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Values Matter
2016 Sustainability Report
Values Matter
2016 Sustainability Report
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2016

Commitments

In 2015, we continued to make good progress toward achieving our immediate and longer-term sustainability goals.

Vermilion’s long-term vision is founded on business pillars that cover the key elements of success, including: our people; health, safety and environment programs; shareholder returns; operational excellence; and portfolio balance. Each of these pillars has its own objectives, supported by an Executive champion along with annual commitments that are reviewed regularly at the Executive and Board levels. Progress toward these objectives is assessed annually by setting goals, and measuring progress toward achieving them through the year.  In late 2015, we assigned Integrated Sustainability as our sixth pillar of our long-term business vision. Vermilion has established a management position to deal primarily with Integrated Sustainability, and this subject is championed by our entire group of C-suite officers and our EVP of People and Culture.

We believe this best-in-class approach clearly communicates, both externally and internally, our commitment to sustainability as a priority throughout the company and positions us to recognize the opportunities it presents. It also supports the proactive manner in which we address external risks that have potential impacts on short and longer-term company performance, including:

Vermilion's Board of Directors, Executive team and Risk Management Committee regularly review these risks, along with mitigation strategies and associated opportunities.

When we began our sustainability reporting in 2014, we identified that our focus was primarily internal, and that we would develop our external stakeholder engagement over time. In 2015 and continuing through 2016, this external engagement has taken shape, as we have sought input from key socially-responsible investment agencies, and welcomed engagement from shareholder signatories to the United Nations’ Principles for Responsible Investment.

Combined with our existing and ongoing sustainability work, this has led to three key areas of focus in 2016:

This is critical foundational work, and we are investing both the time and the resources required to get it right. We expect to communicate our progress in our 2017 sustainability reporting.


Working Toward Target Setting

We are working in 2016 to analyze science-based target setting in relation to our operations in critical areas identified by both internal and external stakeholders, including safety, energy use, greenhouse gas emissions and water use. Understanding that organizations often progress along a continuum of action, we have already achieved the following milestones:

Ethics
2015 TargetsProgress on 2015 TargetsAdditional 2015 Highlights2016 Targets/highlights to date2017-2020 Goals
One-button access to send concerns anonymously to our Corporate Secretary  Complete, as part of our new business unit external website rollout in Netherlands & Germany   Rollout in all locations as the website structures are updated; via email or toll-free phone call in the interim  
Develop procedures for contractors to confirm awareness of and compliance with code of business conduct Ongoing

Added Germany to annual sign-offs through Workday in 2016: Employee Obligations for employees and
Insider Trading for contractors

 

 

Governance
2015 TargetsProgress on 2015 TargetsAdditional 2015 Highlights2016 Targets/Highlights to date2017-2020 Goals
Continue to conduct annual “say on pay” advisory votes at annual AGM Received 99% shareholder approval on “say on pay” advisory vote at 2015 AGM for the 2014 comp   Received 96% shareholder approval on “say on pay” advisory vote at 2016 AGM for the 2015 comp Continue to hold annual “say on pay” advisory votes
Continue to monitor corporate governance regulations, requirements, and trends     Created two corporate performance scorecards, to reflect annual and long-term evaluations

 

Amended anti-hedging policy aligned with best governance practices

 

Introduced one rolling reserve for all Vermilion’s security-based compensation arrangements of 3.8% (reduced from 5%) aligned with best governance practice and posted all on SEDAR

Continue to improve communication and disclosure in the Annual Information Circular & Proxy for purposes of transparency for shareholders
Continue to demonstrate strong results in the area of board and corporate governance   Board of Directors recognized for strong corporate governance (See Awards) Appointed an independent Lead Director to provide the Board with an independent perspective ensuring the Board is organized properly, functions effectively and operates independently of management  Continue to demonstrate strong results in the area of board and corporate governance
People
2015 TargetsProgress on 2015 TargetsAdditional 2015 Highlights2016 Targets/Highlights to date2017-2020 Goals

Increased emphasis on employee development and training

Avoided downturn-related across-the-board layoffs 

46 new hires and 28 staff moves, including lateral moves, promotions and progressions

Continue to hire for critical new and replacement positions only 

Focus on appropriately staffing for long-term growth, placing priority on the development of internal staff through lateral moves and promotions, rather than external hires, wherever possible

