Suncor recognizes and has embraced the importance of taking the long view. Our business model, strategies and growth plans are driven by a clear vision of the role we aspire to play in creating energy for a better world over the next 50 years or more.
That kind of long-term thinking is more critical than ever in a world facing significant long-term social, economic and environmental challenges – including the challenge to lower global emissions to address climate change. To be an energy provider of choice going forward, companies like Suncor need to build pathways towards global competitiveness, on both cost and carbon.
We also need to ensure the benefits of resource development are shared more fully. It’s not just about corporate profits – it’s about something bigger. That is why we focus so much effort on ensuring communities we touch, including Aboriginal communities, participate with us to co-create our future.
While much work remains to be done, I believe Suncor is making progress in responding to these key challenges. That’s a result of the sustainability journey we embarked on more than two decades ago, which commits us to continually improve our environmental, social and economic performance.
We’ve learned the key to making progress is to bring together and engage with people of diverse interests and perspectives – and listen intently to their concerns, expectations and ideas about how we can work together on solutions to shared challenges.
These conversations continue to shape, change and guide us. I know they help make us a more sustainable and resilient energy company. And they’re good reminders that when you take a long-term view, you’re ensuring a better future for those that follow.
The energy future: challenges and opportunities
Energy is the lifeblood of our economies and quality of life. Whether it’s providing for food, heat or transport, reliable and affordable oil and gas remains one of the primary energy sources for modern society. And while renewable energy continues to advance, oil and gas are expected to continue to be a significant part of the global energy mix for the foreseeable future.
That doesn’t mean it’s business as usual. Climate change is real – one of the most pressing challenges of our time – and we all have a shared responsibility to find solutions. Failing to act is not an option.
Canada has the energy the world needs. Our challenge is to continually improve our performance, inspire others to do so and move our products to new customers in new markets in the years ahead.
For a company like Suncor, that means our oil must be globally competitive on cost and carbon. I’m encouraged by the progress we’re making in both of these areas.
Suncor has been on a multi-year journey to improve reliability, reduce costs across our business and prudently manage capital allocation. These strategies have served us well in volatile times.
Through it all, we stayed true to another key business strategy – being a leader in sustainability. We understand that the economic, environmental and social dimensions of energy development are deeply integrated and success in one cannot be achieved without success in all.
By taking costs out of our business and pursuing operational excellence, Suncor can now generate sufficient funds from operations at a US$40 to $45 per barrel oil price to cover our sustaining capital and our dividend. There aren’t many oil producers globally that can make that claim.
At the same time, we are driving improvements in environmental performance. Suncor recently achieved a significant milestone at our Fort Hills project – achieving design capacity much earlier than planned. This project is poised to provide energy for the next 50 years and the greenhouse gas (GHG) emissions intensity of production at Fort Hills is currently on par with the average refined barrel in the United States.
The next major challenge is at our in situ sites, where the bulk of Suncor’s future growth is expected. Next-generation in situ technologies hold the potential to not only reduce costs, but to also dramatically lower GHG emissions – in some cases by 50 to 70%. We’re currently allocating capital to advance some of these in situ technologies at commercial scale.
Throughout the recent oil-price downturn, Suncor continued to invest in technology development. In 2017, we invested almost $350 million on the development and deployment of new technology.
The scale of Suncor’s ambition is reflected in our sustainability goal to harness technology and innovation to contribute to a low-carbon economy. We are measuring our progress to meet this goal by targeting a reduction in the total GHG emissions intensity of our oil and petroleum products by 30% by 2030. We believe this target, together with our ongoing commitment to technology and innovation, puts us on the path to ultimately bending the curve on our absolute GHG emissions as well.
In addition to our internal strategies, Suncor works closely with organizations like Canada’s Oil Sands Innovation Alliance (COSIA) and Evok Innovations on clean technology solutions. We also continue to partner with groups like the Carbon Pricing Leadership Coalition, Canada’s Ecofiscal Commission, Clean Resource Innovation Network (CRIN) and the Energy Futures Lab to support collaboration and innovation.
