As we think about what makes a fundamentally sustainable company, it means having long-term demand for your product or service while effectively executing a sound business model focused on maximizing value for stakeholders and enhancing environmental, social, and governance (ESG) outcomes. Reflecting on 2021 and beyond, four key concepts support our confidence in DCP’s current and long-term success in being fundamentally sustainable.
1. The United States has an increasingly important role in the globalized energy markets.
Following the first U.S. liquified natural gas (LNG) exports in 2016, in 2018 the US surpassed Russia and Saudi Arabia to become the world’s largest crude oil producer, representing 15 percent of global crude oil supplies. These benchmarks reflected years of dramatic growth in our nation’s oil and natural gas production driven by American ingenuity and the hard-working people in our energy industry. Today, one in five barrels of oil in the global market were produced in the U.S., and our country leads the world in natural gas and natural gas liquids (NGL) production.
2. 2021 and 2022 highlight the importance of energy transition AND energy security.
Energy markets were extremely volatile in 2021 as a result of tight supply, continued economic stress from the ongoing COVID-19 pandemic, policy decisions, and other dynamics. Various nations used their state oil reserves to try to influence rising commodity prices, while countries in Asia, Europe, and the Americas faced energy crises not seen in decades. As a result, the energy narrative significantly expanded from largely focusing on decarbonization, to now also emphasizing energy security and affordability. Though many in the developed world believed we had already emerged from a time of energy scarcity, the events of 2021 and now into 2022 highlight the need for renewed attention on energy reliability and the ongoing complexity of maintaining adequate, low-cost electricity, fuel, and feedstock for products.
3. Natural gas and NGLs remain critical in the near- and long-term.
According to the United Nations, the world is expected to grow from the current 7.7 billion people to a population of almost ten billion by 2050, primarily driven by Asia and Africa. Our global population continues to strive to improve quality of life, largely supported by ever-increasing energy consumption. In fact, the US Energy Information Administration (EIA) projects a nearly 50 percent increase in global energy demand over the next 30 years to satisfy population and economic growth, with natural gas consumption increasing by more than 40 percent between 2018 and 2050 and continued growth in NGL use. We believe this is not the time to pick generation source winners and losers, but rather, it is time focus on making all sources as sustainable as possible.
4. Companies who lead on financial performance with the cleanest operations will win.
Every day, DCP employees strive to achieve our vision of being the safest, most reliable, low-cost midstream service provider, sustainable in any environment while living our purpose of "Building Connections to Enable Better Lives". It is our fundamental belief that if we deliver on operational excellence and sustainability, our company will continue to thrive. We are actively driving toward producing the cleanest energy molecule possible, which is where our company has massive opportunity to succeed and add value. This year, we have aligned our reporting with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) to increase our transparency on our efforts in this arena.
As we look across the broad spectrum of sustainability components, we have continually been a leader, demonstrated by our tremendously successful DCP 2.0 transformation strategy, our early adoption of greenhouse gas (GHG) emissions reduction, as well as inclusion and diversity goals, and our leading approach to sustainability-linked financing.
Looking at 2021, some highlights of our company achievements include:
- 23% reduction in Scope 1 and Scope 2 GHG emissions since 2018 versus our goal of a 30% reduction by 2030, inclusive of an 8% reduction in GHG emissions in 2021
- 80% reduction in volume of hydrocarbon spills greater than one barrel since 2018
- Set multiple company safety records, including number of days worked without an OSHA recordable injury, a Preventable Vehicle Incident Rate of 0.91, and the fewest number of recordable injuries in a year, which included working for half the year with only one recordable injury
- Received the Environmental Excellence Award from the GPA Midstream Association for the sixth time in the twelve-year history of the award
- Executed the energy industry’s first ESG-linked accounts receivable securitization facility
- Established a board level Sustainability Committee to provide oversight of sustainability-related matters including environmental, social and governance strategy, activities, performance, and reporting
- Created a new sustainability and energy transition executive function reporting directly to the CEO
- Adopted an Anti-Hedging/Anti-Pledging Policy and an Incentive Compensation Clawback Policy
- Committed a full-time resource to lead progress on inclusion and diversity efforts in coordination with our employee-led I&D committee
- Created a women's mentorship program to support increasing the number of women in leadership and management positions
- Recorded a four-point improvement in employee satisfaction and a six-point increase in our Employee Belonging score
- Increased diversity representation in the workforce, and female and diversity representation in leadership
- Joined CEO Action for Diversity & Inclusion, a network of over 2,000 signatories across 85+ industries, committed to advancing diversity and inclusion in the workplace
At DCP Midstream, we are incredibly proud of our achievements and immensely motivated to continue to demonstrate that we are fundamentally sustainable. I encourage you to read this report to learn more about our company, our performance, and sustainability focus, and invite you to share your thoughts with us as we move forward. Thank you for your interest in DCP Midstream.
Wouter van Kempen
Chairman, President, & CEO
August 2021