Mapping our Sustainability Risks

Mapping our sustainability risks and opportunities

A summary of our potential risks and opportunities (identified risk and opportunity topics), their potential impact and our mitigation or other actions in management approach, structured by our sustainability material topics is presented, annexed to this report. Relevant risks and opportunities included were selected based on their magnitude using impact and probability, and at least one relevant example for each material topic was selected for our internal analysis. The summary includes risks and opportunities for each material topic, their effects and our mitigation measures or approach.

Climate change and Energy Transition

Risk/Opportunity		Effect Description (Positive or Negative)	Mitigation/Approach
Opportunity	Expansion of new energy solutions	Generation of new revenue streams Long-term value for OMV Petrom and its shareholders Carbon footprint reduction	Test and implement business opportunities, which offer significant upscale potential, fit to OMV Petrom’s capabilities
Opportunity	Use of renewable energy for own operations	GHG emissions reduction from energy efficiency improvements and technology changes Enhancement of sustainable operations in Upstream and Downstream business (reduced carbon footprint, increased energy efficiency consumption) Lower costs of electricity and carbon emissions (ETS) Improvement of reputation Renewable energy sources will reduce the carbon intensity of products in our Company’s portfolio.	Identify and execute business opportunities which offer significant upscale potential, fit OMV Petrom’s capabilities, and create long-term value Increase of energy efficiency and reduction of internal fuel consumption by renewable energy supplies such as own photovoltaic plants Ensure achievement of OMV Petrom’s long-term targets
Opportunity	Carbon capture and storage use	Lower carbon footprint Significant positive environmental benefits Potential new business line	Carbon capture and storage projects development and potential development of business line

Environment

Risk/Opportunity		Effect Description (Positive or Negative)	Mitigation/Approach
Risk	Reduction of flaring, venting and fugitive emissions – failure to comply	Potential enforcement action by regulators Stakeholder outrage (limited) Damage of reputation Potential environmental damage	Procedures on GHG Emissions Monitoring and Reporting under EU Emission Trading Scheme (EU-ETS); Carbon Intensity Monitoring at company level on a systematic basis, quarterly internal reporting on emissions. Carbon Management Program in Upstream
Risk	Spills, waste, and water management -environmental compliance issues	Pollution of soil, surface water or ground water, air Community nuisance from noises, odors, light Damage of company reputation Environmental costs from potential liabilities, fines	Environmental management system ISO 14001 – implemented Proper management of conformity budget and projects Operating procedures in place and risk-based maintenance Emergency preparedness and response Insurance for third party loses Environmental risk assessments

Supply Chain

Risk/Opportunity		Effect Description (Positive or Negative)	Mitigation/Approach
Risk	Labor practice and human rights criteria for the purchase of oil/gas and non-oil products and services; (supplier social and human rights assessment) – poor practice of subcontractors	Legal liability in case of direct complicity Reputational damage Low morale of contractor employees resulting in low quality of products and services Deprivation of access to basic needs, adequate standard of living for the rightsholder	Training for employees (focus on high-risk countries); Human Rights – Country Entry Check before launching operations in a country as well as regular human rights assessments in our countries of operations, consider labor rights aspects HSSE contractor management considers human rights aspects (incl. labor rights) in pre-qualification and auditing phase ESG supplier assessments Code of Conduct includes labor rights
Risk	Engagement of local suppliers for goods and services as well as supplier development	Project delays and poor quality translated into costs Deprivation of access to basic needs adequate standard of living for the rightsholder	Implement Ariba Risk module fully (interface to Financial information providers not yet fully functional) Build custom Supplier Risk alerts for subcontractors involved in high-risk projects (e.g., offshore assets)
Risk	Engagement of local suppliers for goods and services as well as supplier development – Lack of sub-contractor availability/quality	Increased costs, loss of expected benefits, project delays Higher internal efforts for execution Higher claim potential Potential impact on other projects Reputation damage	Supplier category-specific procurement strategies developed – tailored for the actual activity to be performed
Risk	Carbon Footprint from goods & services purchased by Procurement	Lose share of SRI investors Lower ESG ratings agencies Reputational risk Financial impact (e.g., EU carbon border adjustment mechanisms) Potential environmental damage	A new concept for Sustainable Procurement defined Increase transparency through carbon management reporting (scope 3 emissions of purchased goods and services) in Power BI Engaging with suppliers on carbon management topics through CDP Supply Chain
Risk	Business ethics in the supply chain	Reputational risk Business impact (e.g., losing customers) Business continuity (e.g., if a supplier is blocked and cannot continue to operate this has an impact on our business continuity)	Perform supplier audits and evaluations as part of the Together for Sustainability program Include sustainability performance in selection criteria
Opportunity	Safety of contractors & suppliers – requirements defined for integrating best practice HSSE aspects in all phases of the life cycle of a product/service contracted	Improved reputation as a strong partner in a safer environment Shared knowledge stays within local community and increases safety and environmental awareness among the communities, which leads to a positive impact on the environment and society Positive impact on health of people and environment	Measures to improve HSSE performance of OMV Petrom contractors: HSSE requirements in the SOW HSSE pre-qualification of contractors HSSE performance part of the capability audits for potential contractors HSSE requirements annexed to the contract, binding conditions in binding documents HSSE induction, common trainings, forums and workshops, common walks, periodical meetings, Audits of the contractor HSSE management system

