Material ESG Issues
Our sustainability strategy is built upon our material environmental, social and governance (ESG) issues, and to data that has included conducting an ESG Materiality Assessment on a three-yearly basis to:
- prioritize focus areas for evaluation and integration into our business strategy, and
- provide key focus areas for our actions and reporting.
In 2019, we began our three –yearly reevaluation of material ESG topics, combining inputs from over 74 stakeholders, including our employees, customers, shareholders, suppliers, government, trade associations and community organizations.
In defining material topics, various dimensions were considered:
- Reasonably estimable sustainability impacts
- The interests and expectations of stakeholders invested in the organization
- The main ESG focuses/impacts and future challenges for our sector
- Key Halliburton organizational values, policies, strategies, operational management systems, goals and targets
- The core competencies of the organization and the way they can contribute to sustainable development
- Consequences for the organization as related to their impact on the economy, the environment and/or society.
A three-tier approach was taken for the survey, consisting of interviews, web-based surveys and benchmarking, with key stakeholders engaged across the process through different levels of engagement.
The outcome of the survey revealed little change in priorities from our current Materiality Matrix, which we believe shows that we have been focusing on the most relevant ESG topics for our business. The key Material ESG issues are:
|Material ESG Issues|
|Health, Safety and Wellness|
|Corporate Governance, Business Ethics and Transparency|
|Risk and Crisis Management|
|Climate Change: Greenhouse Gas Emission Reduction, Energy Efficiency, Alternative Energy|
|Information Security/Data Management|
|Environmental Stewardship: Water, Waste, Responsible Resource Use, Biodiversity|
|Human Rights, Human Trafficking|
|Diversity and Inclusion|
|Benefits and Compensation|
|Board Leadership and Inclusion|
|Supply Chain Sustainability|
However, even though climate change and the potential related risks have been included as one of our Material ESG topics for the last five years, and, as such, is addressed as part of our Enterprise Risk Management (ERM) program, there has been an obvious shift from solely greenhouse gas emission reduction to a broader climate change focus.
In addition, environmental stewardship and human rights (namely, human trafficking) have risen in importance and as such are being given a greater focus in our sustainability strategy for 2020.
Board and Committees
The Halliburton Board of Directors (the Board) provides comprehensive oversight of the management and governance of the Company. Halliburton Guiding Principles for Sustainability are built on our core values of Ethics and Integrity, through oversight provided by our Board, our Code of Business Conduct (COBC), our employment practices and our internal assurance function.
The Board plays an integral role in our corporate sustainability governance processes by:
- Reviewing and monitoring the Company’s Enterprise Risk Management Program (ERM)
- Addressing matters pertaining to corporate citizenship, governance and sustainability at Board and sub-committee meetings
- Reviewing the Annual and Sustainability Report prior to publication
Each Board member sits on at least two of our four Board Committees:
- The HSE Committee
- The Compensation Committee
- The Nominating and Corporate Governance Committee, and
- The Audit Committee
Two of our three female board members sit on the HSE and Nominating and Corporate Governance Committees while the other female board member sits on the Compensation and Audit Committees. Sustainability issues are addressed by the relevant Committee.
Compensation programs are integrated with our business and human resources strategies and management processes in order to focus efforts, maximize returns and build shareholder value.
During 2019, we contacted shareholders representing more than 50 percent of our outstanding common stock and met with approximately 31 percent of those shareholders with our senior management team participating in over 375 investor meetings and 16 conferences.
We continue to hear from our shareholders that they support our overall compensation program design and are appreciative of our ongoing efforts to consider their feedback as our program evolves. We also benchmark our pay programs and ensure that we are offering a competitive remuneration package and maintaining governance for consistency and compliance, Additional detail on remuneration policies is available in our 2020 Proxy Statement.
Management of Climate-Related Risks
Halliburton has been incorporating climate-related risks and opportunities into our own operations, and into our growth strategy, for several years now. As a service company, our primary focus at this time is on assisting our customers in the implementation of their climate-related strategies. We consider that the climate-related scenarios developed by our customers are at the leading edge of scenario development. In line with our customers, we acknowledge that oil and gas will remain key fuels for the next several decades and that we have a responsibility to advance our ability to access those fuels in the most efficient way possible through the use of low-carbon and zero-carbon technologies.
The Board has ultimate oversight of this issue, and it reevaluates climate-related risks and opportunities on a regular basis alongside other key enterprise risks. Halliburton senior-level management is responsible for identifying climate-related risks and opportunities and implementing the necessary climate-related actions as they relate to their particular areas of responsibility. Our Sustainability Council, which comprises representatives from across all business areas, provides advice, counsel and recommendations to the Global Sustainability Manager for the preparation and implementation of the Halliburton Sustainable Development Program. For further information, refer to our Climate Change Position on our website.
