© 2011 Chevron U.S.A. Inc. Reporting through the Carbon Disclosure Project GHG Reporting Workshop March 1, 2011 Laura Verduzco Chevron Corporation

© 2011 Chevron U.S.A. Inc. Agenda  What is CDP?  Questionnaire  Scoring  The energy sector  Suggested areas of collaboration for IPIECA-CDP  CDSB – Organizational Boundaries for reporting GHG emissions  Issue questions

© 2011 Chevron U.S.A. Inc. What is CDP?  “The Carbon Disclosure Project is an independent not-for-profit organization holding the largest database of primary corporate climate change information in the world.” -CDP website  Who discloses information? companies in 60 countries (including 84% of the Europe 300, 82% of the Global 500; 70% of the S&P 500 and 74% of the South Africa 100 companies)  CDP represents 551 institutional investors, holding US$71 trillion in assets under management  Types of programs: –Investor CDP –CDP Public Procurement –CDP Water Disclosure –CDP Supply Chain –CDP Cities Focus

© 2011 Chevron U.S.A. Inc. Questionnaire Investor CDP  Management: Governance, Strategy, Targets and Communications  Risk and Opportunities  Emissions: Methodology and Data  Industry Specific: Auto, Electric Utilities and Oil and Gas

© 2011 Chevron U.S.A. Inc. Response Rates Total response rates and disclosed emissions over time by geography (All Scopes CDP 2003 to CDP 2010) Source: CDP 2010

© 2011 Chevron U.S.A. Inc. Scoring  Scoring: –Disclosure: business-specific risks and potential opportunities related to climate change and internal data management practices for understanding GHG emissions –Carbon performance score: Measures for climate change mitigation –Leadership Index (CDLI and CDPI): companies with the most comprehensive report Source: CDP 2010

© 2011 Chevron U.S.A. Inc. CDLI and CDPI – Energy Sector Energy Sector Emissions CDLI cut-off CPLI cut- off Sources: CDP 2010 CDP 2010 chart courtesy of PwC Trading Governance

© 2011 Chevron U.S.A. Inc. Suggested areas of collaboration: IPIECA and the CDP questionnaire  The following slides present sections of the CDP questionnaire that have been problematic for Chevron to respond to. The issues highlighted are likely to affect other IPIECA members, and are presented with the objective of engaging in a healthy exchange of ideas and determine IPIECA’s future involvement.

© 2011 Chevron U.S.A. Inc. New Organizational Boundaries from the Carbon Disclosure Standards Board (CDSB)  CDP 2011 will add a new organizational setting approach developed by CDSB  The Climate Disclosure Standards Board (CDSB) was formed at the 2007 annual meeting of the World Economic Forum to standardize reporting guidelines on the inclusion of climate change information in mainstream financial reports.World Economic Forum  The Carbon Disclosure Project (CDP) acts as Secretariat to CDSB and is responsible for advancing the CDSB Framework  Climate Change Reporting Framework (CCRF) v1.0: It is aligned to principles and objectives of financial reporting published by the International Accounting Standards Board (IASB). –Chapter 4- Requirements for Disclosure Content-. Requirements are very similar to the CDP questionnaire, including information about governance, greenhouse gas emissions, risks and opportunities, management actions, and future outlook. –Organizational boundaries for GHG reporting: The CCRF prescribes a single approach based on the International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) on consolidation and equity accounting

© 2011 Chevron U.S.A. Inc. CCRF Boundaries Snapshot Part 2 GHG emissions should include emissions from operationally controlled and/or other entities/activities/facilities that: a. are not consolidated in Part 1; and b. must be reported under regulatory requirements by the disclosing organization in its capacity as operating licensee or in any other capacity (e.g.: tenant); or c. due to the nature of the contract for the operation or use of the entity/activity/facility: i. expose the reporting organization to risk, opportunity or financial impacts; or ii. enable the reporting organization to influence the extent to which GHGs are emitted. CDP 2011: Added CCRF reporting approach to the list of consolidation options What is the value of adding a fourth reporting boundary option? This will increase investor confusion and reporting burden. Further, some industries have well established guidelines (i.e. IPIECA GHG Reporting guidelines)

© 2011 Chevron U.S.A. Inc. CDP 2011 – Other issue areas  The questions continue to change year-after-year: Lack of consistency limits analysis of historical results and trends  Different metrics every year to measure GHG intensity. For example - CDP 2011 requires GHG/FTE. FTE definition: “ FTE (or full time equivalent) is a way to compare staff numbers across companies with different working arrangements. To calculate FTE employees you should add together all staff hours and then divide it by a full time working day of 7.5 hours.”

© 2011 Chevron U.S.A. Inc. CDP 2011 – Other issue areas Confidentiality concerns: Investment details and projected savings are confidential business information. Prediction of the future: the scientific and engineering information requested is not yet available.

© 2011 Chevron U.S.A. Inc. CDP 2011 – Other issue areas  Disaggregation of investment numbers: Some of the strategic investments of the oil and gas industry, or other allied energy industries (such as power generators), are not for the sole purpose of reducing greenhouse gas emissions  What is the future of the O&G section? “The oil and gas sector module is not scored as part of the CDP 2011 scoring methodology.” -CDP 2011 Guidance Document