Mindful of the imperative to address the challenges of climate change, Canacol has joined the global initiative of the Paris agreement. This accord aspires to restrict the rise in temperature increase to 1.5°C above pre-industrial levels. Consequently, we have made a resolute commitment to reduce our greenhouse gas emissions, increase our resilience to risks stemming from climate variability, and adopt measures to both adapt to and mitigate the impacts of climate change.
As a result, the Company has set itself an ambitious agenda, aiming to achieve carbon neutrality by 2050. In pursuit of this objective, we aim to reduce our GHG emissions (Scope 1 and 2) by 50% by 2035 in relation to our 2022 baseline emissions. Additionally, we are determined to achieve zero methane emissions by 2026.
With an unwavering commitment to sustainability, our decarbonization goals are designed to significantly reduce our carbon footprint.
Since the year 2022, the variable compensation of the executive team, which includes a year-end cash bonus, is linked to the attainment of 100% of the annual ESG objectives. These objectives encompass initiatives such as formulating a corporate plan for carbon reduction and offsetting, complete with specific goals, activities, and associated costs for 2022. Enhancing the Company’s ESG performance index is another key indicator determining the variable compensation of the executive team.
For further information, please refer to the following CDP Climate Change Questionnaire 2023
The board of directors recognizes the importance of climate change and exercises oversight of all climate-related risks and opportunities. Canacol’s ESG Committee is responsible for ensuring the integration of the Company’s sustainability strategy, climate-related risk management, and emissions reduction roadmap into the business plan, long-term strategic decision-making, and financial planning.
The governance structure that addresses climate issues is presented below.
The ESG Committee assumes a fundamental role as the primary body in climate-related matters, ensuring the coherent integration of climate-related risks, opportunities, and objectives throughout the corporate strategy and goals. Additionally, it is entrusted with overseeing the establishment of pertinent policies and procedures for the identification and effective management of the most significant climate risks.
The ESG Committee continuously evaluates the progression of the climate-related risk and opportunity landscape and reports its findings to the Board of Directors biannually. These findings are then considered and incorporated into the company's overall planning.
The Board oversees the advancement of these plans to uphold accountability and address challenges. The Committee convenes as necessary, but no less than twice a year.
For further information please refer to our TCFD Report.
As the largest independent natural gas exploration and production company in Colombia, Canacol is actively committed to embracing complete responsibility in managing the consequences stemming from climate-related risks and opportunities, along with their ramifications for the communities and the ecological landscape within our operational purview. As highlighted in our 2022 ESG Report, we have chosen to align our climate strategy with the framework delineated by the Task Force on Climate-Related Financial Disclosures (TCFD). Notably, we have integrated the climate-related risks and opportunities into our governance and risk management processes.
Canacol has systematically identified and evaluated climate-related physical and transitional risks at the organizational level. The critical mitigation measures to address these risks are outlined as follows. A group-wide exercise was undertaken and involved managers and personnel responsible for the ESG team and the business units. This exercise encompassed the assessment of the impact and probability of physical and transitional risks. This evaluation of climate-related risks leveraged the most recent advancements in climate research contextualized within Colombia's climate outlook, to analyze the repercussions and mitigation strategies. Presented below are three key physical and transitional risks that we have identified as priorities.
For further information, please refer to our TCFD Report.
We have established parameters and objectives to ensure the achievement of our business goals related to climate change and the energy transition. Measuring and managing carbon emissions has become a key focus across all our business units. Adhering to the guidelines of the GHG Protocol Corporate Standard, we calculate and disclose our carbon emissions, with the support of an external consultant. In the latest fiscal year (2022), we have quantified our greenhouse gas emissions, encompassing both direct and indirect emissions, covering 100% of our emissions inventory. Additionally, for a more comprehensive assessment of risks on both a corporate and value chain level, we have adopted the Wood Mackenzie Emission Benchmarking Tool. This addition enhances transparency and enables a more profound and rigorous analysis.
Our energy consumption metrics exemplify our low carbon operational strategy. While the growth and expansion of production have led to an increased demand for non-renewable energy, it is important to emphasize our significant strides in adopting hydropower and solar energy sources, reaching 373 MWh in 2022. Importantly, during 2022, we achieved zero consumption of diesel for power generation in our operations.
For further information, please refer to the 2022 ESG Report