support effective compliance

programs. Our CEO and senior officers are also subject

to a code of ethics that applies to their particular duties

and commitments.

ANTI-CORRUPTION

We conduct our business ethically and in compliance

with all applicable U.S. and foreign anti-bribery and anti-

corruption laws, including the Foreign Corrupt Practices Act

(FCPA). The Company has implemented an anti-corruption

program which includes a policy and procedures regarding

third-party due diligence, gifts and entertainment, travel,

charitable contributions and record-keeping.

All officers, directors and employees—as well as applicable

contractors, agents and others who work on our behalf—

must comply with this policy and with all required

procedures. Anti-corruption training is provided to all

applicable employees, officers, directors and agents.

Tesoro’s Code of Business Conduct is a common-sense policy which supports good business decisions. All employees, officers, directors and business partners are required to understand and follow our Code of Business Conduct.

TESORO CORPORATION8

STAKEHOLDER ENGAGEMENT

Effective engagement with stakeholders enhances our strengths, promotes transparency and helps to identify opportunities

for improvement. It is also an important part of developing our business strategy. Compliance with our Core Values and

Code of Business Conduct is an integral part of those interactions.

The following table provides examples of how Tesoro regularly engages with a variety of stakeholders whose support and

understanding are important to our business.

STAKEHOLDER GROUP EXAMPLES OF ENGAGEMENT

Employees

Interactive town hall meetings with senior management

Communitiescharities and non-governmental organizations

communities

and non-profit board leadership

Local, State and Federal Governments government

Customers

Investors

posted on our corporate Internet

pay practices

Suppliers and Business Partnerstopics including environmental stewardship and operational safety and reliability

ethical standards


ADVOCACY AND PUBLIC POLICY

As elected and appointed leaders consider issues such as

energy supply, production and environmental stewardship,

it is incumbent upon industry leaders to be constructively

engaged in the public policy process. Our Government

Affairs team, with input from our External Policy Committee:

Identifies legislation, as well as pending, proposed

or final regulations, that could have a material impact

on us,

Establishes our positions on issues, which are, in

turn, overseen by the Executive Committee, and

Engages in discussions with policymakers to

advocate our positions.

We regularly interact with elected representatives,

government agency officials and their staffs to discuss

pending legislative and regulatory initiatives that impact our

business. As government policymakers address federal, state

and local issues, we regularly engage with these stakeholders

through direct advocacy, participation in industry trade

associations and involvement in the political process.

We work to keep employees and customers informed about

public policy through our website, ActTesoro.com, which

facilitates outreach to elected representatives. The site

provides information on important issues, such as climate

change, alternative fuels and taxes.

We exercise our right to participate in the political

process through contributions to individual candidates

and organizations. In making such contributions, Tesoro

complies with all applicable reporting requirements. In

venues where corporate contributions are not permitted

by law, we engage in the political process through our

Political Action Committees (PACs), which are voluntarily

funded by eligible employees. In 2012, Tesoro made a total

of $272,999 in political contributions and $230,450 in PAC

contributions.

HUMAN RIGHTS

We expect our suppliers to comply with all labor laws,

including laws against child labor, forced labor and human

trafficking, and require them to verify that the materials

incorporated into their products are manufactured in

compliance with all such laws. Furthermore, we will not

conduct business with any suppliers found to be in violation

these laws, and we reserve the right to conduct audits to

ensure compliance.

In coordination with our efforts to uphold basic human

rights, we provide training on applicable labor laws to

those employees with direct responsibility for supply chain

management. In 2012, we did not have any reported

human rights grievances, nor have we been subject to

human rights reviews.

Our People


At Tesoro, we are committed to creating a high-performing culture and a work

environment that attracts, retains and motivates talented individuals.

EMPLOYMENT

Our success is directly tied to our ability to attract, hire,

develop, promote and retain a talented and diverse

workforce. We achieve these objectives by:

Hiring the best people with diverse experiences and

perspectives that enhance our ability to grow,

Treating employees fairly and equitably by

providing equal access to opportunities,

Rewarding employees in ways that recognize their

individual accomplishments and their contributions to

business results,

Providing employees with meaningful

opportunities to grow and develop their skills,

Supporting employees with programs to enhance

their health and well-being, and

Encouraging employees to actively serve in the

community and contribute to the community’s health

and vitality.

Our employees have the opportunity—and the

responsibility—to share their diverse experiences, ideas

and viewpoints, make a difference in all levels of the

organization and in the communities in which we operate.

In 2012, our workforce reached more than 5,700 total

employees, a slight increase from the year before,

and commensurate with our growth and customer

requirements.

Our workforce is a diverse one, composed of employees

with unique backgrounds, skills and experiences. In 2012,

female and minority employees accounted for 33 and

37 percent of our workforce, respectively. As our Company

grows, we are committed to building a workforce that

reflects the markets in which we operate.

TOTAL NUMBER OF EMPLOYEES

2010

2011

2012

5,278

5,374

5,768

2010

2011

2012

GENDER

Female Male

2010

2011

2012

ETHNICITY

Minority Non-Minority

33%

37%

67%

32% 68%

63%

37% 63%

37% 63%

33% 67%

TESORO CORPORATION12

COMPENSATION AND REWARDS

Tesoro is committed to providing competitive compensation

and rewards to attract, retain, reward and motivate

employees. We are a pay for performance organization, and

our compensation programs align directly to our business

objectives. In addition, our comprehensive programs

include a pension plan at no cost to employees and a

matching Thrift 401(k) Plan with investment alternatives.

In keeping with our philosophy of individual accountability,

our financial benefits encourage shared responsibility. We

provide employees with the tools to save for retirement and

ways to enhance their financial security.

EDUCATION AND DEVELOPMENT

At Tesoro, employees are encouraged to take an active role

in their career development through onboarding, as well

as technical, leadership and performance management

training. Our employee training and development

programs promote leadership competencies that support

our commitment to creating a high-performing culture and

ensure that all employees stay competitive in knowledge

and skills, while remaining compliant with all relevant laws,

regulations and guidelines. Employees and supervisors also

receive performance management training. We present

our employees with challenging opportunities for on-

the-job growth and development. Performance reviews

are mandatory for all salaried employees, as they provide

feedback for performance enhancement and ensure

alignment with our goals.

