ESG materiality assessment in response to events such as the COVID-19 pandemic and demonstrations in support of racial equality in the U.S. We refreshed our materiality assessment prior to issuing our 2020 report to reflect company and stakeholder perceptions of the increasing importance of issues like health, safety, and cybersecurity.
The update in 2021 was a condensed version of our formal materiality assessment in 2019. The update is based on input from virtual in-person interviews, stakeholder requests, and publicly available data. In this context, ESG materiality should not be confused with financial materiality.
Our updated materiality map is presented below:
Our reporting frameworks
Our reporting frameworks align with the standards most frequently referenced by our stakeholders, including investors. This report is prepared in accordance with:
- The GRI Core Standards
- The GHG Protocol
And provides reporting indices for:
- The TCFD Standards
- The SASB Oil & Gas Services Industry - Extractives and Mineral Processing Sector Standard, as well as other relevant sector standards.
We are committed to reporting in a way that provides our investors and other stakeholders with data that is focused on material metrics and is consistent and comparable.
Baker Hughes identifies risks to our business and assets utilizing an effective Enterprise Risk Management (ERM) process – a risk-based management and monitoring program that is aligned to the business cycle, leads to more informed decision making and builds resilience across the organization. Our ERM process includes an annual risk review with representatives of business segments and functions to proactively identify and monitor key risks and opportunities that have significant potential to affect our business. Identified risks are then reviewed with executive leadership for validation and alignment, ownership of risk responses, and monitoring of key risk indicators. The ERM Steering Committee has oversight of the ERM program and will recommend further analysis or in some cases, specific improvements to strengthen the company’s safeguards. The CEO and ERM executive sponsors perform deep dive reviews of response actions for each risk with the risk owners and quarterly updates are presented to the Executive Leadership Team. In addition, the top sixteen risks are reviewed during Board of Directors meetings throughout the year.
The ERM Team works closely with key stakeholders to introduce, support, and promulgate the risk culture across the company. There are six (6) main cultural values driving Baker Hughes’s ERM practices. These are:
Tone at the top
Awareness of risk
Willingness to participate
Ownership of risks
Inclusion of risk in decision making
Ongoing risk management education
A summary of our company’s material risks is presented in our 2020 10K filing.
Support to the UN Global Compact
Baker Hughes is a signatory of the UN’s Global Compact: a voluntary leadership platform for the development, implementation, and disclosure of responsible business practices. Baker Hughes takes a leadership position in our industry sector by making this commitment.
We are committed to supporting and reporting our progress toward the Ten Principles of the United Nations Global Compact on human rights, labor, environment, and anti-corruption, as well as the Sustainable Development Goals.
Support to the Paris Climate Agreement Objectives
We support the United Nations Paris Climate Agreement and its goal to keep global temperature rise well below 1.5-degrees Celsius.
As an energy technology company with a portfolio of low-carbon solutions across the energy spectrum, our corporate strategy is to lead through the energy transition to a zero-carbon future. We have committed ourselves to reduce our carbon equivalent emissions 50% by 2030 and to achieve net-zero Scope 1 and 2 carbon equivalent emissions by 2050 in line with the Paris Climate Agreement. Our net-zero by 2050 and interim goal of a 50% reduction in emissions by 2030 covers our Scope 1 and 2 emissions.
Baker Hughes maintains robust management systems that govern different aspects of our operations, including safety, environment, and quality management. The Baker Hughes HSE Management System is an enterprise-wide framework that covers all employees and contract/contingent workers. It drives continual improvement in our HSE performance and legal compliance in our facilities and operations worldwide. Our management system comprises 15 elements and operational control procedures that detail the minimum standards for controlling safety and environmental risk in our operations. In addition, we maintain ISO-certified management systems in the following areas across our sites:
- 102 sites ISO 14001 certified (environmental management system standard)
- 273 sites ISO 9001 certified (quality management system standard)
- 63 sites ISO 18001 or 45001 certified (occupational health and safety standard)
Engagement with key external stakeholder groups allows Baker Hughes to help shape the direction and priorities of select entities, gain insights from a vast global consortium of peers; customers, governments, and academia; and, establish knowledge-sharing networks for more informed and effective decision-making and strategic planning. In 2020, we developed an engagement strategy and criteria for how we select engagement in external associations and organizations. These engagement criteria and process ensure we employ our resources to the entities that are shaping the future of energy while aligning with our strategic interests.
