The Key Performance Indicators (KPIs) that we are reporting for 2016 were drawn from our materiality process and overall business objectives. They align with the Global Reporting Initiative (GRI) Standards. Here, we provide a methodology and definitions for selected KPIs from subject areas that were assessed to be the most important to Cairn and its stakeholders, as follows:
|Material issue||KPI no.||Key Performance Indicator|
|Economics and funding||Covered in Annual Report and Accounts (accounts, reserves)|
|Contractors and supply chain||1||
Percentage of new suppliers that were screened for corporate responsibility risks in four different areas:
|Ethics, anti-bribery and corruption and transparency||2||Percentage of employees trained in Cairn’s anti-corruption policies and procedures|
|3||Payments to governments|
|4||Investment proposals that covered results of Corporate Responsibility (CR) due diligence|
|Social and economic benefit||5||Number of contractors|
|6||Percentage of contractors that are national|
|Human rights||8||Percentage of employees trained in policies and procedures relating to human rights|
|9||Total number and percentage of significant investment agreements and contracts that include human rights clauses or that underwent human rights screening|
|Major accident prevention and safety||10||Number of fatalities|
|11||Lost Time Injury Frequency (LTIF)|
|12||Total Recordable Injury Rate (TRIR)|
|13||Oil spills – number and volume|
|14||Fuel spills – number and volume|
|15||Chemical spills – number and volume|
|16||Waste spills – number and volume|
|17||Other spills – number and volume|
|Climate change, emissions and discharges||18||Greenhouse gas emissions (GHG) – Scopes 1, 2 and 3, and GHG normalised to total employee and contractor hours worked|
|19||Total mass of waste by type and disposal method|
For each of these KPIs we provide a definition and an explanation of the methodology used in collecting the data, where appropriate.
New supplier: for the purposes of this indicator, we are assessing the new suppliers that require approval from Cairn’s Contracts Committee.
This data is compiled by reviewing Cairn’s Contract Committee records to identify new suppliers that Cairn selected during the reporting year. Tender and contract documentation for those suppliers are then reviewed to identify which corporate responsibility risks are covered in the screening process for each one. Note: all suppliers are included in the figures regardless of whether or not they are considered likely to present CR risks. For example, data processing companies and suppliers of materials are included in the figures.
Number of new suppliers that Cairn selected during the reporting year that were screened for corporate responsibility risks in each of the four key areas/number of new suppliers that Cairn selected during the reporting year x 100
Employee: person employed by, and on the payroll of, Cairn. Persons employed under short-service contracts are included as Cairn employees provided they are paid directly by Cairn. Cairn has a lot of other individuals who work on its behalf in the office. Those who are contracted for more than three months to an organisational position are categorised as ‘other workers’. These individuals are included as employees for the purposes of reporting health and safety statistics, but are not included in this training data.
Cairn’s anti-corruption policies and procedures: Cairn has a well-established anti-bribery and corruption management system and procedures which look to mitigate the risks of bribery or corruption in the supply chain and when considering new investment opportunities.
Number of employees trained in Cairn’s anti-corruption policies and procedures/total number of employees x 100
Payments to governments: any payments made to governments.
Figures for any payments made to governments during the reporting year are collated by Cairn’s Finance department at the end of each calendar year. Payments are listed by country under the following categories:
In the interests of transparency, we cover operated as well as non-operated assets for this indicator. Gross payments are disclosed for assets that Cairn operates and net payments are disclosed for Cairn’s non-operated assets. Negative figures in the data reflect refunds received. Figures disclosed represent a net of payments and refunds.
Cairn reports these figures in support of two transparency initiatives, namely the European Union Accounting Directive and the Extractive Industries Transparency Initiative (EITI). The figures include both payments to government included in our EITI reporting, such as corporate income tax, licence fees and withholding tax suffered, and additional payments made including VAT and payroll taxes, and social security costs.
Investment Proposals (IPs): in 2016, Cairn required that any new investment with a net expenditure in excess of US$1 million should be assessed against specified investment criteria, which include an assessment of the potential CR risks involved with the opportunity. For those investment opportunities that are taken forward to the Board for approval, an IP is required which summarises the outcome of the review (including the CR assessment), the recommended terms of the offer and how the opportunity would be managed in the event of success. These IPs are signed off by all functional department heads, the Chief Operating Officer (COO) on behalf of the Management Team (MT) and the Chief Executive Officer (CEO) on behalf of the Executive Team (ET).
This indicator measures the proportion of IPs approved in the reporting year that covered the results of CR due diligence. Figures are compiled by reviewing all investment proposals approved in the reporting year.