An educational assistance reimbursement program is

available to eligible employees to promote secondary

learning and excellence within their fields.

EMPLOYEE HEALTH AND WELLNESS

The health and well-being of employees is vital to our

success. We believe healthy employees are more engaged,

more productive and better equipped to do their jobs safely

and efficiently. Conversely, employee health problems

can contribute significantly to both direct medical costs

and indirect costs, such as decreased productivity and

absenteeism.

In order to promote health and wellness, we encourage

employees to maintain a healthy lifestyle. Medical benefits

offered to eligible employees include a free annual physical

examination and coverage for preventive care. Our medical

cost-sharing approach, in which the Company assumes the

majority of the cost, encourages employees to take an active

role in managing their benefits, costs and overall health.

In 2012, 103 employees participated in Tesoro’s educational assistance program, which provided more than $395,000 in assistance.


Employee Benefits include:

Medical, dental and vision coverage offered to full-time

employees and their eligible dependents

Wellness benefits, including fitness center and

Weight Watchers® reimbursement

Flexible spending accounts for medical and dependent

care expenses

Adoption assistance

In 2012, Tesoro established a Wellness Advisory Committee

to gather ideas, input, feedback and recommendations

regarding the Company’s wellness program. The

committee is made up of individuals from multiple

departments and business units across the Company. Its

key objectives are to consider program options and best

practices, and provide objective feedback that will lead to

final program recommendations.

We also continued our annual biometric screening and

online health risk appraisal incentive program in 2012,

and maintained our company-wide network of “Wellness

Champions”—employees who commit themselves to driving

awareness of healthy behaviors and wellness activities.

DIVERSITY, INCLUSION, EQUAL OPPORTUNITY

AND NON-DISCRIMINATION

Diversity is one of the characteristics we value in a high-

performing culture, and we are committed to inclusion,

collaboration, equal opportunity and non-discrimination.

Our employees’ diversity of views, backgrounds and beliefs

broadens our perspective, and strengthens our ability to make

good decisions that address the needs of our stakeholders.

Tesoro offers equal employment opportunities to those who

meet our qualifications. We recruit and post job openings

nationally and hire the best candidate for each position.

We have long recognized our moral and legal obligation

to support equal employment opportunities for all, without

regard to gender, age, race, ethnicity, color, national origin,

religion, marital status, sexual orientation, disability, veteran

status or any other protected basis.

Tesoro has an equal opportunity employment policy which

applies to recruitment, placement and compensation, as well

as other terms and conditions of employment. We do not

tolerate unlawful discrimination of any kind. No employee

will be subject to retaliation for reporting an incident he

or she believes, in good faith, violates our policies against

discrimination or harassment.

We are committed to supplier diversity. We strive to do

business with suppliers certified as being owned and

operated by women, minorities, veterans and physically

challenged or disadvantaged persons, as well as suppliers

collectively referred to as small business enterprises.

ADDITIONAL WELLNESS INITIATIVES

Other steps taken to promote wellness in 2012 included:

Implementing a free, company-wide tobacco cessation program

Launching a company-wide weight loss challenge in which more than 200 employees participated

onsite corporate fitness center

Our Communities


Being a good corporate citizen means being a good neighbor. At Tesoro, we measure

our success not only by the bottom line, but also by how well we perform as a

responsible corporate citizen in the communities where our employees live and work.

Volunteering and charitable giving are woven into our corporate culture.

We strive to make an impact in three primary areas:

Community Vitality. We aim to make communities

stronger and more dynamic by helping people and

improving their opportunities in life.

Education. We focus on giving students the tools they

need to succeed and grow, both in knowledge and

character.

Environment. We help better the lives of people for

generations to come by preserving natural resources

and promoting clean surroundings.

COMMUNITY INVOLVEMENT

Through strategic partnerships at the local level, we make

a vital difference for people, groups and environmental

organizations that need help in each area we serve.

Behind our mission to be a responsible corporate citizen

is a solid team of community-minded and committed

employees who consistently support worthy causes with

their hearts, their time and their money. In 2012, Tesoro

and its employees donated more than $1.9 million to local

United Ways and United Way agencies through a series of

annual workplace giving campaigns. During the year, our

employees also dedicated more than 25,000 volunteer

hours to varied activities benefiting our communities, such

as mentoring students, delivering meals to the elderly,

planting trees, cleaning up parks and neighborhoods,

and serving on community and non-profit boards.

The following are examples of how our employees engaged

with their communities last year.

Anacortes employees race to help United Way.

Employees of Tesoro’s refinery in Anacortes, Wash., carried

on a tradition of helping the United Way of Skagit County.

Founded by Bud Anderson, a retired refinery employee, the

Annual March Point Run and Fun Walk has raised money

for the United Way for the past 18 years. The 2012 event,

organized by Tesoro employees, attracted more than 300

recreational and competitive runners of all ages, and raised

$183,000. Proceeds helped the United Way address key

social issues, such as promoting financial stability and

independence within families, helping children and youth

achieve their potential, and improving personal health.


Kapolei fuels the dreams of Special Olympics athletes.

For seven years, Tesoro’s refinery in Kapolei, Hawaii, has

hosted the “Fueling Dreams” campaign for Special

Olympics Hawaii, which provides children and adults with

intellectual disabilities an opportunity to participate in

sports training and athletic competitions throughout the

year. In the campaign, which supports the Special Olympics

Hawaii Annual State Summer Games, Tesoro Hawaii

partners with military personnel, law enforcement officials

and Special Olympics volunteers. Employees ask customers

at our retail gasoline stations for donations, while wiping

their windshields and pumping their gasoline. Combining

customer donations with other fundraising support, we

presented the organization with a record amount of more

than $100,000.

Kenai helps students “return to the moon.” For six

years, Tesoro’s refinery in Kenai, Alaska, has provided

3,750 middle school students with Tesoro scholarships to

participate in a “mission” at the Challenger Learning Center

of Alaska. The center, located in Kenai, is a part of the

Space Science Education network created by the families

of the astronauts lost on the Challenger space shuttle.