We begin to assess memberships, affiliations, and engagements with external stakeholder associations by identifying key areas of common interest between the external group and the Baker Hughes product companies and corporate functions. If areas of common interest are found, we will evaluate the organization’s strategic direction and its alignment with our priorities, such as climate science, environmentally safe and efficient hydrocarbons development with advanced methane and carbon emissions abatement technology such as CCUS, and the energy transition. If we are aligned, and the criteria are met, a formal membership decision is made.
As a result, in 2020 we increased our activity with organizations focused on hydrogen, geothermal, energy storage, carbon capture, utilization, and storage, energy efficiency, emissions management, and new industrial sectors, in addition to our traditionally hydrocarbon-focused associations.
Engaging with diverse stakeholders opens a spectrum of perspectives on our operations and helps us identify the future of energy and the most significant ways we impact the world as an energy technology company.
During the past year, most of the face-to-face meetings and conferences that enable our traditional stakeholder engagement methods moved to virtual or electronic formats. Despite these changes, we continued to conduct a variety of engagements and to align our priorities with those of our stakeholders.
One such engagement exemplifying our commitment to the energy transition is with Geothermal Rising, a non profit organization advancing the understanding and practical use of geothermal energy. Our engagement with Geothermal Rising demonstrates our support and involvement in the renewables sector. In 2020, we advanced our engagement by augmenting our membership with participation in the executive policy committee, helping to shape the strategy for growth and deployment of geothermal energy throughout the United States and the rest of the world. In addition, in the geothermal space, we furthered our engagement with the U.S. Department of Energy, National Renewable Energy Laboratory (NREL) geothermal program. Beyond memberships, collaborations and partnerships are also key forms of external stakeholder engagement. In 2020, we provided support to Resources for the Future (RFF), a nonprofit organization that conducts independent research into environmental, energy, and natural resource issues. Our support allowed RFF to organize multi-stakeholder workshops on “internal carbon pricing” and the impact of the energy transition on oil and gas workers and communities. The learnings that we harvest from RFF, along with a number of organizations such as the International Energy Agency Greenhouse Gas Technology Collaboration (IEAGHG), Global Carbon Capture and Storage Institute (GCCSI), and the Energy Storage Association, are shared across the organization through an extensive network of knowledge groups. Collaboration on these topics better positions Baker Hughes for the future of energy.
University relationships are also an important piece of the stakeholder engagement strategy. Baker Hughes is a sponsor of the Stanford Natural Gas Initiative (NGI), a collaboration of research groups at Stanford University drawn from engineering, science, policy, geopolitical, and business disciplines that works with a consortium of industry partners and other external stakeholders to generate the knowledge needed to use natural gas to its greatest social, economic, and environmental benefit. This alignment to our energy transition and emissions reduction commitments makes this engagement a mutually beneficial partnership in the realms of safe, environmentally safe, and efficient utilization of natural gas. Baker Hughes will continue to participate in workshops and speaking engagements with Stanford NGI to present and share ideas on this topic.
As we expand our strategically aligned relationships, we remain committed to seeking diverse viewpoints and perspectives to garner insights, positioning Baker Hughes as a thought leader in the energy transition and beyond. Our collaborative engagements will continue, as we strive to make energy safer, cleaner, and more efficient for people and the planet.
Global, regional, and local industry events, forums, and conferences
Proprietary company events and meetings
Partnerships and working groups to advance best practices
Annual shareholder meeting
Executive meetings, presentations, and operational tours
Outreach program led by our Investor Relations group, the Corporate Secretary’s Office, and Executive Compensation Team
Interactive online forums
People leader engagement
Employee Resource Groups, many with senior leader sponsors
CEO’s Employee Pulse Group
Lobbying and other direct engagement in compliance with applicable laws and regulations
Collaboration and social investments where we operate and in support of broader society
Working groups, committees, and public-private partnership activities in industry groups and associations
Leadership and committee positions that extend and strengthen organizational capabilities