Report on Sustainability 2018

Sustainability Q and A

With the appointment of a Chief Sustainability Officer, Suncor signals a focused commitment to its proven business strategy

A conversation with Eric Axford, Chief Sustainability Officer, and Arlene Strom, Vice President, Sustainability and Communications

Suncor’s sustainability journey gained increased emphasis in 2017 with the appointment of Eric Axford as the company’s first-ever Chief Sustainability Officer. Eric, formerly executive vice president, Business Services, is charged with providing further focus to Suncor’s multi-decade commitment to sustainable energy development. As reinforced in this conversation with Eric and Suncor’s Arlene Strom, the new position is part of a constantly evolving vision of sustainability that is integral to Suncor’s aspiration to be a trusted steward of valuable natural resources in a world transitioning to a low carbon future.

What is significant about Suncor appointing a Chief Sustainability Officer (CSO)?

Eric: While I had accountability for sustainability in my previous role, this brings executive focus and clarity to the task at hand. The time of senior management is a scarce resource and this clears the deck to really focus hard on these issues – on all our external-facing issues and opportunities.

The time is right. We’ve been using these four questions to assess the strength of our business strategy:

  1. Should we be in the oil business?
  2. Can we compete on cost and carbon?
  3. Can we generate the returns we need?
  4. Can we navigate today’s complex external environment?

You can get to “yes” fairly easily on those first three questions. The uncertainty is in navigating this complex external environment. Can we get the market access and the right policies and conditions we need to be successful and contribute to solving complex challenges? This role relates directly to that challenge. Although some of those things are accountabilities of other parts of the organization, this is a strategic, cross-cutting role. I’m very excited by it.

Arlene: I think it’s huge and I’m already hearing from stakeholders and industry peers about how significant it is to see someone at the most senior executive level representing this vital component of our business strategy. It’s a reflection of Suncor’s multi-decade journey and commitment when it comes to sustainability.

Does the appointment of a CSO mark an evolution in Suncor’s view of what sustainability is all about?

Eric: If you look at the literature on best practices, you’ll see that companies usually begin by dealing with sustainability on an issue management basis. But as companies mature, sustainability becomes more of an integrated capability. The role of a CSO is then to ensure the organization is living up to its commitments, values and beliefs.

I can see and feel that at Suncor. Of course, it’s time to have a CSO at the executive level – in part, because we’ve matured through a 20-year journey to actually build this capability deeply into our culture. My role is different now than it would have been 10 or 15 years ago. This isn’t about issues management; it’s about developing a strategy and capability right across the company. I’m a custodian of that strategy while the work is distributed among more than 13,000 people.

What’s Suncor’s vision for sustainability going forward? How is it changing?

Eric: I think that’s part of our evolution. We are framing sustainability to include things that are a natural fit, but perhaps haven’t had the same focus and profile until now. For example, we’ve always understood the importance of diversity and inclusion, but now we are recognizing these issues as an integral part of our sustainability strategy. That will help elevate the urgency of addressing these challenges.

Arlene: That’s at the heart of this appointment. This CSO role demonstrates we are thinking more deeply about the path forward. For example, the fact that Eric is stressing the importance of diversity and inclusion highlights the evolution in our thinking as part of a broader vision of sustainability.

The United Nations (UN) has set out 17 Sustainable Development Goals (SDGs), many of which have some application to a company like Suncor. Does that provide a useful guideline for broadening the concept of sustainability?

Arlene: The UN goals are a reflection of the global conversation on sustainability. To me, they are exactly that – guidelines and a framework that can help us map our own goals, objectives and strategies. They help us fit into the global conversation and, by doing that, we are addressing stakeholder concerns.

Eric: It’s an interesting way to help translate what we’re doing when we are talking to global stakeholders, because so many of them are aware of the UN goals. I think there is a good overlap. Now, the goals are framed at a high level to end poverty, protect the planet and ensure peace and prosperity. But, frankly, we all have the opportunity to address issues of poverty, environmental protection and discrimination. The SDGs allow us to have a more integrated conversation.

Suncor CEO Steve Williams has talked a lot about “taking the long view of being in the energy business.” In that context, is sustainability even more important?