The center uses simulated space missions to inspire school

children to develop an interest in math, science, technology

and engineering. A six-week classroom curriculum leads up

to a day at the Challenger Center, during which students

simulate a mission to the moon, Mars or a comet.

Mandan volunteers support Arbor Month. For

more than 23 years, Tesoro’s Mandan, N.D., refinery has

partnered with local community groups to support Arbor

Month activities, including cleaning parks and planting

trees and bushes. In 2012, Tesoro volunteers joined with

the Boy Scouts and Girl Scouts, as well as the local Forestry

and Parks and Recreation departments, to support clean-

up and planting activities at Bismarck’s Sertoma Park and

Mandan’s Kiwanis Park. Over the years, Tesoro volunteers

from the refinery have planted more than 11,000 trees

and bushes. The event also helps students learn about the

environment and give back to the neighborhoods where

they learn and play.


Martinez employees help feed the hungry. For more

than 10 years, Tesoro’s refinery in Martinez, Calif., has

enjoyed a relationship with the Food Bank of Contra Costa

and Solano counties. For some events, the refinery matches

food and contributions made by the public. For example, in

“Scare Away Hunger,” Concord High School students trick-

or-treat for food on Halloween night, and Tesoro matches

dollar-for-dollar up to $5,000 for the donations received.

The event also teaches children about the issue of food

insecurity and what they can do to help. Other food bank

activities that we and our employees support include the

annual fundraiser and the “Refinery Run” motorcycle run,

which includes participation by our suppliers.

Salt Lake supports JA City. The Salt Lake City refinery is

working with Junior Achievement of Utah to help teach

children about entrepreneurship and leadership. Located in

downtown Salt Lake City, the make-believe town of JA City,

housed in a 10,000-square-foot facility, allows students

from more than 100 schools to gain experience managing

and operating the day-to-day activities that sustain a city,

such as hosting elections, creating jobs for more than 20

storefronts, and managing the city’s financial well-being. In

addition to contributing a Tesoro-branded gas pump, the

refinery’s employees participate in career day and school

visits, teaching students about various jobs and giving them

insight on real-world experiences.

San Antonio employees act as Big Brothers and Big

Sisters. Through a partnership with Big Brothers Big Sisters

of South Texas, employees at our corporate headquarters in

San Antonio make a difference in the lives of local school

children. During the year, 23 students from El Dorado

Elementary visit the corporate campus each month to eat

lunch, play games, do arts and crafts, and spend time with

their mentors. Through this mentoring program, called

“Beyond School Walls,” our employees provide a positive

influence, while encouraging and inspiring children to stay

in school and do well.

Wilmington provides career mentoring. Since 2007,

Tesoro’s refinery in Wilmington, Calif., has sponsored

International Trade Education Programs (ITEP), a non-

profit that provides mentorships and hands-on, real-life

experiences to high school students who have an interest

in careers related to ports, logistics and manufacturing,

including refining. In the fall of 2012, Tesoro became the

first corporate sponsor to partner with ITEP to launch

“Exploring Careers in Long Beach,” an afterschool program

that provides youth with opportunities for hands-on

exploration of key industries and employers. During the

inaugural year, ITEP provided services to 50 sophomores

from Juan Rodriguez Cabrillo High School in Long Beach.

Health and Safety


Improving personal and process safety continues to be a top priority. Tesoro is

committed to operating our refineries, pipelines, retail stations and other facilities in

a manner that promotes the health and safety of our employees, our customers and

the communities where we do business.

Our goal is to keep our employees, contractors and

neighbors free from harm by working to eliminate the

types of incidents that may put them, and our facilities,

at risk. We proactively engage with those who share an

interest in continually improving our performance through

understanding and learning from each other.

We are committed to developing a culture in which

personnel are committed to their own safety and, just

as importantly, to each other’s safety. By offering the

right training, tools and work environment, we provide

employees with the opportunity to be successful and safe

every day.

EH&S MANAGEMENT SYSTEM

At Tesoro, we are committed to conducting business in

a manner that promotes the health and safety of those

working and living in communities near our facilities, while

protecting the environment and sustaining the ecosystems

in which we do business.

This vision is clearly set forth in Tesoro’s Environmental,

Health & Safety (EH&S) Policy which establishes metrics,

expectations and responsibilities for achieving our goals

for personal safety, process safety and environmental

protection. The roadmap for implementing the EH&S

Policy and continuing to drive improvement is based on

the Responsible Care® model—Plan, Do, Check and Act /

Adjust—established by the American Chemistry Council.

PLAN

CHECKACT/ADJUST

DO

ProgramsLeadership

Priorities

Strategy

Learning

Improving

Training

Work Processes

Standards

Audits

Metrics

Investigations

CONTINUOUS IMPROVEMENT

RESPONSIBLE CARE® MODELPlan: Develop expectations for the standard, based on leadership’s priorities and strategy.

Do: Create the standard for implementation in the field, through programs and work processes.

Check: Use audits, metrics and investigations to assess the standard’s value in operations.

Act/Adjust: Learn and continue to refine the standard for continuous improvement.


PROCESS SAFETY

At Tesoro, we ensure our facilities are properly designed,

safely operated and appropriately maintained. We have

established a disciplined framework for managing the

integrity of hazardous operating systems and processes

by applying good design principles, engineering, and

operating and maintenance practices.

We use industry-recognized process safety and asset

integrity assurance methodologies to reduce the risk of all

process safety events. Process safety fundamentals have

been implemented throughout our operations, including

management of change, mechanical integrity assurance,

incident investigation, process hazard operating procedures

analysis and making process information available to the

workforce.

For the classification of process safety events, Tesoro utilizes

the American Petroleum Institute’s (API) Recommended

Practice 754, Process Safety Performance Indicators for

the Refining and Petrochemical Industries. We voluntarily

report process safety events that have potentially high

consequences as defined by API as either a Tier 1 or Tier 2

Process Safety Event. The industry is continuing to work

to normalize the reporting of these events across facilities

and companies so that data from API Process Safety events

can be collected and analyzed, and the causes trended to

identify program improvements.

We focus on effectively managing process safety to

prevent incidents and address key risks in our business. Our

management systems are designed to address the process

safety issues inherent to the energy industry.