Health, Safety & Security

Risk/Opportunity		Effect Description (Positive or Negative)	Mitigation/Approach
Risk	Occupational health and safety compliance	Fatalities Fines Reputational damage Increased costs on municipal and national health systems Work-life balance not established	Compliance audits HSSE management system audits Awareness trainings and awareness campaigns Safety culture improvement
Risk	Upstream Security/Thefts	Financial impact due to production interruption; loss of operational equipment/petroleum product. Associated safety risk that can lead to third party injuries Environmental damage (after theft attempt) Reputational impact Legal liability due to possible nonconformities with the legislation Personnel injuries due to interference with theft authors	Corporate Security & Resilience is currently managing security services for all OMV Petrom Group sites in Romania Standards from OMV have been incorporated into the Petrom SOW Security services framework Zero tolerance policy for theft Protocols with MAI HQ Security continuous monitoring new solutions Security concept focused on technology. Develop Integrated Security System Projects Standardized technical security through Integrated Security System Projects Replace Man guarding with Technology Automated Security Incident Reporting Tool Security Risk Assessment framework Security Operations Center (SOC) is operational. Implemented Security Loss Management Program for concealed theft detection and response
Risk	Asset integrity and process safety	Injuries/fatalities of 3rd party Temporary stop of gas supply to populations Reputational damage to company; in mass media Damages and pollution caused to properties owned by third parties	Risk awareness campaign Lessons learned (internal incidents or industry experience) Preventive maintenance Integrity assessment programs Corrosion Management Plan developed Pipeline Integrity Management System in place Awareness campaign for communities
Risk	Offshore Asset integrity and process safety	Loss of Life (including third-party fatalities) Loss of Assets (destruction of jackets and facilities). Costs for abandonment Major Oil Spill (Pollution) Significant negative public image with potential impact on sales Reputational damage of OMV as competent operator. Production loss (no reconstruction of the facilities). Prosecution under Romanian laws and penalties/fines Endangered biodiversity and eco-systems	Risk awareness campaign Lessons learned (internal incidents or industry experience) Preventive maintenance Integrity assessment programs Corrosion Management Plan developed Pipeline Integrity Management System in place Awareness campaign for communities
Risk	Asset integrity and process safety (Vapor Cloud Explosion potential incident in refinery)	Maximum estimated damage in the process unit caused by an explosion Fire and blast destruction of equipment (property) Financial losses generated by the business interruption Environmental impact Employee fatalities and injuries (including third parties) Reputational damage Destruction and pollution of adjacent third-party property Endangered biodiversity and eco-system	Inspection program Risk Based Maintenance Operating and emergency procedures Risk mitigation measures: 24H operator, gas detectors and measurements Frequent turnarounds Training program HAZOP measures conducted (measures from risk analysis regarding possible sources of gas and ignition sources) Related measures from QRA study Third party liability insurance; Business interruption and Property Damage Insurance Life insurance for employees Emergency plans and exercises (with the collaboration of firefighting authorities)
Risk	Customer satisfaction – health and safety of consumers and environmental impact of products	Damage of reputation Financial liability towards clients Loss of clients Decrease of customer satisfaction level Customers claims Potential damages to environment and people’s health	Implemented standards for products Technical specifications for fuels in place Quality Council with regular meetings Regular audits on partners Anticontamination and e-sealing devices Monthly quality control in fuel stations Active campaigns for customer loyalty

