production platform in the Escravos area, offshore Nigeria

positioning chevron to win in any environment

Building strength for the future starts with a focused, no-excuses mindset. It requires us to anticipate and be proactive — so no matter what market conditions we face or what regulatory and operating environments we confront, we can overcome obstacles and deliver industry-leading results. Our strategy focuses on five elements that differentiate Chevron from its competitors:

an advantaged portfolio
resilience to price downside
commitment to capital discipline
a superior capacity to return cash to shareholders
sustainable value creation for stakeholders

our sources of competitive advantage

expertise

We leverage nearly a century and a half of expertise to navigate global markets, thrive in diverse economies and cultures, operate in complex regulatory environments, and develop new energy solutions.

assets

We have diversified, high-quality assets around the world that underpin our financial strength and present opportunities for future development.

purpose

We are committed to delivering the energy that improves lives and enables human progress, within a company culture defined by trust, responsibility and integrity. Our purpose guides our aspirations, motivations and operations.

we put people at the center of everything we do

We believe our greatest resource is the inspiration, creativity and ingenuity of our people. Over our entire history, Chevron problem-solvers have strived to meet the evolving expectations of our stakeholders, tackling the most complex challenges to deliver the affordable, reliable, ever-cleaner energy that enables human progress.

partners

We partner around the world to deliver the energy of today and explore the energy opportunities of tomorrow. Delivering energy — from exploration to extraction to production to distribution — requires a network of trusted partners who succeed when we succeed.

technology

We leverage technology to push energy’s frontiers. Every day, we scan the landscape for opportunities to make the world’s energy cleaner and more affordable, our environmental footprint smaller, and the industry’s workforce safer.

financial strength

Our financial strength supports our goal to invest in future opportunities and deliver sustained shareholder value in any economic environment. We put our financial strength to work to shape the future of energy — identifying the most promising trends, making smart investments and scaling the most sustainable solutions.

lead director: one-on-one

Chevron’s corporate secretary Mary Francis sits down with Chevron’s lead independent director Ronald Sugar as he shares his insights on current events and topics that are top of mind for investors.

Francis: Chevron now ties executive compensation to specific greenhouse gas intensity reduction metrics. What prompted this change, and when will we know if it has been effective?

Sugar: This is a prime example of the accountability called for by the Board. The metrics are not only tied to compensation for executives, they affect compensation for nearly all employees, about 45,000 worldwide. The Board took this action to send a clear signal that lowering Chevron’s carbon intensity is important. The four metrics are based on net greenhouse gas intensity, on an equity basis. Setting targets on an equity basis means that the measure includes all Chevron operated and non-operated production. A timeline of 2016-2023 is used to align with the period between the ratification of the Paris Agreement and the first “stocktake.” We believe tying these metrics to compensation is an effective means to drive results, draw out the most innovative solutions, and align the daily work of employees to these metrics.

Francis: What was the Board’s response to the company’s fourth quarter 2019 impairments and write-down?

Sugar: The impairments and write-downs were a result of management’s capital funding decisions. The funding decisions were driven by management’s focus on assets that generate the highest returns for shareholders and demonstrate the company’s commitment to capital discipline. Management made the decision, with the Board’s support, to cut funding for certain assets, primarily the Marcellus and Utica shale, and the Kitimat LNG project, which could no longer compete for investment funds. Capital investment will instead be allocated to assets that are expected to generate higher returns. Impairment charges for other assets that remain in the portfolio were the result of a reduction in management’s longterm outlook for commodity prices. It’s ironic that the write-down is due in part to the energy industry’s success in increasing production of affordable energy.

Francis: Forecasts indicate the low-price environment is likely to continue for the foreseeable future. How does the Board ensure Chevron’s strategy will deliver value through a challenged business cycle?

Sugar: This is a complex business with long lead times, so the strategy must always focus beyond the current business cycle. Chevron does not base decisions on price forecasts, and certainly not near-term prices, alone. The company consults with experts and evaluates data on a variety of fronts — geopolitical, technological, societal and economic — to drive a strategy that is resilient to withstand the downturns and agile to capitalize on the upturns when the market shifts. This disciplined approach has resulted in Chevron being able to increase the annual per-share dividend payout again in 2019.

Francis: What is the Board’s role in overseeing Chevron’s transition to a lower carbon future?

Sugar: The Board provides guidance and oversight to management with respect to Chevron’s strategy, including its strategy to navigate the energy transition (see Board oversight discussion in 2020 Proxy Statement, pp. 20-22). This means that the Board helps management determine how to position the company for success in a lower carbon future. It means we oversee Chevron’s risk management policies, processes and practices related to climate change. And it means we must challenge the status quo. In 2018 and 2019, the Board participated in expanded strategic planning sessions that included third-party experts to discuss energy transition issues. As the International Energy Agency has stated, there is no single or simple solution to addressing climate change. The solutions will come from multiple points of innovation. Chevron’s strategy to navigate the energy transition focuses on lowering its carbon intensity, increasing the use of renewables, and investing in breakthrough technologies. The Board asked management to develop metrics that demonstrate a commitment to transparency and accountability, and we worked with management to establish specific greenhouse gas intensity reduction metrics that encourage continuous improvement.

process safety

Two Chevron colleagues review valve tags during a field walk in the alkylation unit at our Richmond Refinery in Richmond, California. Our workforce is dedicated to delivering value through safe and reliable performance by managing the integrity of our equipment and operating systems.

Developing the energy that powers the world forward comes with the responsibility to contain that energy from the point of discovery, through ships, pipelines, refineries and service stations. We call the work we do to meet this responsibility “process safety.”

Delivering value through safe and reliable performance
Process safety includes risk analysis, engineering and the practices that help us manage the integrity of our operating systems. In fact, nearly three-quarters of our workforce is dedicated to designing, constructing, operating and maintaining our equipment to safely and reliably provide energy to customers.

Why does process safety matter?
Sustaining a high level of process safety protects our workforce, the community and the environment. We measure our progress by the presence of effective safeguards, which in turn leads to fewer incidents. In building better safeguards over the last decade, we have significantly reduced the number of incidents, even as our portfolio has become more complex.

As we strive to improve continually in process safety, we benefit by viewing our business from an “asset class” approach: similar types of assets should have similar safeguards to prevent similar incidents. While much of our business is organized geographically, we increasingly look at subsets of our business on a more global basis, with support teams set up to help monitor performance and drive best practices across operations. We benchmark performance against our competitors and freely share process safety practices as we collectively strive to eliminate losses of containment in our industry.

Chevron’s commitment to process safety extends beyond our company. We actively participate in several leading efforts to improve safety performance in the industry. We adopt practices from others, collaborate on the development of industry standards and practices, and continue to increase effectiveness of safeguards. Our chemical plants are certified in the American Chemistry Council’s Responsible Care* program for safety, environment and process safety management. We also validated our Operational Excellence Management System design against Center for Chemical Process Safety guidance on Risk Based Process Safety, and our effectiveness against their Vision 20/20 industry tenets.

*Responsible Care is a federally registered service mark of the American Chemistry Council, Inc.