Tesoro spends hundreds of millions of dollars annually on

routine maintenance, regulatory projects and turnarounds.

A turnaround is a planned, periodic shutdown of all or

part of a refinery to perform maintenance, overhaul and

repair operations, and inspect, test and replace materials

and equipment. Each turnaround is scheduled at a specific

frequency to ensure reliable operations.


PERSONAL SAFETY

Strong management support, emphasis and leadership

clearly identify safety as a priority for the organization.

Tesoro has adopted standards that establish safe work

practices. Audits, assessments and program reviews are

conducted to ensure these practices are being followed,

and to identify improvements that will further reduce risks

and improve the effectiveness of the standards.

Identification, measurement and regular reporting of safety-

related leading indicators help keep us focused on achieving

our safety goals, further strengthening our culture, which

values safety equally with productivity and quality.

Fulfilling our commitment to safety also requires an

engaged workforce that identifies potential risks and

eliminates or mitigates them. Promoting ownership of the

safety process to the front-line level of the organization

encourages personnel to take responsibility and ownership

for their own safety and the safety of those around them.

TRANSPORTATION SAFETY

We take many preventative measures to promote the safe

operations of our pipelines and related facilities. We work

to continuously improve the performance of our pipelines,

ensuring that the lessons learned from pipeline industry

incidents are incorporated into our Integrity Management

Program. Multiple pipeline management systems are also

in place to mitigate or eliminate potential adverse impacts

to our employees, our communities and the environment.

In 2012, Tesoro operated a total of approximately 570 miles

of Department of Transportation (DOT) regulated pipelines

in six states. There were zero reportable spills for those

pipelines during the year.


EMERGENCY PREPAREDNESS

Despite stringent safety measures and prevention procedures,

the potential exists for emergency situations involving our

assets, particularly where flammable and hazardous materials

are processed or handled. Tesoro’s emergency planning and

response process is designed to anticipate, prepare for and

respond to potential emergencies.

All of our operations have written Emergency Response

Plans (ERPs) in place. The purpose of these ERPs is to

provide an effective organizational response to potential

emergencies in a timely manner. This includes instituting

a systematic approach, known as the Incident Command

System, to respond to an emergency. In addition, Tesoro’s

ERPs and programs are designed to comply with all state

and federal regulations.

Robust training is provided for all employees to educate

them on how to respond in the event of an emergency.

Training varies depending on the specific role an individual

is likely to play during such an event.

Employees receive training in:

General safe working practices,

Safe handling and use of refinery chemicals, hazardous

wastes and other hazardous materials,

Emergency response tactics,

Care and use of emergency response and personal

protective equipment,

Firefighting procedures,

Release containment and cleanup procedures, and

Evacuation and alert procedures.

Refinery teams conduct emergency drills and exercises

throughout the year to test and refine individual response

procedures and performance.

FIRE SCHOOL FOR EMERGENCY RESPONSE PERSONNEL

that have been established at each refinery. Throughout the year, members of this group

their skills fresh.

In 2012, a total of 65 Tesoro refinery fire

A&M Training facility in College Station. Use of this facility allowed fire brigade members to practice new skills for which training is not available at the refineries.


PERFORMANCE

Consistent with our Strategic Priorities and Core Values, we strive to be best-in-class in our safety performance. In pursuit of

this goal, we track our process safety performance by measuring the rate of process incidents as defined by the American

Petroleum Institute (API) Tier 1 and Tier 2 events. We track our personal safety performance by measuring Total Recordable

Incident Rate (TRIR) for both employees and contractors as defined by the Occupational Safety and Health Administration

(OSHA), a division of the Department of Labor that sets and enforces occupational health and safety rules.

PERSONAL SAFETY

In 2012, our combined TRIR for employees and contractors

improved slightly (4%) from the year before, from 0.52

injuries per 200,000 hours worked to 0.50. Our refining

business led the way with an 11% improvement (0.44

to 0.39)—the lowest rate in the Company’s history. Our

personal safety goal for 2013 is to achieve a combined TRIR

of 0.45 or better.

PROCESS SAFETY

In 2012, we saw a significant improvement in our process

safety performance. Our combined API Tier 1 and Tier 2

incident rate decreased 20% from 0.30 incidents per

200,000 hours worked in 2011 to 0.24 in 2012. While we

strive to achieve an incident-free environment, our goal for

2013 is to operate more safely and reduce our rate to 0.20.

(Injuries per 200,000 hours worked)

2010

2011

2012

0 0.2 0.4 0.6 0.8 1.0

2011

2010

2012

API Tier 1 Incident Rate API Tier 2 Incident Rate

0 0.80.2 0.4 0.6(Incidents per 200,000 hours worked)

For detailed information on Tier 1 and Tier 2 events, please visit the API website at www.api.org.

For information on workplace safety and incident rates, please visit OSHA’s website at www.OSHA.gov.


Tesoro operates in environmentally sensitive and diverse locations that have varying

and complex regulations. We use and strengthen our procedures, programs, tools

and systems to better comply with existing regulations, and to establish processes

that allow for continuous improvement.

To do this, we develop regionally appropriate goals and

performance targets. At a corporate level, we review

our management of key material issues, including our

environmental footprint.

AIR EMISSIONS

Petroleum refineries are complex systems of linked

operations that convert crude oil into valuable products such

as gasoline, diesel, jet fuel and liquefied petroleum gas (LPG).

In producing these products, refineries use energy to heat

process streams, promote chemical reactions, provide steam

and generate power. This energy is usually obtained from the

combustion of fuels in boilers, process heaters, gas turbines,

generators and the fluid catalytic cracking unit. This results

in the emission of such products of combustion as nitrogen

oxides (NOX), sulfur dioxide (SO2), carbon monoxide (CO),

carbon dioxide (CO2), volatile organic compounds (VOCs)

and particulate matter (PM).

At our refineries, we manage air emissions through the

use of environmental management systems. We monitor

and report our emissions to government agencies on a

regular basis. We are committed to implementing cost-

effective energy conservation measures which reduce

direct emissions of criteria air pollutants and greenhouse

gases (GHGs).