Global Ethics and Compliance
The Global Ethics and Compliance practice group is responsible for advancing the Company’s commitment to its core value of integrity through the administration of its Global Compliance Program. The group supports ethical business conduct by directors, officers, employees, contractors, suppliers, agents, consultants and others acting on the Company’s behalf.
Our Global Compliance Program is based on a robust compliance governance framework built around applicable laws and regulations along with the demands and expectations of our diverse stakeholders. It comprises;
- well-defined and clearly communicated standards of compliance;
- open lines of communication;
- continuous compliance monitoring through internal assessments and audits;
- effective and timely responses to detected violations of the Code of Business Conduct (COBC) or the law, including disciplinary actions and remedial actions when appropriate; and
- ongoing training and education, and proactive risk management.
The safety of our employees, contractors and facilities is paramount, and coincides with our respect for human rights and the security of local communities. Our high standards of safety require the use of third-party armed security in a small minority of the countries where we operate. Halliburton makes significant efforts to ensure that these security providers uphold our strong standards of ethics and integrity. All third-party security providers with access to the Company’s internal systems are required to take formal training on the Halliburton COBC every two years.
Internal Assurance Services
Our Internal Assurance Services (IAS) function conducts reviews on a global basis to assess adherence to the Halliburton Management System and findings are reported within the organization and to the Board Committees as applicable. In 2019, 91 audits were performed by our IAS group, which is in line with previous years.
Public Policy and Political Contributions
Halliburton keeps informed on significant domestic and foreign policy issues that affect our Company and its employees around the world. Halliburton may engage in public policy issues relevant to the Company’s interests. In 2019, the Halliburton risk management portfolio was expanded to include proactive monitoring of political risks. Halliburton does not make political contributions to political candidates or political parties. Further information on the Company’s contributions and public policy engagement can be found on the Public Policy page of the Halliburton website.
Halliburton operates in more than 80 countries around the world. Our shareholders, customers, suppliers and employees represent virtually every race, nationality, religion, culture, political philosophy and language. This diversity supports our business excellence and embodies the Company’s respect for human rights and the dignity of all people. We support universal human rights, as defined by the United Nations Universal Declaration of Human Rights, and are committed to compliance with the requirements of all applicable employment, labor and human rights laws. Our IAS and Human Resources processes validate our human rights practices. Our Human Rights Statement is available under the Corporate Governance section of the Halliburton website.
Human Trafficking / Modern Slavery
As members of the Oil and Gas Trafficking Awareness Group (OGTAG), and with our Global Sustainability Manager on OGTAG’s Advisory Board, we are determined to strengthen our commitment to preventing human trafficking in our supply chain and in the communities in which we operate. We are enhancing our policies, processes and procedures to help educate our employees and suppliers on signs of human trafficking, so they can uphold our commitment to this cause.
The Supply Chain division at Halliburton comprises procurement, manufacturing, materials and logistics, and manages a complex, global network of suppliers, warehouses, cross docks and manufacturing facilities. We require the same high standards of corporate citizenship throughout our supply chain as in our own global operations by striving to maximize the positive economic and social impacts of our value chain, while minimizing environmental impacts, as exemplified by our high engagement rates of local and diverse suppliers in the countries where we operate. More information can be found on our Supplier Relations page of the Halliburton website.
Supply Chain Governance
Halliburton is committed to ensuring that our suppliers are in compliance with all applicable employment, labor and human rights laws to ensure fair and ethical employment practices, including non-discrimination, minimum age, and freedom of associations, as well as our fair compensation polices and our policies on health, safety and security. Our supplier expectations are clearly stated in our Supplier Ethics Letter and we provide training to certain key suppliers on topics including health, safety and environment (HSE) standards, human rights and conflict mineral compliance. The Supplier Ethics Letter, along with more information on supply chain relations and our supplier due diligence checks, can be found on the Supplier Relations section of our website.
Local Content and Supplier Diversity
Halliburton shapes local sourcing efforts to the specific governmental, cultural and economic needs of each country. Additionally, Halliburton supports small, minority-owned and women-owned businesses throughout our U.S. supply chain. In 2019, more than 80 percent of the Company’s procurement spend was with suppliers located within the region where our operational activity took place.
Suppliers are required to provide Democratic Republic of Congo (DRC) conflict-free materials to Halliburton, and to furnish information to assist in determining that work provided to Halliburton is DRC conflict-free and to respond to requests for information on sources of supply. Halliburton removed suppliers from our approved supplier base in 2019 who did not cooperate with our Dodd-Frank compliance requirements.
Modern Slavery in the Supply Chain
We communicate our supplier expectations regarding human rights through the Supplier Ethics Letter and the Supplier Ethics Statement. As part of our enhanced supplier evaluation process, we include assessments and audits of suppliers’ approaches to forced labor and human trafficking along with other human rights requirements.