The Company pays great attention to the risk management issues in order to ensure reasonable achievement of the strategic goals in the conditions characterized by uncertainties and adverse factors. LUKOIL is undertaking a vast set of actions to manage climate risks and identify opportunities.
Assessment of climate change exposure is factored in the Common Scenario Conditions used by the Company in strategy development, evaluation of investment projects, or preparation of annual or midterm plans.
| Risk category | Description | Management |
| Market risks | Risks brought about by changes in demand or consumer preferences | The Company embraces a scenario-based approach to make macroeconomic projections, also through the use of various climate scenarios. |
| Political, legal, and regulatory risks | Risks associated with the global transition to a low carbon global economy, and measures taken by the countries of the Groups’ presence, to impose harsher regulations governing emissions of greenhouse gases | LUKOIL is continuously monitoring statutory changes in the area of climate change, gets involved in the discussion of draft regulations dealing with climate issues, to provide a detailed explanation of the Company’s stance on such issues, risks, or uncertainties that may be inherent in new statutory initiatives. |
| Reputational risks | Risks associated with the stakeholder’s perception of the Company’s involvement in the transition to a low-carbon economy or withdrawal from such involvement | The Company has been regularly disclosing the details of its climate change management effort and greenhouse gas emissions upon request of its stakeholders.
|
Technological risks
| Risks associated with the accelerated transition to a low-carbon global energy as a result of advancements in low-carbon technologies and their improved efficiency | LUKOIL continuously monitors and promotes in-house solutions to enhance energy efficiency. Enhanced energy efficiency of production due to energy conservation, energy management, and streamlining of industrial processes is a key carbon management tool used by the Company. |
Physical risks
| Risks associated with weather and climate change, or other environmental changes in the regions of the Group’s presence that are capable of affecting dependability of equipment and human health (including risks of natural disasters or permafrost thawing) | LUKOIL evaluates climate change while designing and constructing its facilities, including those within the most vulnerable territories (Arctic zone, arid regions, or offshore sites), and monitors the state of the environment based on a relevant range of parameters, which enables it to interfere in a timely fashion. |