Tesoro’s environmental and incident management systems

are utilized to track action items. Measurement of emissions

to the atmosphere helps us to compile emissions inventories

and to take actions to minimize those emissions. Emissions

to the atmosphere are calculated using Continuous Emission

Monitor System data, fuel consumption data, tank emission

software and other procedures.

GREEN SHIP INCENTIVE PROGRAM

Four of Tesoro’s operated overseas vessels participate in the Green Ship program, a voluntary clean-air initiative targeting the

The program rewards qualifying vessel operators for deploying today’s greenest ships to the Port of Long Beach, and for accelerating the use of tomorrow’s greenest ships.


GREENHOUSE GAS AND ENERGY USE

Tesoro recognizes that climate change is an important

global issue, and we are committed to reducing GHG

emissions from our refineries to below 1990 levels.

Current and future regulations designed to address GHG

emissions do and will impose additional costs to Tesoro,

the industry and our consumers, while yielding uncertain

results. Alternatively, energy conservation measures have

proven to be a more effective pathway to managing our

overall GHG footprint.

Our operations create GHG emissions from direct operating

processes, such as combustion, fugitive emissions and

process emissions. GHGs are also created indirectly through

the use of third-party steam, hydrogen, chemicals and

electricity to operate process units at our refineries.

We manage our GHG emissions by improving energy and

process efficiencies, reducing flare activity where safely

possible, monitoring for leaks and repairing them promptly,

and minimizing energy loss through equipment insulation.

We consider GHG emissions when evaluating projects and

business opportunities.

In 2012, we improved energy efficiency at our refineries by

converting some steam-operated turbine pumps to more

energy-efficient, electricity-operated pumps, upgrading

air preheaters in some of the heaters and boilers, and

reviewing energy usage to reduce fuel consumption.

During 2012, we also improved our power generation

efficiency through upgrades at our cogeneration units in

the Kenai and Los Angeles refineries.

WHAT WE’RE DOING TO REDUCE FLARING

Refinery flares safely burn hydrocarbons in case of an overpressure event that might take place as a result of startup, shutdown or process unit upset at the refinery. However, flaring can result in increased emissions of GHG and criteria pollutants. In addition to utilizing the flare gas recovery systems already present at some of our refineries, during the year, we enhanced our flare minimization plans and installed flare flow meters at all our refineries to detect flare gases in order to further reduce the environmental impact of flaring.

Installation of flare gas recovery systems at our Los Angeles and Martinez, Calif., refineries has led to significant reduction in flare emissions. Procedures for planned shutdowns and startups, which had already been revised to minimize flaring, were reviewed and revised again to optimize the recovery capacity of the flare gas recovery systems.

The implementation of these new systems and procedures to minimize flaring have had a significant impact on reducing our GHG emissions.


WASTE

As defined by Congress under the Resource Conservation

and Recovery Act (RCRA) and enforced by state and federal

environmental agencies, hazardous wastes are liquids, solids

or contained gases with properties that are dangerous or

potentially harmful to our health or the environment. In a

refinery setting, hazardous wastes are primarily generated

when refinery equipment, such as heat exchangers, vessels

or tanks, is cleaned prior to preventive maintenance

or inspection.

Tesoro is committed to the reuse of waste for beneficial

use, as well as the reclamation of waste streams. Our

preferred approach is to minimize waste generated at

the source, then recycle or reuse the waste. We are

committed to disposing of any remaining waste in a safe

and environmentally approved manner as required by EPA

and state regulations.

WASTEWATER

In light of increased concerns about water supply, we are

taking a fresh look at our operations in order to reduce

our environmental footprint in this area. We treat water

prior to discharging it back into the environment or

sending it to a publicly-ownedtreatment works (POTW),

where it undergoes further treatment prior to discharge.

All of our refineries are required to meet pre-treatment or

discharge standards.

Some of the water used in the refining process ultimately

becomes waste water. Waste water that has hydrocarbon

or oil content is routed through a series of separation and

treatment processes, based on the level of oil content, in

order to reduce hydrocarbons to levels that are acceptable

from a regulatory standpoint.

Tesoro is committed to protecting the environment by

maintaining effluents below prescribed federal, state and

local limits.

WATER WITHDRAWAL

We primarily use fresh water for cooling, steam generation

and production processes. In addition, some air pollution

control devices, such as wet gas scrubbers, require water

to remove sulfur oxides and particulate matter from

exhaust streams.


SPILL RESPONSE PREPAREDNESS

We operate in environmentally sensitive waterways,

where tanker, pipeline and other petroleum product

transportation operations are regulated by federal, state

and local agencies. The transportation of crude oil and

refined products over water involves risk, and subjects us

to the provisions of the Federal Oil Pollution Act of 1990

and related state requirements, which require that most

petroleum refining, transport and storage companies

maintain and update various oil spill prevention and oil spill

contingency plans. On average, we hold 30 spill response

drills each year, and provide more than 2,000 hours of

additional training per year.

Prevention is the first and best response to managing spills.

The next step is preparedness, which is broken out into the

following categories:

Following approved facility and vessel response plans,

Training the incident management teams (IMTs) in the

Incident Command System (ICS) process and facility or

vessel response plans,

Conducting drills to validate each IMT’s knowledge of

the ICS process and response plan, and

Contracting with Coast Guard-approved oil spill

response organizations (OSROs) that can respond to the

worst-case scenarios outlined in our facility and vessel

response plans.ALASKA SPILL DRILL

During 2012, Tesoro undertook a preparedness drill based on the simulation of a spill in a remote area of Alaska. This drill tested the Company’s ability to handle the logistics involved in moving a large Tesoro incident management team to a remote command post. The Company worked closely with state and federal agencies

challenging scenario. Testing of remote area communications was successful, demonstrating the Company’s ability to generate appropriate stakeholder and public awareness of the situation in multiple jurisdictions.


MARSHLANDS AT MARTINEZ

Our Martinez, Calif., refinery borders four miles of waterways and marshland which host a diverse array

protection of special status species and wetlands.

Recent projects to remediate historic solid waste units at the refinery created by previous owners will

credits have been identified from an area mitigation bank. The remaining credits will come from another mitigation bank, restoration of park areas, or wetlands creation at the refinery.