Number of IPs approved in the reporting year that covered the results of CR due diligence/number of IPs approved in the reporting year x 100
Contractor: someone contracted to work on Company business on a temporary basis in field-based positions, a subcontractor through another company, or someone contracted to work on Company business for less than three months in an office-based position. These people are not paid directly by Cairn but through their employing organisation.
Many field-based contractors work on rotation (back to back), e.g. one month on, one month off, so it is not practical or meaningful to give the total number of individuals who have worked as contractors on Cairn projects throughout the year. Instead, we provide the total number of contractor positions during 2016.
Data on numbers of short-term office contractors was collected for the first time in 2016. It came from three sources:
Data on numbers of field-based contractors and some short-term office-based contractors is collected and entered into the database each month. At the end of the year, the highest monthly figures are taken from each vessel/rig/base/office and these are added together to give the total number of contractors. Short-term office-based contractor data that is not available monthly is entered into the database at the end of the year and the average monthly figure is used for the number of contractors in this case.
Note: office-based contractors who work on Company business on longer-term projects (three or more months) are captured in a separate long-term contractor or ‘other worker’ category together with the employee data, and are not included in the contractor numbers.
An occasional day worker, who is on a project very briefly, might be omitted from the total contractor numbers.
The number of contractors is not an exact number of individuals. It is calculated as either the maximum or the average (depending on how the data is collected) monthly number of contractors for each vessel/rig/base/office.
National (contractor): from the country of operation, i.e. having the nationality (born or naturalised) of that country.
Non-national (contractor): not from the country of operation, i.e. not having the nationality of that country.
This data is collected for the purpose of measuring Cairn’s impact on the communities in which we work and the definitions are simply regarding whether a contractor is from the country of operation or not.
When contractor numbers are collected each month, the numbers that are national and non-national are provided. At the end of the year, the same monthly figures that are used to calculate the number of contractors are used to calculate the number of national contractors.
When recording numbers of short-term office-based contractors (e.g. the non-time-writing personnel list and the Unit4 personnel list), it is not always known whether these contractors are national or non-national as these details are not currently recorded. In such cases, we assume the contractors are national.
Number of national contractors/total number of contractors x 100
Cairn defines social investment as ‘pro-active contributions or actions taken by Cairn to help bring benefits to communities where we operate’. These may include community development projects, capacity building within national institutions and developing skills within local businesses.
Figures for social investment are collated from the following sources:
Note: as from 2016, payments made to governments for training allowances payable under licensing agreements have been excluded.
A definition for employee is given above under KPI no. 2.
Number of employees trained on policies and procedures relating to human rights/number of employees x 100
A significant investment agreement is defined as one that requires Board approval. This equates to one with a net expenditure in excess of US$1 million.
Significant investment agreements and contracts are assessed against specified investment criteria, which include an assessment of the potential CR risks, including human rights, involved with the opportunity. The IP summarises the outcome of the review (including the CR assessment), the recommended terms of the offer and how the opportunity would be managed in the event of success. These IPs are signed off by all functional department heads, the Chief Operating Officer (COO) on behalf of the Management Team (MT) and the Chief Executive Officer (CEO) on behalf of the Executive Team (ET).
Data for this indicator is compiled by reviewing all IPs that were approved in the reporting year. While all significant investments are screened broadly for human rights issues at the IP stage, only those that make specific reference to human rights are counted as having undergone human rights screening.
Number of IPs approved in the reporting year that make specific reference to human rights/number of IPs approved in the reporting year x 100
Fatalities: cases that involve one or more people who died as a result of a work-related incident or occupational illness (International Association of Oil and Gas Producers (IOGP)).
We report employee, contractor and third-party fatalities.
Records of incidents including fatalities are kept in our online incident reporting system. Contractors are required to report all incidents to Cairn management as soon as possible after the event, and the details are logged into our incident reporting system, which keeps key personnel informed, by email, about progress with the reporting and investigation.
LTIF: the number of lost time injuries (fatalities + lost work day cases) per 1,000,000 hours worked (IOGP).
Employee: person employed by and on the payroll of Cairn. Persons employed under short-service contracts are included as Cairn employees provided they are paid directly by Cairn. Cairn has a lot of other individuals who work on behalf of Cairn in the office. Those who are contracted for more than three months to an organisational position are categorised as ‘other workers’ and these individuals are included as employees for the purposes of reporting health and safety statistics. They are not paid directly by Cairn but through their employing organisation.
Contractor: someone contracted to work on Company business on a temporary basis in field-based positions, a subcontractor through another company, or someone contracted to work on Company business for less than three months in an office-based position. These people are not paid directly by Cairn but through their employing organisation. We record contractor work-related activities in line with IOGP definitions of mode 1 and mode 2 contractors; mode 3 are excluded as per the IOGP guidelines.
