Building relationships through active outreach
Building relationships with our shareholders helps Devon anticipate and manage issues that influence our long-term success. We’ve learned through years of active shareholder outreach that our ESG performance is a key component of their valuation of the company. Insights from our shareholder engagements each year inform our environmental targets, shape our ESG programs, impact our compensation structure and focus our reporting.
Based on our ongoing engagements, we’ve strengthened our governance structure and practices to more effectively manage the risks and opportunities of climate change, workforce diversity and other ESG issues of interest to our shareholders. We expanded the responsibilities of the former Governance Committee of our board of directors to include environmental and public policy oversight in 2021. Now known as the Governance, Environmental, and Public Policy (GEPP) Committee, it oversees Devon management in setting strategy, establishing goals and integrating sustainability into our business activities. Our senior-level ESG Steering Committee coordinates related efforts and regularly updates the executive committee, GEPP Committee and the full board on our progress.
Our vice president of corporate governance, secretary and associate general counsel leads Devon’s efforts to communicate directly with shareholders to understand their interests and needs. Devon senior leaders and subject matter experts on ESG topics of interest — including executive compensation, field environmental practices and diversity — join the meetings to share our strategies and plans. They report what they learn to Devon senior management and our board, who appreciate shareholder feedback and welcome the opportunity to engage with shareholders, as appropriate.
Responding to shareholder feedback
We value shareholder feedback and use it to evaluate possible changes to our programs and practices. As interest in climate change has grown, we’ve listened to our shareholders and responded by setting our first methane intensity target in 2019 and additional board-approved environmental targets in 2021. These include goals for net zero operational GHG emissions and reducing GHG and methane emissions intensity, flaring and freshwater use.
To demonstrate our commitment to transparency and reporting, we published Climate Change Assessment Reports in 2018, 2020 and 2021. The 2021 report is consistent with the core elements of the Task Force on Climate-related Financial Disclosures (TCFD) framework. We seek to align with TCFD because many of our investors and other stakeholders prefer this international, multi-industry-led initiative for voluntary disclosure of climate-related risk. We continue to share our tactics to meet our decarbonization targets, as well as information about our water use, biodiversity, land reclamation and other environmental topics.
As a result of shareholder conversations in 2021, our 2022 corporate performance scorecard includes a standalone emissions reduction goal with a 15% weighting. This compares to our 2021 emissions goal that made up a portion of the ESG/EHS goal that had a cumulative weighting of 20%. We believe these actions contributed to approximately 95% of voting stockholders casting ballots “for” Devon’s say-on-pay vote in 2022. We also began sharing individual diversity traits of our board members in response to shareholder requests.
Refining our reporting and transparency
Devon participates in third-party ESG-focused surveys and assessments that help stakeholders benchmark our progress. Our ESG scores are ranked in the top tier of our peer groups by Sustainalytics, ISS, Moody’s Vigeo Eiris, RobecoSAM, CDP Climate and Water, Just Capital and CPA-Zicklin Index.
These assessments also help refine our transparency efforts and improve our ESG performance. We regularly evaluate surveys and additional public disclosures we could make to target our reporting on the information that is most meaningful for shareholders and other stakeholders.