CAIRN INDIA LIMITED

CORPORATE SUSTAINABILITY REPORT 2015-16

NOTES FROM THE CEO’S DESK

It has been nearly four years since we began our sustainability journey and I am happy to see how far we have progressed. It was in a conference room in our old office that the company’s highest body on sustainability governance, the Sustainability Steering Committee (SSC), decided to embark on a journey to influence the DNA of the organization. The plan that was created did not seek to usher in radical changes in the way we do our business.  Instead it was designed to bring in reforms at a systemic level that would transform Cairn into a more sustainable company. The result of this deliberate strategy has been that we have become much better and consistent at aligning sustainability goals and targets alongside our annual corporate plans.

 

As we examine this year’s performance in the pages that follow, I want to focus on some of the factors that have influenced our sustainability thinking and also give some guidance to our stakeholders on where we plan to head in the future.

 

The driving force behind our sustainability program has been the need to minimize and balance our impact on the environment and society with the requirement to grow in a manner that is economically attractive to our shareholders.

 

The last two years have seen global oil prices dip by nearly 70%. This downturn has led Cairn to re-examine its overall business strategy and relentlessly focus on realizing cost efficiencies throughout our value-chain. We have sought to preserve shareholder value and remain cash positive so that we can keep the long-term vision for the company intact.

 

While the emphasis has been to bring down our operational costs, we have been conscious about the impact of such an exercise on our environmental and social commitments. We have tried to ensure that progress on our sustainability agenda is not impacted as a result of this business downturn. We have looked to our Sustainability Steering Committee (SSC) to help ensure that these commitments are honored.

 

In order to do so, the SSC has kept its focus simple. It decided that only the most essential bits of our environmental and social commitments (‘must-haves’) would be implemented as long as the economic situation remains uncertain. This meant that the team put its energies into ensuring that our water, waste, greenbelt, and renewable energy commitments are met. The SSC has also made the decision that certain ‘good-to-have’ elements of our sustainability plan, such as an improvement of our sustainability data collection system will be deferred until we are on a more sound economic footing.

 

This approach has allowed the team to focus on the essentials and I have been particularly impressed at how the team has led the company to significantly decrease its dependence on local community water for our Petroleum Engineering (PE) operations and improve its overall management of waste. The team has taken on challenges that are truly cross-functional in nature and will add value to the company’s sustainability agenda for years to come. I believe that the speed and thoroughness with which these challenges were addressed would not have been possible if the committee was not functioning effectively. The work managed by the committee in FY2015-16 is a testament of how sustainability is leading to improved business practices, while ensuring that we remain environmentally and socially responsible.

 

Outside of the SSC, we have made solid progress in our CSR initiatives. Last year, we had committed to scale-up our hugely successful “Jeevan Amrit” program to supply safe drinking water to villages across Rajasthan. In FY2015-16, we have finalized agreements with vendors who will help us replicate this model across 300 villages and reach out to over a million people. This is the largest such initiative in India.

 

We have also committed to build 20,000 household toilets and 188 school toilets in partnership with the Government of Rajasthan. In FY2015-16, 3,200 household toilets and all 188 school toilets have been constructed. Additionally, we have completed 3,600 out of 4,000 toilets under the Nirmal Bharat Abhiyan. Collectively, these efforts have resulted in the Beriwala Tala Gram Panchayat being declared as the first open defecation free Gram Panchayat in the district of Barmer.

 

Additionally, under a MoU signed between Vedanta Limited and the Women and Child Development Ministry, GoI, Cairn has committed to develop 2,000 anganwadis (court yard shelters) over a period of three years. In FY2015-16, we constructed 50 anganwadis in Barmer.

 

FY2015-16 was the year when the world stood up to take responsibility for human-induced climate-change. The outcome of the COP21 event in Paris underscored that the world’s policy makers are serious about taking time-bound action on mitigating climate change. India's role was instrumental in forging an agreement, and the country has shown leadership in committing to reduce its Greenhouse Gas (GHG) emissions intensity by 35% by 2030 and source 40% of its energy needs from renewable energy sources. At Cairn, we support the way forward outlined by the Government of India and are committed to do our bit to curb global GHG emissions.

 

Our initiatives such as the adoption of renewable power at Saraswati well-pad S1 or the use of solar evaporators to handle our liquid waste are a step in that direction. Our overall renewable energy use has increased by more than 370% as a result, but still remains only a marginal portion of our overall energy mix.

 

As our fields mature, their water cut (water to hydrocarbon ratio) is increasing. This is a natural phenomenon and characteristic of all hydrocarbon fields around the world. This means that we handle greater quantities of fluid for every ton of hydrocarbon we produce, leading to a rise in our energy requirements and therefore our carbon footprint. Given the nature of our fields, this rise in GHG emissions intensity is inevitable. In fact, our GHG intensity has been increasing at an average of 20% over the last two years. This is of concern to us and moving forward, we plan to focus on developing a management plan to curb its rate of growth.  Though we have seen a rise in our GHG emissions intensity, at 146.47 Tons of CO2e/’000 Tons of Hydrocarbon Produced, we are still significantly lower than the IOGP average of 153 Tons of CO2e/’000 Tons of Hydrocarbon Produced.

 

We are in the process of creating a 5-year roadmap of GHG emissions so that we can better plan our mitigation measures.

 

In FY2015-16, we participated in the Vedanta Sustainability Assurance Protocol (VSAP) audit for the second time. We are using the findings from the audit to refine our procedures to align with those of the group.

 

Like I have mentioned in the past, sustainability is a journey for Cairn India and each of our employees is committed to seeing the organization succeed in this endeavor. Every year we learn more about ways to better our approach and adapt to the challenges that come our way. I encourage all of you – our stakeholders – to join us on this path to creating a more sustainable enterprise.

 

Sudhir Mathur

Acting CEO, Cairn India Limited

Visit us at: cairnindia.com