            
Recognized as a Best Workplace by the Great Place to Work Institute in all of our participating jurisdictions  Achieved   Recognized as a Best Workplace by the Great Place to Work Institute in all of our participating jurisdictions Continue to be recognized as a workplace of choice, via ongoing focus on best in class recruiting processes, growth opportunities for all employees, and competitive compensation and benefits programs in all markets with focus on additional communication with staff, process improvements and streamlining
Creation of Employee Handbooks, with country-specific policies amendments, for Germany and US Complete Created Employee Handbook with country-specific policy amendment for Hungary    
Establish Works Council in The Netherlands Complete      
Safety
2015 TargetsProgress on 2015 TargetsAdditional 2015 Highlights2016 Targets/Highlights to date2017-2020 Goals
Implement Fair Culture Policy Fair Culture policy implemented in France, Netherlands, Germany and US   Policy to be implemented in Central & Eastern Europe in 2016 Implement policy in any new Business Unit  

Development of fit-for-purpose Process Hazard Analysis (PHA) Standard

 

Development of fit-for-purpose Process Hazard Analysis (PHA) Standard

Completed Process Hazards Analysis (PHA) Standard

 

PSMS drafted

 

Implement PHA  globally

 

Completion of PSMS and development of implementation plan

Implement in new operating regions


Implement in operating regions

 

 

Inventory, review and creation of new safety operating procedures as part of operator competency program (OCP) development in Canada Continued review and approval of critical procedures in Canada Developed project charter and selected team for OCP in France Advance review and approval of critical procedures and implementation of OCP program in Canada

Implementation of OCP in Canada and France

 

Review and update of OCP in the Netherlands

Development of in-house HSE Leadership Program  Customized a HSE Leadership Program for managers and frontline supervisors 

Delivered HSE leadership training in France and The Netherlands

 

Created and implemented performance-based HSE leader competency
Deliver HSE leadership training to Canada office and field supervisors  Further develop training program and train new leaders
Develop robust hazard identification and risk mitigation program around Vermilion’s top fatal risk exposures and top environmental sensitive sites Develop robust hazard identification and risk mitigation program around Vermilion’s top fatal risk exposures and top environmental sensitive sites   Continued focus on robust hazard identification and risk mitigation program around Vermilion’s top fatal risk exposures and top environmental sensitive sites  Continued focus on robust hazard identification and risk mitigation program around Vermilion’s top fatal risk exposures and top environmental sensitive sites
Environment
2015 TargetsProgress on 2015 TargetsAdditional 2015 Highlights2016 Targets/Highlights to date2017-2020 Goals
   

 

Assess science-backed target setting for emissions intensity and/or emissions reduction  
Publish Corporate Sustainability Report

 

Submit CDP Report
Complete, including more complete Scope 3 reporting Recognized as the top scoring energy company on the Climate Disclosure Leadership Index (Canada 200)

Publish Corporate Sustainability Report

 

Submitted CDP Report
Continued focus on transparent reporting of EESG performance, including streamlined data collection
Assess potential for transfer of geothermal and other technology to locations beyond Parentis, France Conducted pilot programs and trials on the implementation of new technology to improve environmental performance and decrease the impact of operations   Continue pilot programs and trials, particularly in The Netherlands Move projects from pilot to implementation based on results
Significant reduction of flaring and venting at Southeast Saskatchewan assets acquired in 2014 Completed    Continue emission management programs  Continue emission management programs
Assess cost-benefits of electric cars for fleet in France Assess cost-benefits of electric cars for fleet in France   Review electric car cost-benefits results  
Signed a 30-year partnership with French land developer Pichet to provide heat for up to 450 homes in a newly planned eco-neighbourhood complex   Continued to support the eco-neighbourhood project development    
Community Investment
2015 TargetsProgress on 2015 TargetsAdditional 2015 Highlights2016 Targets/Highlights to date2017-2020 Goals
Continue to enhance staff involvement in community investment activities globally through in-country plans  Opportunities created for staff in all business units to become involved in Vermilion’s community investment activities   Days of Caring in all operating business units to strengthen staff-company-community connection Support staff involvement in external volunteer activities through increased promotion of existing Volunteer Grant program 
 Develop a sustainable funding model for community investment budgets globally  Complete      
      Redevelop community investment plan in The Netherlands to include flagship partnership and focus on operating areas  
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