Federally listed endangered species are protected in this area, including the California clapper rail, California tiger salamander and red-legged frog. Also protected are species designated as endangered by the International Union for Conservation of Nature, such as the salt marsh harvest mouse.

ECOSYSTEM PROTECTION

Our operations take place near sensitive ecosystems that contain diverse wildlife and habitats. We are vigilant in working

to ensure that our operations do not have a negative impact on these natural resources.


PERFORMANCE

DIRECT GREENHOUSE GAS EMISSIONS

In 2012, we successfully reduced total direct GHG

emissions from our refineries by 4%, from 34.11 tons of

carbon dioxide equivalent (CO2e) per one thousand barrels

of throughput in 2011 to 32.72 tons in 2012.

INDIRECT GREENHOUSE GAS EMISSIONS

Total indirect GHG emissions from our refineries increased

slightly (6%) in 2012 to 11.25 tons of carbon dioxide

equivalent (CO2e) per one thousand barrels of throughput,

up from 10.62 tons in 2011.

AIR EMISSIONS

We continued to successfully reduce total air emissions in

2012. In 2012, we produced 75.55 tons of emissions per

one million barrels of throughput, a 1% and 14% reduction

from 2011 and 2010 emissions, respectively.

ENERGY USE

Our energy use increased slightly (2%) from 2011 to 2012.

In 2012, our total energy use from all sources was 498.09

million BTUs per one thousand barrels of throughput,

compared to 487.12 million BTUs in 2011.

(Tons CO2e per one thousand barrels of throughput)

2010

2011

2012

0 10 40

Petroleum Refining

Hydrogen Production

Stationary Combustion

20 30

(Tons CO2e per one thousand barrels of throughput)

2010

2011

2012

0 12

Purchased Natural Gas Purchased Electricity

2 4 6 8 10

2010

2011

2012

0 100

Sulfur Oxides (SOX)

Nitrogen Oxides (NOX)

Carbon Monoxide (CO)

Volatile Organic Compounds (VOC)

Particulate Matter (PM10)

20 40 60 80(Tons per one million barrels of throughput)

(Million BTUs per one thousand barrels of throughput)

2010

2011

2012

0 500100 200 300 400


WASTE

In 2012, our refineries produced 94.55 thousand tons of

waste. This increase over 2011 was largely due to non-

hazardous waste generated from expansion activities at

our operating sites.

WASTEWATER

We successfully reduced our wastewater discharge by 4%

from 2011 to 2012. In 2012, we discharged 0.55 barrels of

water per one barrel of throughput versus 0.57 barrels of

water in 2011.

WATER WITHDRAWAL

Water consumption at our refineries continued to improve

in 2012. We used 0.95 barrels of water per one barrel of

throughput in 2012 as compared to 0.97 barrels of water in

2011, a 2% reduction year-over-year and a 19% reduction

since 2010.

SPILLS

Significant spills (greater than one barrel to a permeable

surface) continued to improve in 2012. There were 15 spills

in 2012, compared with 18 in 2011.

We continue to perform well by keeping significant

quantities of product out of our waterways. Over the last

three years, we have not had any significant spills to water.

2010

2011

2012

0 100

Hazardous Waste Non-hazardous Waste

20 40 60 80(Thousand tons)

(Barrel of water per one barrel of throughput)

2010

2011

2012

0.1 0.2 0.3 0.4 0.5 0.60 0.7

(Barrel of water per one barrel of throughput)

2010

2011

2012

0.2 0.4 0.6 0.8 1.00 1.2

(Total number of spills > 1 barrel)

2010

2011

2012

19

18

15

0

0

0

Spills to water (> 1 barrel) Spills to land (> 1 barrel)


Performance Summary

FINANCIAL UNIT OF MEASURE 2010 2011 2012

EBITDA $ millions 551 1,480 1,793 Revenues $ millions 20,583 30,303 32,974 Operating Income $ millions 140 1,080 1,402 Capital Expenditures $ millions 287 320 559 Turnaround Expenditures $ millions 140 109 261 Debt to Capital Percent 38 30 25 Net Earnings Per Share, Diluted (loss) $ per share (0.21) 3.81 5.25Dividends $ per share 0 0 0.27

OPERATIONS UNIT OF MEASURE 2010 2011 2012

Refineries Number 7 7 7Branded Retail Stations Number 880 1,175 1,402Crude Throughput1 Barrels per day 480,000 579,000 585,000Crude Capacity2 Barrels per day 665,000 665,000 675,000Crude Oil Source – Domestic3 Percent – barrels per day 65 58 59Crude Oil Source – Foreign4 Percent – barrels per day 35 42 41Refined Products – Gasoline, Diesel and Jet Fuel Percent – barrels per day 79 82 82Refined Products – Heavy Fuel Oils, Residual and Other Products Percent – barrels per day 21 18 18Retail Fuel Sales5 Million gallons per year 1,336 1,526 1,740

1 – Our Washington refinery was temporarily shut down from April 2010 to November 2010, resulting in a lower annual throughput.2 – We completed a project to expand the crude oil throughput capacity at our North Dakota refinery from 58 to 68 Mbpd in 2012.3 – Domestic crude oil sources are primarily from California, North Dakota and Alaska.4 – Foreign crude oil sources are primarily from South America, Russia and Canada.5 – Retail fuel sales include company- and jobber/dealer-operated retail stations.

GOVERNANCE UNIT OF MEASURE 2010 2011 2012

Board of Directors1 Number 8 9 10 Independent Directors Number 7 8 9 Female Directors Number 1 1 2 Minority Directors Number 0 2 2 Directors Age 50 and Older Percent 100 100 100

1 – Governance data is reflective of Tesoro Corporation’s Board of Directors, only.