Eric: At the crux of it, sustainability is all about the long game. If you plan to be in this business for the next 50 to 100 years, you think quite differently. To be successful, you must consider the needs of stakeholders, investors and society as a whole. The nature of the oil sands business – including the very large capital investments that are required – means you have to take a long-term view. So it’s really quite conducive to a sustainability strategy.

Arlene: If you are looking at the long term, your compass is clear. As you start to map out where you are going, there are signposts along the way. As an organization committed to sustainability, we want to make sure we have great headlights – that we can see what’s coming at us and we’re reading those signposts correctly.

How important is goal-setting and ambition to this vision of sustainability?

Arlene: It’s very important. We’ve been ahead of the curve on setting ambitious goals. And we are reframing our long-term goals to drive changes in behaviour. We are also measuring our progress against these goals by setting targets and reporting our progress against these targets.

Eric: I think aspiration is a wonderful thing. We’ve always set goals that some have described as audacious. It’s often a little unclear, even to us, how we will achieve them. But it’s helped bring focus and clarity to what we are trying to do. Now, the fact is we’ve met most of the goals we’ve set; our people continually find ways to innovate and meet even what appear to be very audacious targets.

As a concrete example, Suncor is targeting a 30% reduction by 2030 in the total greenhouse gas (GHG) emissions intensity of its oil and petroleum products. How does that change day-to-day decision-making?

Eric: It has a very real impact. Once you’ve made a public commitment like that, there’s really no going back. When we first set that target, we did not really see how we were going to close that gap. But, we had committed to a goal to harness technology and innovation to help us contribute to a low-carbon economy and we knew we needed a target to help us measure our progress. Since committing to the target, we’ve been focused on strategies and technology investments to do just that. As a result, we can now see a realistic path to achieving the GHG intensity reduction. One thing about this industry is that it’s filled with a lot of very bright scientists and engineers who like problem solving and finding tangible solutions.

Suncor has said that, to succeed over the long haul, it needs to be globally cost and carbon-competitive. Where are you on that spectrum?

Arlene: We are very excited about the lower emissions intensity of our most recent project. Fort Hills is actually equal in carbon intensity to the average refined barrel in North America. That’s real progress. For future growth, we know we can and will get beyond today’s technologies. That will be necessary to contribute to Canada’s commitments to reduce its emissions, and ultimately, bend the curve on absolute emissions as well. Last year alone, we invested $350 million developing and deploying new technologies.

Eric: The oil sands is a surprisingly low-cost producer when you look at the full economics over the long term. Technology and innovation has been critical, both in terms of reducing costs and improving environmental performance. It will be even more critical going forward. Some of the new in situ technologies we are developing hold the potential to reduce GHG emissions intensity by 50-70% over current methods. We are also working collaboratively with industry partners and others to improve our collective performance. We know we will need to drive not just continuous improvement, but transformative improvement to remain competitive in a low-carbon future. We believe we are on the path to doing that.

While our own emissions will continue to go up in the short term as we grow production, Suncor is taking steps – including replacing coke-fired boilers and expanding cogeneration – that will help “green” the Alberta electrical grid.

The bottom line is we support a de-carbonizing world, and we have a place in that world. And technology and innovation are vital to that.

Suncor has also set a long-term social sustainability goal focused on increasing the participation of Canada’s Aboriginal Peoples in resource development. How is that progressing?

Arlene: We are really proud of the agreement that was completed this past year, in which the Fort McKay and Mikisew Cree First Nations acquired a combined, 49% equity position in Suncor’s East Tank Farm Development – the largest investment to date by First Nation communities in Canada. By the First Nations’ own declaration, this is game-changer. It demonstrates that mutually beneficial partnerships are possible, and it inspires us in terms of future opportunities with other Aboriginal communities.

We believe we have a role to play in ensuring the communities directly affected by our operations share in the economic benefits of resource development. But this social goal is also about a new way of thinking and acting. This isn’t work we do “for” Aboriginal Peoples. It’s about listening and learning and working together. Part of what we’re trying to do is increase awareness of the history and experiences of Aboriginal Peoples, starting within our own company. Close to 5,000 Suncor employees have gone through our web-based Aboriginal awareness program, which was developed with guidance from partners like Reconciliation Canada as well as our own Aboriginal employees. Suncor’s Aboriginal Employee Network is growing rapidly and any Suncor employee can join the network. We all learn together through this network.

