Task Force on Climate-related Financial Disclosures

We report in line with the FCA Listing Rule LR 9.8.6(8), which requires us to report on a ‘comply or explain’ basis against the TCFD Recommendations and Recommended Disclosures in respect of the financial year ended 31 December 2023.

We consider our climate-related financial disclosures to be consistent with all of the TCFD Recommendations and Recommended Disclosures and that they are therefore compliant with the requirements of Listing Rule 9.8.6(8).

We have set out our disclosures against each TCFD Recommended Disclosure and in doing so have covered both the Recommended Disclosure and the related Recommendation. We have made disclosures that take into consideration references made to the materiality of information in the Recommendations related to Strategy and Metrics and Targets. In determining materiality for these purposes we considered whether particular information may have the potential to influence the economic decisions of our shareholders. We have also, where appropriate, considered the TCFD guidance and other supporting materials referred to in the Listing Rules.

You can find our disclosures against each TCFD Recommended Disclosure and the related Recommendation covering Governance, Strategy, Risk Management and Metrics and Targets in the bp Annual Report 2023 – pages 55-68.

Testing the resilience of our strategy

Our strategy is designed to be resilient to a range of climate-related scenarios including those consistent with well-below 2°C and 1.5°C outcomes.

As in 2022, to help test our view of this, we have assessed the resilience of our strategy to different climate-related scenarios, including 1.5°C consistent scenarios. This analysis, described in more detail on pages 55-68 of the bp Annual Report and Form 20-F 2023, quantitatively assessed the potential impact to bp’s business areas of different transition exposure scenarios in 2030. This enabled us to identify any business areas for which the possible consequences of the downside scenario(s) were sufficiently material to potentially jeopardize group strategic resilience through three lenses: our ability to continue to (i) deliver a resilient dividend to shareholders, (ii) maintain a strong investment grade credit rating, and (iii) make disciplined investment allocations within our capital frame.

This is not intended to represent a ‘definition’ of resilience beyond the purposes of this exercise, and a core assumption of this analysis is necessarily that, aside from any implications of the scenarios being tested, including potential controllable mitigations such as capital or cost management that we might naturally expect to take in response, bp will deliver the assumed underlying strategic and financial priorities out to 2030.

Key insights from our scenario analysis and resilience test

As in our Annual Report and Form 20-F 2022, oil price is likely to remain the main source of climate-related transition uncertainty for our strategy through to 2030. Even with the most extreme low oil price environment in any of the 1.5°C, well-below 2°C and BAU scenarios, based on the WBCSD Scenario Catalogue ranges, sustained over the period from 2025-2030, in our analysis we were able to deliver across the three lenses we use to consider strategic resilience, described above.

While the results of any such analysis must be treated with caution – each is necessarily dependent on numerous assumptions and methodological choices, and each has its own limitations – overall, this analysis and resilience test reinforced our confidence in the continued resilience of our strategy to a wide range of transition scenarios, including those consistent with limiting temperature rise to 1.5°C, and in particular, as our greatest transition exposure, to oil price scenarios, tested to 2030.