OUR PEOPLE UNIT OF MEASURE 2010 2011 2012

Total Number of Employees1 Number 5,278 5,374 5,768 Minority Employees Percent – total employees 37 37 37 Executive or Senior Officers Percent – minority employees 0 0 2 First- or Mid-level Managers Percent – minority employees 16 17 19 Supervisors Percent – minority employees 37 38 38 Female Employees Percent – total employees 33 32 33 Executive or Senior Officers Percent – female employees 14 15 16 First- or Mid-level Managers Percent – female employees 22 23 24 Supervisors2 Percent – female employees 42 42 40 Employees Represented by Independent Trade Unions Percent – total employees 25 25 24

1 – An employee who is defined by the Federal Labor Standards Act (FLSA) as being exempt from this law’s minimum wage and overtime requirements.2 – Data reported in previous reports used a subset of supervisors/managers. The data reflected in this report specifically breaks down each role.


SAFETY UNIT OF MEASURE 2010 2011 2012

Total Hours Worked (Employees and Contractors) Million hours 16.22 15.83 18.74Total OSHA Recordable Incident Rate1 Injuries per 200,000 hours worked 0.84 0.52 0.50 OSHA Recordable Incident Rate – Employees Injuries per 200,000 hours worked 0.98 0.60 0.60 OSHA Recordable Incident Rate – Contractors Injuries per 200,000 hours worked 0.57 0.37 0.29Total Days Away From Work (DAFW) Case Rate2 Injuries per 200,000 hours worked 0.20 0.14 0.09 DAFW Case Rate – Employees Injuries per 200,000 hours worked 0.17 0.21 0.12 DAFW Case Rate – Contractors Injuries per 200,000 hours worked 0 0 0.03Total Fatalities Number 7 0 0 Fatalities - Employees Number 7 0 0 Fatalities - Contractors Number 0 0 0Total API Tier 1 and Tier 2 Process Safety Event Rate3 Incidents per 200,000 hours worked 0.74 0.30 0.24 API Tier 1 Process Safety Event Rate Incidents per 200,000 hours worked 0.37 0.08 0.06 API Tier 2 Process Safety Event Rate Incidents per 200,000 hours worked 0.37 0.22 0.18

1 – OSHA Recordable Incident Rate represents the number of injuries or illnesses which met the criteria to become a recordable incident per 29 CFR 1904.2 – Days Away From Work (DAFW) represent the number of OSHA recordable injuries or illness which resulted in time away from work.3 – American Petroleum Institute’s RP 754 identifies the leading and lagging process safety indicators for driving performance improvement.

ENVIRONMENT1 UNIT OF MEASURE 2010 2011 2012

Total Direct Greenhouse Gas Emissions2 Tons CO2e per one thousand barrels of throughput 35.13 34.11 32.72 Direct Greenhouse Gas Emissions – Stationary Combustion Tons CO2e per one thousand barrels of throughput 22.64 21.48 20.70 Direct Greenhouse Gas Emissions – Hydrogen Production Tons CO2e per one thousand barrels of throughput 3.71 3.31 2.66 Direct Greenhouse Gas Emissions – Petroleum Refining Tons CO2e per one thousand barrels of throughput 8.77 9.32 9.36 Total Indirect Greenhouse Gas Emissions Tons CO2e per one thousand barrels of throughput 11.35 10.62 11.25 Indirect Greenhouse Gas Emissions – Purchased Electricity Tons CO2e per one thousand barrels of throughput 1.92 1.85 1.77 Indirect Greenhouse Gas Emissions – Purchased Natural Gas Tons CO2e per one thousand barrels of throughput 9.43 8.77 9.49 Total Energy Use3 Million BTUs per one thousand barrels of throughput 462.86 487.12 498.09 Fuel Gas and other internal energy sources Million BTUs per one thousand barrels of throughput 283.34 320.35 319.62 Purchased Electricity Million BTUs per one thousand barrels of throughput 18.38 17.05 16.45 Purchased Natural Gas Million BTUs per one thousand barrels of throughput 161.14 149.72 162.02 Total Air Emissions4 Tons emissions per one million barrels of throughput 87.68 76.13 75.55 Sulfur Dioxide (SO2) Tons per one million barrels of throughput 14.96 13.10 11.00 Nitrogen Oxides (NOX) Tons per one million barrels of throughput 25.78 25.09 24.56 Carbon Monoxide (CO) Tons per one million barrels of throughput 21.32 17.50 20.28 Volatile Organic Compounds (VOC) Tons per one million barrels of throughput 19.88 15.36 14.84 Particulate Matter (PM10) Tons per one million barrels of throughput 5.73 5.08 4.87 Total Water Withdrawal5 Barrels of water per one barrel of throughput 1.17 0.97 0.95 Groundwater Barrels of water per one barrel of throughput 0.26 0.22 0.21 Surface Water Barrels of water per one barrel of throughput 0.10 0.07 0.06 Municipal Barrels of water per one barrel of throughput 0.81 0.69 0.68 Total Wastewater Discharge6 Barrels of water per one barrel of throughput 0.61 0.57 0.55 Publicly Owned Treatment Works (POTW) Barrels of water per one barrel of throughput 0.30 0.29 0.28 Injection Well Barrels of water per one barrel of throughput 0.04 0.04 0.03 Surface Water Barrels of water per one barrel of throughput 0.27 0.25 0.23 Total Waste7 Thousand tons 62.94 45.91 94.55 Non-hazardous Waste Thousand tons 56.70 42.13 89.60 Hazardous Waste Thousand tons 6.24 3.78 4.95 Spills of Hydrocarbon to Water (> 1 barrel) Number 0 0 0 Spills of Hydrocarbon to Land (> 1 barrel) Number 19 18 15

1 – To ensure the quality of the data disclosed in this report, data for 2010 and 2011 were reviewed and, in some instances, updated. All environmental data includes only our refining operations.2 – Direct GHG emissions are emissions from refining operations that are owned or controlled by Tesoro. CO2e stands for Carbon Dioxide equivalent. Details of our direct GHG emissions can be found on the

Environmental Protection Agency (EPA) website via the Electronic Greenhouse Gas Reporting Tool (e-GRRT). The breakdown of our GHG emissions are per EPA Greenhouse Gas Reporting Program Subpart C (Stationary Combustion), Subpart P (Hydrogen Production) and Subpart Y (Petroleum Refining).

3 – The data set for the 2012 report now includes an expanded breakdown of our energy use and is not comparable to data disclosed in previous reports. We intend to continue reporting in this format in future reports for year-over-year comparison purposes. Fuel and other internal source data for 2010 and 2011 was not available at the time this report was generated.