Records of all incidents, including fatalities and lost work day cases, are kept in our online incident reporting system. Contractors are required to report all incidents to Cairn management as soon as possible after the event, and the details are logged into our incident reporting system, which keeps key personnel informed, by email, about progress with the reporting and investigation.
Hours worked are collected for employees and for contractors. Employee hours are derived primarily from Cairn’s time-writing system that UK and Norway employees use to log their working hours. For Senegal and Morocco employees, hours worked are estimated based on the number of working days in the month and the standard working hours. Employee hours include hours worked by ‘other workers’ as these are captured in the time-writing system. Cairn’s Human Resources department compiles the figures and enters them into the database each month.
Hours worked by field-based contractors are collected monthly, together with other HSE KPI data, from each vessel, rig, aircraft and shore base. For offshore workers, the hours are often calculated on a 12-hour work day basis.
Hours worked by short-term (less than three months) office-based contractors have been collected for the first time in 2016. Figures for the Dakar office contractors were obtained monthly in the form of timesheets. The remaining figures were compiled at the end of 2016 using a list of non-time-writing personnel and the schedule of a software implementation project.
Hours worked by field-based contractors are often calculated on a 12-hour work day basis rather than being a precise log of time worked.
Hours worked by short-term office contractors, other than those in the Dakar office, were estimated, largely based on discussion with people in the Edinburgh office.
TRIR: the number of recordable injuries (fatalities + lost work day cases + restricted work day cases + medical treatment cases) per 1,000,000 hours worked (IOGP)
See above (KPI no. 11) for definitions of employees and contractors and for details of how incidents are recorded and how ‘hours worked’ are calculated.
We report spills according to the categories provided by the GRI: oil, fuel, chemical, waste, other.
Oil: crude oil.
Fuel: diesel, gasoline, kerosene, heating oil, aviation fuel.
Chemical: any other raw material or ancillary.
Waste: any material (solid, liquid, gas) that is introduced into the work location as a product of the work but that fulfils no further useful purpose at that location.
Other: other material not included in categories above.
Note: if something fits into more than one category, we report against the category that provides the most information, e.g. chemical rather than waste when reporting waste chemicals.
We collect figures on the number of spills in the following size categories: less than 1 barrel; between 1 and 10 barrels; between 10 and 100 barrels; and greater than 100 barrels. We also record the actual volume spilled.
We report figures on spills to the environment, but also collect data on spills contained before reaching the environment for monitoring purposes.
Spill volume is usually based on an estimate.
We report our GHG emissions in accordance with the GHG Protocol Corporate Accounting and Reporting Standard (World Resources Institute/World Business Council for Sustainable Development). All GHG emissions are reported in tonnes of carbon dioxide equivalent (CO2e).
Scope 1 emissions: direct GHG emissions which occur from sources that are owned or controlled by the Company, for example, emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.
At present, Cairn is undertaking exploration activities only. We are not operating any production assets. Our Scope 1 emissions arise from:
In 2016 we carried out a review of our Scope 1 GHG emissions calculations to ensure they reflect best practice and utilise the most appropriate and up-to-date factors available. As a result, we updated to the latest published Global Warming Potentials (GWPs) for CO2, CH4 and N2O from the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report (AR5), having used the Second Assessment Report (SAR) GWPs previously. We also made some minor changes to the emission factors we use from the ‘Compendium of Greenhouse Gas Emissions Methodologies for the Oil and Natural Gas Industry’ (American Petroleum Institute (API) 2009) by selecting ones that align more accurately to the fuel types we use. Finally, we introduced an additional two categories to our waste incineration data. We applied these changes across all our Scope 1 GHG data, past and present. The changes were not material, but we are nevertheless restating all Scope 1 GHG figures in this 2016 report.
The rig, vessels and helicopters keep a daily log of fuel usage and each provides us with a total figure for fuel consumption, in litres, at the end of each month. Fuel consumption figures for land-based vehicles (<0.5% of total fuel consumption) are partly drawn from accurate fuel consumption records and partly from estimates when exact fuel usage is impractical to track.
A fuel density figure is used to convert litres of fuel into tonnes. The fuel density is provided by the rig, vessels or helicopter operator when available (most of the time in 2016). Otherwise, a typical density is used from API 2009. Figures in tonnes are then converted into CO2e using emission factors for carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) from the API Compendium 2009.