Suncor’s commitment to engaging in open and honest conversations – listening to, and learning from, a broad range of viewpoints – has allowed us to play a positive role in advancing progressive public policy on climate change.
Canadian leadership in this area has been noticed and is making a difference.
If you ask people outside our borders where they would like their oil to come from, they prefer Canada to other places in the world. We must continue to work together to meet that demand in a way that helps to make progress on these significant challenges.
Social innovation: forging new partnerships
Taking a long view in business means understanding and adapting to changing expectations. For Suncor, that means recognizing that we can play a part in addressing some of society’s most complex social challenges.
For example, there are wide socio-economic gaps between Aboriginal Peoples and other Canadians and there are many calls to action within Canada’s Truth and Reconciliation Report that seek to bridge those gaps. We want to be part of that change.
Suncor has committed to a long-term, socially focused sustainability goal aimed at increasing the participation of Aboriginal Peoples of Canada in resource development. It’s also about thinking and acting differently and working together with Aboriginal Peoples to create opportunities for economic and social reconciliation.
The partnership we entered into with the Fort McKay and Mikisew Cree First Nations in 2017 is a good example. The First Nations acquired a combined 49% interest in Suncor’s East Tank Farm Development – the largest investment to date by First Nations in Canada. Also in 2017, Suncor purchased a 41% equity interest in PetroNor, a Quebec-based petroleum products distributor owned and operated by the James Bay Cree. We also have other strong partnerships formed through our Petro-Canada business, where 26 First Nations own and operate retail stations.
Going forward, we will continue to explore other opportunities, work to improve Aboriginal Peoples' participation in our workforce, and continue efforts to increase Suncor employees’ awareness of the history and experience of Aboriginal Peoples.
Like so many of Suncor’s collaborations, our social goal grew directly from listening to Aboriginal Peoples. To achieve our goal, we know we will need to continue to listen and learn.
Good governance and disclosure
In uncertain times, ensuring the resilience of an energy company is increasingly about good governance and transparent disclosure. Suncor’s Board of Directors continues to focus their efforts on forward-looking oversight of strategic planning, risk management and business conduct. They ensure management’s decisions align with the long-term interests of Suncor shareholders.
Supported by our Board, Suncor has committed to transparent disclosure. One example is our annual climate report, which provides a clear-headed assessment of why we believe our strategy is resilient through a range of forward-looking scenarios, and how we can continue to deliver value in a carbon-constrained world.
We work collaboratively with several other companies as members of the United Nations Global Compact (UNGC) Local Network in Canada to promote action in support of broader UN goals. Throughout this report, we share our efforts to support and uphold the UNGC’s Ten Principles, which also guide our approach to human rights, labour, environment and anti-corruption for all our operations.
We are also supportive of the voluntary recommendations outlined by the Task Force on Climate-related Financial Disclosures (TCFD), an international initiative of the Financial Stability Board (FSB). The recommendations provide companies with a voluntary, consistent disclosure framework that improves the quality of climate-related and financial disclosures. Many of the requirements of the TCFD are already met in our climate report, and we are taking steps to fully comply with the recommendations in coming years. We are confident in our resilience over the long term and support the transparent disclosure of how we deal with long-term climate risk.
Sustainability: embracing change
Sustainability is a concept that is constantly evolving. However, in all that we do, we will continue to place one value above the rest – safety first. As part of our Journey to Zero safety program, Suncor is committed to eliminating all workplace incidents. And while we continued to reduce lost time injuries, recordable injury frequencies and loss of containment incidents in 2017, we regrettably suffered the tragic loss of a contractor during the year. We won’t rest in our pursuit of a safe and incident-free workplace.
We all have a role to play in shaping our shared energy future. The challenges we face are complex and require creative collaboration. We need to be bold, innovative and open-minded.
By taking the long view and continuing to listen and learn from others, we at Suncor hope to play a constructive role in the transition to a better energy future. Together, let’s keep the conversation going.
President and Chief Executive Officer