4 – Air emissions data for 2010 and 2011 were updated during a review of previously reported data.5 – Water withdrawal data for 2010 and 2011 were updated during a review of previously reported data. We reported the metric as “water use” in the 2011 report. The change to “water withdrawal” reflects

the data set used as the total water withdrawn from each source. 6 – The data set for the 2012 report now includes an expanded breakdown of wastewater by destination and is not comparable to data disclosed in previous reports. We intend to continue reporting in this

format in future reports for year-over-year comparison purposes. 7 – The data set for the 2012 report now includes non-hazardous waste. This metric will vary year-to-year due to projects and other activities that may produce a larger volume of non-hazardous waste.


Tesoro utilizes two sources as the primary framework for reporting its sustainability performance: 1) the Global Reporting Initiative’s (GRI) General Guidelines and Oil and Gas Sector Supplement (versions 3.1) and 2) “Oil and Gas Industry Guidance on Voluntary Sustainability Reporting” (2010), developed by the International Petroleum Industry Environmental Conservation Association’s (IPIECA), the International Oil and Gas Producers Association (OGP) and the American Petroleum Institute (API). These guidelines are used as a basis for selection of specific disclosures intended to provide stakeholders with relevant information on topics of concern.

GRI OGSS G3.1 IPIECA/API DESCRIPTION LOCATION

STRATEGY AND ANALYSIS

1.1 Message from Our CEO pg. 1

ORGANIZATIONAL PROFILE

2.1-2.9 Company Structure and Size pg. 2, 3, Investor Relations website

REPORT PARAMETERS

3.1-3.4 Report Profile pg. 35

3.5-3.11 Report Scope and Content Boundary pg. 35

3.12 Content Index pg. 34

GOVERNANCE AND ENGAGEMENT

4.1-4.10 SE15, SE16 Governance pg. 6, 32, Investor Relations website

4.14, 4.16 Stakeholder Engagement pg. 8

LABOR PRACTICES AND DECENT WORK

LA1 SE15 Employment pg. 11, 32

LA4 Employees Covered by Collective Bargaining pg. 32

LA7 HS3 Occupational Health and Safety pg. 23, 30

LA11 SE17 Education and Development pg. 13

LA13 SE15 Diversity and Equal Opportunity pg. 12

ECONOMIC

EC1 Economic Performance pg. 3, 32, Financial reports

EC4 Financial Assistance from Governments Financial reports

ENVIRONMENT

EN3 E2 Energy Use pg. 26, 30, 33

EN8 E6 Water Withdrawal pg. 27, 31, 33

EN16 E1 Direct and Indirect Greenhouse Gas Emissions pg. 26, 30, 33

EN18 E1 Initiatives to Reduce Greenhouse Gas Emissions pg. 26

EN20 E7 Significant Air Emissions pg. 25, 30, 33

EN21 E9 Wastewater Discharge pg. 27, 31, 33

EN22 E10 Waste pg. 27, 31, 33

EN23 E8 Spills pg. 28, 31, 33

SOCIETY

SO1 SE1, SE4 Community Involvement pg. 15-17

SO2 SE11 Anti-Corruption pg. 7

SO5, SO6 SE14 Public Policy pg. 9

OG13 HS5 Asset Integrity and Process Safety pg. 20, 23, 33

HUMAN RIGHTS

HR7 SE9 Forced and Compulsory Labor pg. 9, Supplier Relations website

HR10, HR11 Human Rights Reviews and Grievances pg. 9


REPORT PROFILE

The reporting period for the information disclosed in this

report is calendar year 2012. We previously published our

2011 Social Responsibility Report in October 2012.

The framework for defining the content and quality of

this report was determined using the Global Reporting

Initiative’s (GRI) General Guidelines and Oil and Gas

Sector Supplement (versions 3.1), as well as “Oil and Gas

Industry Guidance on Voluntary Sustainability Reporting”

(2010), developed by the International Petroleum Industry

Environmental Conservation Association (IPIECA), the

International Oil and Gas Producers Association (OGP) and

the American Petroleum Institute (API).

DEFINING REPORT CONTENT

Content disclosed in this report is based on sustainability

topics that have been identified as significant by stakeholders

and by Tesoro’s ability to impact those recognized topics.

We prioritized the content by determining the materiality

of these sustainability topics. Topics and indicators that are

of greater stakeholder concern are disclosed in more detail

than topics of lesser concern.

We communicated the release of the 2011 report both

internally (to our employees) and externally. The feedback

received was considered in the development of the

2012 report.

ENSURING REPORT QUALITY

We are committed to providing a report that is balanced,

understandable, consistent and reliable. We will continue

to build processes to improve the quality of our social,

environmental and economic disclosures. This report has not

been externally assured by an external assurance provider.

DATA IN THIS REPORT

Data included in this report were believed to be accurate at

the time the report was generated. Any updates to current

data reflected in this report will be identified in future

reports. We will report the previous two years of data for

comparison purposes. Normalization of certain data, based

on refinery throughput, will be identified when used to

assist in year-to-year comparison. We will recognize any

limitations to disclosed data in this report where applicable.

REPORT BOUNDARY

The information in this report consists of all Tesoro entities,

including Tesoro Logistics LP, for calendar year 2012. There

are no limitations to the scope or boundary of this report.

REPORT AVAILABILITY AND CONTACT METHOD

This report is available through our website in PDF format:

www.tsocorp.com/responsibility

Requests for a hard copy of this report can be made using

the information below:

Social Responsibility Reporting

Attn: Corporate Affairs

19100 Ridgewood Parkway

San Antonio, Texas 78259

Email: [email protected]

Report Parameters

This report is printed on a Forest Stewardship Council-certified paper stock which is process-chlorine-free, made from 100% post-consumer waste, and manufactured with wind-generated energy. Printed with soy-based inks. Designed by Briley Design Group.

© 2013 Tesoro Corporation. All rights reserved.

Documents

2012 Social Responsibility Report RESPONSIBILITY REPORT 2012 1 Tesoro is dedicated to operating in a socially responsible manner. Our Core Values are ... Tesoro’s Code of Business