Flaring was carried out during well testing in 2016. The volume of oil and gas flared was measured and converted into mass (tonnes) using densities obtained from well test samples that were analysed in the laboratory. Scope 1 GHG emissions (tonnes of CO2e) were then calculated using emission factors from EEMS (Environmental Emissions Monitoring System) Atmospheric Emissions Calculations, 2008 (Table 10.1).
We have updated our 2015 Scope 1 GHG emissions figure to incorporate flaring data that was not available when we produced our 2015 end-of-year reports. Our 2015 normalised GHG emissions have increased in line with this. Note: 2015 flaring data was included in Cairn’s 2016 ‘Half Year Corporate Responsibility Update’, but has since been recalculated with amended gas densities and is restated in this report.
A small amount of non-hazardous waste was incinerated on one of the marine vessels supporting drilling operations in 2016. Scope 1 GHG emissions (tonnes of CO2e) arising from waste incineration are calculated using emission factors from the GHG Protocol 2014.
Petrol and diesel consumption for land-based vehicles at shore bases/offices was partly estimated. This represents less than 0.5% of fuel consumption during operations in Senegal and overall. The mass of waste incinerated on board vessels is usually based on estimates; however, this represents a tiny amount compared to overall emissions (<0.001 tonnes CO2e).
We use the most applicable emission factors available, but there will always be a small margin of error from these as they may not match fuel type exactly.
Scope 2 emissions: electricity indirect emissions are from the generation of purchased electricity consumed by the Company. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organisational boundary of the Company.
Our Scope 2 Emissions arise from:
We report Scope 2 emissions in line with GHG Protocol Scope 2 Guidance, i.e. in two ways: according to a location-based method and a market-based method. (Transmission and distribution losses are excluded.)
For the location-based method, we use emission factors from the International Energy Agency (IEA) Report ‘CO2 emissions from Fuel Combustion Highlights’ (2013 edition), pp110–112 ‘CO2 emissions per kWh from electricity generation’. These are grid average emission factors for each country. For district heating and cooling, we use location-based emission factors from the UK Department for Environment Food & Rural Affairs (Defra) 2015.
For the market-based method we use emission factors, where available, in the following order of preference:
Supplier-specific emission factors were requested from the electricity suppliers of all of Cairn’s offices but were only available for the Edinburgh and London offices. Market-based Scope 2 figures for Norway were calculated using the residual mix emission factor for Norway. For Morocco and Senegal, there were no residual mix factors available, so the location-based factors were used.
We are not able to obtain supplier-specific emission factors for years prior to 2015 so all Scope 2 data prior to 2015 is calculated according to the location-based method.
Our Scope 2 GHG figures for all years have been very marginally adjusted in 2016 (maximum figure change of 0.34 tonnes CO2e) due to slight adjustments that were made to the units of measure conversions in our database.
Most of our electricity and district heating and cooling (Norway only) consumption happens in our head office in Edinburgh (75% of our total electricity, district heating and cooling in 2016), followed by Stavanger, London and Dakar (12%, 7% and <6% of total respectively). Electricity consumption for the Edinburgh, London, Dakar and Rabat (0.1% of total) offices is taken from meter readings. The figure for the London office covers October 2015 to October 2016 because fourth-quarter figures are not available in time for this report. Electricity consumption for the Stavanger office is calculated as a proportion of the overall building consumption.
There is always a degree of inaccuracy in emission factors. Also, there is no electricity emission factor available for Greenland, so we used the Denmark factor instead.
Scope 3 emissions: Scope 3 emissions are a consequence of the activities of the Company, but occur from sources not owned or controlled by the Company.
Cairn currently reports Scope 3 emissions from business travel, including air and rail travel, but not tube travel. Other Scope 3 emissions, e.g. supply chain and employee commuting, are excluded.
For calculating Scope 3 (business travel) GHG emissions, we use the Defra methodology, including its recommendation to include an uplift for the influence of radiative forcing in air travel emissions. This uplift ensures that the maximum climate impact of an organisation’s travel habits is captured. In our air travel GHG emissions calculations, we use journey type (domestic, short haul, long haul and international (new for 2016)), seat class (economy, premium economy, business, first) and distance travelled. In our rail travel GHG emissions calculations, we use rail type (national rail, international rail) and distance. We updated to the latest Defra 2016 emission factors for 2016 data (see http://www.ukconversionfactorscarbonsmart.co.uk/).
It is Cairn policy that all travel for Edinburgh- and London-based staff, and usually the smaller offices, is booked using its corporate travel agent, HRG, except under special exemption. As a result of this, the majority of our travel data is obtained in a report from HRG and includes details on journey type, seat class and kilometres travelled. Travel data is also obtained from Cairn’s travel provider in Norway, from a travel expense claim report from Edinburgh’s accounts department, and through communication with executive assistants in all Cairn’s offices. Where journey kilometres are not provided with the data, they are obtained from internet resources, e.g. airmilescalculator.com, travelmath.com and virgintrainseastcoast.com (carbon calculator).
