Task Force on Climate-related Financial Disclosures

We report in line with the FCA Listing Rule LR 9.8.6(8), which requires us to report on a ‘comply or explain’ basis against the TCFD Recommendations and Recommended Disclosures in respect of the financial year ended 31 December 2022.

We consider our climate-related financial disclosures to be consistent with all of the TCFD Recommendations and Recommended Disclosures and are therefore compliant with the requirements of Listing Rule 9.8.6(8).

We have made disclosures that take into consideration references made to the materiality of information in the Recommendations related to Strategy and Metrics & Targets. In determining materiality for these purposes we considered whether particular information may have the potential to influence the economic decisions of our shareholders. We have also, where appropriate, considered the TCFD guidance and other supporting materials referred to in the Listing Rules.

You can find our disclosures against each TCFD Recommended Disclosure and the related Recommendation covering Governance, Strategy, Risk Management and Metrics & Targets in the bp Annual Report 2022 – pages 50-62.

Testing the resilience of our strategy

Our strategy is designed to be resilient to a range of climate-related scenarios including those consistent with well-below 2°C and 1.5°C outcomes.

To help test our view of this, we assessed the resilience of our strategy to different climate-related scenarios – including 1.5°C consistent scenarios. This analysis, described in more detail on pages 50-62 of the bp Annual Report and Form 20-F 2022, quantitatively assessed the potential impact to bp’s business areas of different transition exposure scenarios in 2030. This enabled us to identify any business areas for which the possible consequences of the downside scenario(s) were sufficiently material to potentially jeopardize group strategic resilience, viewed as our ability to:

1. deliver a resilient dividend to shareholders
2. maintain a strong investment grade credit rating, and
3. make disciplined investment allocations within our capital frame
   

This is not intended to represent a ‘definition’ of resilience beyond the purposes of this exercise, and a core assumption of this analysis is necessarily that, aside from any implications of the scenarios being tested, including potential controllable mitigations such as capital or cost management that we might naturally expect to take in response, bp will deliver the assumed underlying strategic and financial priorities out to 2030.

Key insights from our scenario analysis and resilience test

As in our Annual Report and Form 20-F 2021, oil price was the only variable we identified with the potential to adversely affect the resilience of our strategy in the timeframe of the analysis. Even with the most extreme low oil price environment in any of the 1.5°C, well-below 2°C and BAU scenarios, based on the WBCSD Scenario Catalogue ranges, sustained over the period from 2024-2030, in our analysis we were able to deliver across the three lenses we use to consider strategic resilience, described above.

While the results of any such analysis must be treated with caution – each is necessarily dependent on numerous assumptions and methodological choices, and each has its own limitations – overall, this analysis and resilience test reinforced our confidence in the resilience of our strategy to a wide range of transition scenarios, including those consistent with limiting temperature rise to 1.5°C, and in particular, as our greatest transition exposure, to oil price scenarios, tested to 2030.