Sustainability

Sustainability practices are a fundamental part of our company’s operations. We believe they create value for our shareholders and help position us to continuously improve business performance. Although the low oil price environment continued to be challenging for our industry in 2017, our commitment to excellence in operational, safety and environmental performance, stakeholder engagement and corporate citizenship has been unwavering. To that end, we have developed an environment, health, safety and social responsibility strategy with the input of our stakeholders that focuses our efforts on the areas most material to our business, including health and safety, climate change, community and stakeholder engagement, human rights and transparency.

As part of our commitment, our Board of Directors and its committees are actively engaged in overseeing Hess’ sustainability practices and work alongside senior management to ensure that focus on these topics starts from the top. The Environment, Health and Safety (EHS) Subcommittee of the Board’s Audit Committee provides oversight and makes recommendations to the full Board of Directors with respect to Hess’ policies, positions and systems for environment, health, safety and social responsibility compliance and risk management. This ensures that climate change and environmental risks are discussed at the Board level and taken into account in strategic decisions. Furthermore, the Board’s Compensation Committee has tied executive compensation to advancing the environmental, health and safety goals of the company.

Safety and Health

Our company’s top priority is the safety of our workforce and the communities in which we operate. We work closely with our employees and contractors to promote a strong safety culture, with the ultimate goal of everyone, everywhere, every day, home safe. As a result, we reduced both our 2017 workforce recordable incident rate and lost time incident rate by 38 percent compared with 2016, with improvements in both employee and contractor performance. While our overall safety performance was positive, our severe safety incident rate did not meet our internal target. After identifying an upward trend early in the year, we implemented immediate corrective actions that resulted in an 18 percent reduction in our severe safety incident rate from June to December. Severe safety incidents will continue to be a focus of our key improvement initiatives in 2018.

We continually work to enhance our process safety management systems, which are an integral part of our business and play a critical role in mitigating risk. In 2017, we concluded a two-year assessment of our process safety management systems across the company, along with a review of the mechanical integrity of our onshore and offshore locations as part of our ongoing integrity management program. Recommendations and actions from both reviews will help inform improvement programs from 2018 onward.

Environment and Climate Change

Climate change is a global challenge that requires government, business leaders and civil society to work together on cost-effective policy responses that recognize the vital role that safe, affordable and reliable energy plays in ensuring human welfare, economic growth and security. Our Board of Directors is regularly briefed on climate change by a subject matter expert to ensure that risks are considered in the development of company strategies and policies.

Based on the International Energy Agency’s 2017 World Energy Outlook, oil and gas are essential to meet the world’s growing energy demand through 2040, even assuming a carbon-constrained future.

We are committed to developing energy resources that the world needs in an environmentally responsible and sustainable manner. In June 2017, the Task Force on Climate-Related Financial Disclosures, which was an outgrowth of the G20 Financial Stability Board, issued its final recommendations on how the financial sector should take account of climate-related issues. Our updated climate change strategy, which was implemented beginning in 2015, is closely aligned with these recommendations.

Our company has established 2020 reduction targets for greenhouse gases and flaring. Between 2008 and 2017, we reduced our equity greenhouse gas emissions by more than 6 million tonnes through improved operating practices and asset closures and divestitures. We will continue to take steps to monitor and measure our progress and develop energy resources responsibly.

Team Hess Riders in MS 150 to Support the Multiple Sclerosis Society

Social Responsibility

In 2017, we participated in multi-stakeholder initiatives designed to advance transparency, environmental protection, human rights and good governance, including continued support of the Voluntary Principles on Security and Human Rights. Hess continues to be involved in IPIECA, the global oil and gas industry organization for environmental and social issues, and the United Nations Global Compact and the Global Compact U.S. Network, which shares best practices in sustainable business conduct across the private sector.

Stakeholder engagement processes are integrated into our enterprise risk workshops and asset business plans. In 2017, we initiated stakeholder engagement and grievance mechanism processes at two asset locations and carried out an integrated stakeholder mapping review at one additional location.

11 PRODEGE (the Program for Educational Development of Equatorial Guinea) – a partnership between Hess and the Equatorial Guinean government that concluded at the end of 2017 – delivered programs and training focused on improving the quality of education, reaching more than 69 percent of the country’s student population. Since its inception in 2007, PRODEGE has benefited more than 135,000 students and 1,000 teachers who received program accreditation, with results that include:

• Establishing the first Education Management Information System to strengthen institutional capacity and technical knowledge and improve data collection.
• Defining and developing a nationwide program in active learning methodology for approximately 7,500 teachers.
• Achieving a 34 percent decrease in students repeating first grade, an 8 percent increase in females attending and completing primary school, and a 14 percent increase in ready-age students enrolling in primary school.

Succeed 2020, Hess’ $25 million North Dakota education and workforce initiative, concluded in 2017. The five-year program, aimed at improving the transition from secondary school to college and careers, had a positive effect on students, regional education authorities and related agencies across the state. Program outcomes include increasing the number of state scholarships by 8 percent and increasing high school completion rates by 1 percent.

In 2017, Hess renewed its three-year commitment to the LEAP initiative (Learn, Engage, Advance, Persevere), which was introduced in 2014 at two middle schools in the Houston Independent School District, one of the largest school districts in Texas. LEAP 2.0 represents a broader partnership with elementary, middle and high schools in the district with an aim to improve attendance and increase learning capabilities for students identified as at risk of dropping out. The initiative has offered more than 2,800 students a broad range of support, such as access to a home library reading program, in-school support services, college and career readiness training and expanded science, technology, engineering and mathematics program enhancements.

In the aftermath of Hurricane Harvey and its devastating impact on the Houston community, our company took immediate steps to support recovery and rebuilding efforts, including a $1 million donation to the Hurricane Harvey Relief Fund. We implemented an employee assistance program to help those who were impacted by Hurricane Harvey and established a matching gift program for employees that raised more than $645,000 for three relief organizations. We also donated Hess Toy Trucks to schools near our Houston office and to holiday toy drives. For the 17th year, our Houston team took part in the MS 150, a two-day bike ride to support the National Multiple Sclerosis Society, and boosted Hess’ total donation to more than $1 million.

Environmental, Social and Governance Disclosure

Hess views transparency in reporting as a key part of being a trusted energy partner. Our company continued to be recognized in 2017 for the quality of our environmental, social and governance disclosures, reinforcing our position as a top-quartile performer in our industry. We have been recognized as a leader in climate change transparency for the past nine years by the CDP, an international nonprofit group seeking to drive sustainable economies. We were named to Corporate Responsibility Magazine’s list of 100 Best Corporate Citizens for the tenth consecutive year and were one of only five oil and gas companies to make the list in 2017. Hess also was included in the Dow Jones Sustainability Index North America for the eighth consecutive year.

Additional detail on our environmental, social and governance programs and progress, as well as performance data, can be found in our annual sustainability report.