Business ethics, anti-corruption and anti-competitive behavior

Risk/Opportunity		Effect Description (Positive or Negative)	Mitigation/Approach
Risk	Non-compliance with the principles of the code of ethics	Damage to business reputation that may result in withdrawal of business partners and difficulties to access credit lines Suspension of activity and fines; contractual damage Drop in share price Misuse of company resources and improper direction of funds Imprisonment for bribe offering / taking and ancillary crimes	Internal rules in place: (i) Code of Business Ethics Advocacy of zero tolerance for bribery and corruption. EB commitment clearly stated in the Code of Business Ethics Whistleblowing tools in place: whistleblowing platform available via Internet operated by an independent third party and ensuring confidentiality & anonymity; business ethics helpline available 24 h; confidential e-mail address. Training program (both online & face-to-face) Communication activities to increase awareness Required signing of the declaration of conflict of interest Provide recommendations / advice upon request Conduct Third Party Checks, workshops and recommendations Provide advice and recommendations for third party verification assessments
Risk	Breaches of Competition Council rules (abuse of dominance, cartels)	Fines between 3% and 10% of company turnover Damage to business reputation Damage claims by third parties Significant defense burden Criminal allegations against the management in case of fraudulent intent	Compliance program: ongoing training, antitrust guidelines, advice on sensitive matters, etc. Awareness campaigns Advice on market policies/strategies and on relevant ad-hoc decisions Legal verification of the contracts

Employees

Risk/Opportunity		Effect Description (Positive or Negative)	Mitigation/Approach
Risk	Talent acquisition & retention – decrease headcount	Key roles not filled, left vacant with short or negative handovers and a resulting drop in company performance	Development of new projects in order to prepare young students for trade schools in various specialties for oil & gas industry – such as Vocational School Adaptation of new strategies to attract and retain key competences and key roles in the company
Risk	Talent acquisition & retention – low capability	Key roles not filled, left vacant with short or negative handovers and a resulting drop in company performance Damaged OMV Petrom reputation as an attractive employer.”	Development of new projects in order to prepare young students for trade schools in various specialties for oil & gas industry – such as Vocational School
Risk	Freedom of association and collective bargaining	Delays in implementation of business projects Blockage of business projects (restructuring/ outsourcing projects)	Constant anticipation of any related risks Maintain and improve social peace and dialogue (inform/consult them on each project in order to maintain social peace)
Risk	Talent Acquisition & Retention – low attractivity	Key roles not filled, left vacant with short or negative handovers and a resulting drop in company performance	Adapting new strategies to attract and retain key competences and key roles in the company.
Risk	Freedom of association – inconclusive collective bargaining	Collective conflict, including strike (in the absence of a valid collective bargaining result) Unpredictability in labor relations	Identify solutions to reach an agreement Try to involve representative trade union in the negotiation as a partner, not from the opposite position
Risk	Skills development & training – limited engagement	Less effective outcomes, impact on productivity related to online learning	Blended approaches Engaging employees in active learning Dedicated time slots for online learning during working hours Differentiating instruction per relevant competencies & development needs Frequent opportunities for employees to practice new knowledge or skills Knowledge sharing sessions Immediate and targeted feedback
Risk	Skills development & training-poor feedback	Employees perceive that the company is not really focused on people development resulting in demotivation, disengagement, and lower performance	Strengthen the culture of feedback and increase training for leaders (coaching skills, people development skills)
Risk	Working practices & conditions – post COVID	Migration of talents toward employers that can accommodate fast to the new expectations. Disruptions in business continuity Increased competition (across all geographies) over talents	Adopt remote ways of working (teleworking) Focus on measures to save time (Grow program) Drive knowledge sharing programs to ensure capabilities

Community investment

Risk/Opportunity		Effect Description (Positive or Negative)	Mitigation/Approach
Risk	Community development investments, environmental, health, well-being impact	Consequences for communities: increased number of grievances/social unrest, increased unemployment, limited economic opportunities, livelihood quality Consequences for OMV Petrom: reputational damage, loss of social license to operate, limited economic opportunities, production delays, security issues	Operating and emergency procedures Efficient Training and Inspection programs Coker Closed blowdown system implementation; new tanks for toluene and benzene in Petrobrazi Risk based maintenance Retro-HAZOP program and QRA study Insurance for third party loses Old gas pipeline replacement and pig traps installed Corrosion Management Plan developed and implemented Pipeline Integrity Management System in place -semi-quantitative risk evaluation Routine patrolling of pipeline sections CSR projects, community engagement, safety communication campaigns Effective grievance mechanism

Human Rights

Risk/Opportunity		Effect Description (Positive or Negative)	Mitigation/Approach
Risk	Human Rights policies – non-compliance	Consequences for stakeholders: limited rights of freedom of opinion and expression, discrimination Consequences for OMV Petrom: reputational damage, legal liability in case of actual violation, fines	Include Human Rights in social impact assessments and in social engagement plans

Sustainability Reports

Sustainability Report 2021

Mapping our Sustainability Risks

Mapping our sustainability risks and opportunities

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