Not all HRG flight data can be broken down into flight sectors with the corresponding seat class, so there is a degree of uncertainty in this, e.g. GHG emissions for some of the domestic flight sectors may be calculated using short- or long-haul flight emission factors.
Travel data obtained from travel expenses does not always show whether a journey is single or return, so this sometimes has to be assumed. In addition, the seat class of these flights is not shown; however, flights booked outside the HRG system are usually with budget airlines, so the majority are known to be economy class. These flights are not broken down into sectors, but the majority are domestic or short-haul/European flights which are only one flight sector.
For rail travel data obtained from travel expenses, some of the journey distances are based on estimates.
Travel data provided by Cairn’s travel provider in Norway (Berg-Hansen) does not include train journeys, so an estimate has to be made for these.
Occasional flights/train journeys booked by individuals, based in Cairn’s offices outside the UK, might get missed; however, this is considered minimal.
To meet UK reporting requirements, GHG emissions need to be reported normalised to an appropriate performance measure representative of the business. As Cairn did not have revenue or operated production facilities in 2016, or in the previous four years, and activities were of an exploration nature only (i.e. exploration drilling and associated activity), its GHG emissions have been normalised to total employee and contractor hours worked. They are presented as tonnes of CO2e per 1,000 hours worked.
See above (KPI no. 11) for an explanation of how hours worked are calculated/compiled.
All scopes GHG x 1,000/total hours worked = All scopes GHG per 1,000 hours worked
Scope 1 GHG x 1,000/total hours worked = Scope 1 GHG per 1,000 hours worked
Scope 2 GHG x 1,000/total hours worked = Scope 2 GHG per 1,000 hours worked
Scope 3 GHG x 1,000/total hours worked = Scope 3 GHG per 1,000 hours worked
Hazardous waste: all waste that is defined as hazardous, toxic, dangerous, listed, priority, special or some other similar term as defined by an appropriate country, regulatory agency or authority. We use the European Union (EU) definitions and waste codes.
Non-hazardous waste: industrial wastes resulting from Company operations, including process and oil field waste (solid and liquid) disposed of either on-site or off-site. Includes refuse and other office waste, commercial (e.g. retail) or packaging-related waste. Excludes hazardous waste as defined above.
Disposal method: the method by which the waste is disposed. This is split into the following categories in line with GRI reporting requirements: reuse, recycling, composting, incineration, landfill, on-site storage and other. Waste data, including information on disposal method, is provided by our waste disposal contractors where applicable, or by contractors who are responsible for waste generated during short-term operations. We use EU definitions and codings.
We generate waste during rig, marine vessel and shore base operations, as well as from our offices in the UK and other locations.
Waste from field-based operations: waste generated during field-based operations (including offshore waste – except where offshore treatment is allowed such as waste incineration under the International Convention for the Prevention of Pollution from Ships (MARPOL)) – is transferred to shore-based waste disposal facilities and waste transfer notes are used to record and track each transfer as part of our ‘Duty of Care’. Waste figures are submitted to Cairn at the end of each month by the vessels themselves (in the case of short-term operations such as seismic) or by the waste disposal contractor (in the case of longer-term operations such as current drilling operations in Senegal). This data is then checked and entered into our database, split by hazardous/non-hazardous and by disposal method.
Waste figures are reported in tonnes. We ask our contractors to weigh waste wherever possible and report by mass (tonne, kg). Where this is not possible, tonnage is calculated by multiplying the volume of waste by a conversion factor. We provide contractors with a set of standard conversion factors from Waste & Resources Action Programme (WRAP), a non-government organisation working with UK Governments, the EU and other funders, to help deliver their policies on waste prevention and resource efficiency (see www.wrap.org.uk).
Office waste: waste data is collected from our offices at the end of each year. This covers all types of waste including general office waste, controlled waste and recycling waste, e.g. paper and toner cartridges. Figures for Cairn’s head office in Edinburgh are received from the waste contractors that service the building, and are partly estimated. Figures for Cairn’s Stavanger office are obtained from the building managers. For both these offices, some figures are calculated as a proportion of the overall building. For other offices, waste figures are estimated using per person per month Edinburgh office figures.
There is a degree of uncertainty in the volumes of waste measured and in the conversion factors used to convert volume to tonnes, and these will arise from the method used.
Waste figures for offices are, for the most part, estimated as a proportion of the overall building or using per person per month Edinburgh office figures.