5.1.4Taskforce for Climate-related Financial Disclosure (TCFD)

Governance

Mitigating the impacts of climate change and meeting the needs of the future are a key priority for SBM Offshore. Sustainability is managed by the Global Sustainability Manager and supervised by the Chief Strategy Officer, whom reports directly to the CEO. The integration of sustainability into the strategy department enables sustainability to be fully implemented in many aspects and levels of the Company’s activities. Furthermore, the HSSE department at SBM Offshore has the responsibility to manage Health, Safety, Security & Environmental impact, therefore this department works closely with the sustainability team.

Strategy

As disclosed in section 2.1 Group Strategy, SBM Offshore is committed to preparing and contributing to a fast-paced Energy Transition. The Company routinely assess the risks it faces and adapts its strategy in response.

SBM Offshore’s Group Strategy team analyses the macro trends and specific market sectors to identify new opportunities in the short-, medium-, and long-term¹. This is done in close collaboration with Sustainability, Technology and Business Development departments, which are all part of the Chief Strategy Officer’s portfolio. Once the opportunity has been initially assessed, a strategic plan is developed in conjunction with the business areas (i.e. Product Lines). This process ensures alignment with the business from the ideation phase up to the adoption of the new technology as a product for the Company’s clients.

The potential impacts from climate change, the risks/opportunities they pose, and the strategy to address them

1 Market impact

With its main business segment being within oil and gas, the Company could be impacted in case of an earlier than expected transition of demand away from hydrocarbons and towards alternative energy sources.

Opportunity

The primary business opportunity areas identified by
SBM Offshore within the Renewable Energy sector are in Wind and Wave energy. In addition, SBM Offshore is also developing solutions for Liquefied Natural Gas (LNG).

Strategy

As part of the product development process, SBM Offshore assesses both Technology- and Business Readiness Levels. This aims to certify the maturity of the product prior to the commercial phase. An important step of this process is the development of prototypes and pilots, which can also be done as co-development projects with partners and/or clients.

2 Policy Change Impact

Company proving unable to contribute to the Paris Agreement targets, as well as exposure to carbon tax.

Opportunity

Reduction of overall emissions/carbon intensity in the Company’s products and operations.

Strategy

Following the SDGs framework, the Company has set targets for seven of the SDGs, which have been identified as the ones most relevant to our business, as well as the ones where the Company can have the largest impact. Under the governance of the Group Sustainability team, the business leaderships developed roadmaps covering short-, medium-, and long-term¹ actions for each of these SDGs, including action to better manage and reduce
SBM Offshore's greenhouse gas emissions.

3 Physical Impact

More extreme weather events and changes in climate patterns.

Risk

Disruption of operations.

Strategy

This year, the Risk and Sustainability teams assessed the operational impact climate change risks could have on the Company. The primary physical risk identified for the Company is a disruption of onshore operations due to extreme weather events and climate patterns, either in its offices or at yard locations. These are less likely to impact offshore operations, as the units are equipped to withstand and/or avoid extreme weather events. The Company mitigates these risks via specific emergency response plans tailored to specific scenarios in each location.

Risk Management

Climate change risks are inherently identified and assessed against our strategy in our risk management approach as deployed throughout the Company. When relevant, these risks are included in the detailed risk review and analysis is done for all tenders, projects and FPSO (asset) fleet operations which are part of the Company’s portfolio. Climate change risks are assessed as part of the
SBM Offshore’s Enterprise Risk Management (ERM). This results in a heat-map of risks which are incorporated in a Risk report. This report provides an overview of the top ten risks and the latest Risk Profile versus the defined Risk Appetite status to the Management Board and Supervisory Board.

The quarterly Risk report covers proposal, projects and fleet individual risks, as well as Group Functions and Execution Centers, and includes actions and managing measures in place to mitigate each risk which are followed-up on by partners. In order to manage the transition risk and opportunity of a changing energy mix, SBM Offshore defines action in light of the evolution of the energy landscape. It is gradually diversifying its product portfolio through product development and investments in R&D.

Metrics and targets

Once again this year, SBM Offshore set out short-term targets for the upcoming year (see section 2.3 Sustainability). These ten targets were linked to the six SDGs the Comany has implemented. Several of SBM Offshore's SDG targets are part of the Company's efforts to mitigate the effects of climate change, focused on limiting the Company’s emissions and adapting our ways of working.

Focus on emissions reduction:

• Reduce by 25% the mass of gas flared under
  SBM Offshore account (in tonnes of gas flared per thousand tonnes of hydrocarbon production) (SDG 7)
• Ensure that 60% of project offices operations have a local sustainability certification (SDG 7)

Focus on improved management of emissions:

• 100% of FPSO EPC proposals recording carbon emissions planned over asset life (SDG 9)
• Propose uniform air travel CO₂ measurement system to enable target setting (SDG 13)

Focus on new technological developments:

• 30% of R&D budget going to low-carbon technologies (SDG 9)