Climate-related Financial Disclosures
We support the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), established by the Financial Stability Board to improve the reporting of climate-related risks and opportunities
We report in line with the FCA Listing Rule UKLR 6.6.6(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 2024a.
We consider our climate-related financial disclosures to be consistent with all of the TCFD Recommendations and Recommended Disclosures and that they are therefore compliant with the requirements of UKLR 6.6.6R(8).
You can find our disclosures against each TCFD Recommended Disclosure and the related Recommendation covering Governance, Strategy, Risk Management and Metrics and Targets in the bp Annual Report 2024 – pages 42-55.
Testing the resilience of our strategy
We believe our strategy positions bp for success and resilience in a Paris-consistent world – a world that is progressing on one of the many global trajectories considered to be Paris-consistent, and ultimately meets the Paris goals.
As in 2023, to help test our view of this, we have 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 42-55 of the bp Annual Report and Form 20-F 2024, 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 significant to potentially jeopardize group strategic resilience through three lenses: our ability to deliver (i) a stronger balance sheet that improves our credit metrics within the ‘A’ grade range, (ii) resilient dividend and sharing of excess cash with shareholders through buybacks over time, and (iii) disciplined investment allocations within bp’s capital frame. For any such business we tested the period 2026-2030.
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 we stated in our Annual Report and Form 20-F 2023, oil price is likely to remain the main source of climate-related transition uncertainty for our strategy through to 2030. 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 Cataloguea ranges, sustained over the period from 2025-2030, 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 continued 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.
| TCFD index table Our TCFD disclosures can be found on the following pages of the Annual Report 2024 |
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|---|---|---|
| TCFD recommendation | TCFD recommended disclosure | Where reported |
| Governance Disclose the organization’s governance around climate-related issues and opportunities. |
a Describe the board’s oversight of climate-related risks and opportunities. | Page 42 |
| b Describe management’s role in assessing and managing climate-related risks and opportunities. | Page 44 | |
| Strategy Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s business, strategy and financial planning where such information is material. |
a Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term. | • Pursuing a strategy that is consistent with the Paris goals, page 10 • Strategy, page 8 • Risk factors, page 65 |
| b Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning. | • Risk factors, page 65 – description of principal risks • Strategy, page 8 |
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| c Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. | • Strategy, page 8 • Pursuing a strategy that is consistent with the Paris goals, page 10 |
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| Risk management Disclose how the organization identifies, assesses and manages climate-related risks. |
a Describe the organization’s processes for identifying and assessing climate-related risks. | • Risk management, page 45 • How we manage risk, page 61 • Risk factors, page 65 |
| b Describe the organization’s processes for managing climate-related risks. | • Risk management, page 45 • How we manage risk, page 61 |
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| c Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management. | • Risk management, page 45 • How we manage risk, page 61 • Risk factors, page 65 |
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| Metrics and targets Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material. |
a Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process. | • TCFD metrics and targets, page 55 |
| b Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions, and the related risks. | • GHG emissions data, page 40 | |
| c Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets. | • Our net zero aims and targets, pages 38 - 49 | |
Footnotes:
a Our 2024 analysis used data from the WBCSD Climate Scenario Catalogue version 3.0, published on 16-05-2024 and downloaded on 13-11-2024.
