Turning insights into improvements
As an element of our cash-return business model, Devon’s ESG performance is important to many of our shareholders. Insights from our shareholder dialogues shape our ESG programs, focus our disclosures and impact our compensation structure.
We’ve learned through ongoing outreach with our shareholders that ESG performance is a key component of their valuation of Devon. As a result, we’ve strengthened governance practices to more effectively manage the risks and opportunities of issues such as climate change. In 2021, we expanded the responsibilities of the former Governance Committee to include environmental and public policy oversight, renaming it the Governance, Environmental, and Public Policy (GEPP) Committee. The GEPP Committee oversees company management in setting strategy, establishing goals and integrating sustainability into our business activities. The committee also reviews Devon’s environmental, health and safety and social responsibility programs. Our senior-level ESG Steering Committee coordinates the related efforts and regularly updates our executive committee, GEPP Committee and the full board on our progress.
Building relationships with our shareholders helps Devon anticipate and manage issues that influence our long-term success. Under the direction of Devon’s vice president of corporate governance, secretary and associate general counsel, we communicate directly with shareholders to understand their interests and needs, and to share our strategies and plans.
When a far lower percentage of voting stockholders voted “for” our executive compensation (say-on-pay) in 2020 than in the previous three years, we proactively sought feedback from our institutional investors. Devon interacted with approximately 100 representatives of institutions totaling more than 46% of outstanding shares to discuss our 2020 say-on-pay vote. We analyzed the feedback from these discussions and from critiques contained in governance reports received in response to our proxy statement. Our 2021 proxy statement details our resulting actions and responses. We believe this approach contributed to approximately 94% of voting stockholders casting ballots “for” Devon’s say-on-pay vote in 2021.
In meetings with shareholders, we often invite Devon senior leaders and subject matter experts to provide information on topics of interest, such as executive compensation and field environmental practices. We share key themes with Devon senior management and our board, who appreciate the shareholder feedback. Our directors also welcome the opportunity to engage with shareholders as appropriate.
With our shareholders’ focus on climate change, Devon is committed to reporting our related activities and progress. In December 2021, we published an updated Climate Change Assessment Report to reflect changes in our asset portfolio since publishing the first report in 2018. The 2021 report enhances the company’s alignment with the Task Force on Climate-related Financial Disclosures (TCFD), an international, multi-industry-led initiative launched to develop recommendations for voluntary disclosure of climate-related risk. Devon aligns with TCFD because it is the preferred disclosure framework for our investors and other stakeholders. We also continue to set targets to drive improvements in our environmental performance, including our board-approved targets for reducing GHG and methane emissions intensity, flaring and freshwater use set in June 2021.
Benchmarking ESG performance
We participate in a number of third-party ESG-focused surveys and assessments that help stakeholders benchmark our progress. Sustainalytics, ISS, Vigeo Eiris and CDP have all ranked our ESG scores in the top tier of our peer groups.
These assessments also help us refine our transparency efforts and improve our ESG performance. Devon regularly evaluates surveys and additional public disclosures we could make to target our reporting on the information that is most meaningful for shareholders and other stakeholders.