Eric: Our social goal is a journey and we’ve still got a long way to go. But we’re determined to make progress in multiple areas. We are trying to play a supportive role in the ongoing reconciliation process. We are looking for ways to collaboratively support Aboriginal youth, the fastest growing segment of the Canadian population. We are working with our supply chain, trying to increase revenues to Aboriginal businesses and communities. We feel we have the opportunity to make a difference and, while I’m proud of what we’ve done so far, I’m always thinking we need to do more.

How important is good governance to realizing Suncor’s sustainability vision?

Eric: Governance is very important to us. Simply put, it’s about thinking through the way an organization is managed and governed, goals are set, accountabilities are established, and performance is stewarded and monitored. I think Suncor is widely recognized for having strong practices in this regard. We have certainly connected sustainability and governance right up to our Board of Directors, with common lines of sight throughout the organization.

Arlene: Both Eric and I represent sustainability issues at every meeting of the Board’s Environment, Health & Safety and Sustainable Development Committee. Eric is also at the full Board meetings, representing these issues on a regular basis. And discussions around sustainability – including issues of climate and carbon risk – are a full and robust part of Suncor’s annual strategy process. All of that helps set the right tone for oversight from the Board.

Is good governance and transparency also about creating long-term resilience?

Eric: Absolutely. It’s an uncertain, dynamic world out there and, if you are going to be a resilient energy company you have to transparently assess, manage and report on the principal risks facing your business. A great example of that is Suncor’s stand-alone annual climate report, which was the first of its kind in the Canadian oil and gas industry. The report discloses our best assessment of the business risk associated with climate change and the transition to a low-carbon economy. By evaluating our resilience through a range of potential scenarios – we also evaluate the strategies we are taking to mitigate that risk. The report provides a clear-headed explanation of how we can continue to provide energy on a cost and carbon-competitive basis through an energy transition.

That climate report is also helping inform Suncor’s response to the Task Force on Climate-related Financial Disclosures (TCFD), which is an international initiative to provide companies with a voluntary, framework for climate-related disclosures. Many of the requirements of the TCFD are met in our climate report and we are looking at how we can best align with all of the TCFD recommendations. We have publicly signalled our support for these recommendations and will continue to work together with other affected stakeholders to work out the details of implementation of these recommendations.

Suncor has often talked about the importance of collaboration and stakeholder engagement. Why is that such a critical part of sustainability?

Arlene: Suncor established a stakeholder relations policy 20 years ago and it has served us well. These principles are more important than ever. We believe that, by bringing people with diverse perspectives together to address complex problems, we can accomplish so much more than we could on our own. You can see this in our collaboration with groups like the Energy Futures Lab and the Ecofiscal Commission. Both are focused on finding practical solutions that bring people together who seek to contribute to addressing the challenge of lowering our emissions in a resource-based economy. Our work with industry partners through Canada’s Oil Sands Innovation Alliance to accelerate technology and innovation is another example of collaboration. Or the deliberations with other companies, governments and environmental groups to advance progressive climate change policies. Or, through the Suncor Energy Foundation, we have brought diverse leaders, organizations and Indigenous community members together on a regular basis – through these gatherings, our community partners have changed collaborative strategies and we have been inspired – our social goal was inspired through these gatherings.

What’s common to all these collaborations is that we are changed by these discussions. We listen. We learn. It impacts our view of potential solutions and how we conduct our business.

“The whole concept of sustainability starts with listening to stakeholders and working with them collaboratively.”

Eric: That’s such an important point. The whole concept of sustainability starts with listening to stakeholders and working with them collaboratively. We won’t always agree, but we need to be ready to engage, with respect and an open mind. Without that commitment to dialogue, you end up trapped in old ways of thinking. You need to be agile, understand that you can always learn something new. You need to find ways to embrace change, not resist it. This is part of our core philosophy and I think it’s provided us with a significant competitive advantage.

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Recommended readings
Social responsibility
Stakeholder and Aboriginal relations
Addressing the climate change challenge