Valero Energy Corporation · NYSE:VLO
Valero Energy — ESG Presentation (November 2020)
66 slides from Valero Energy's sustainability presentation, November 2020
Slide 1: ESG Company Overview
ESG Company Overview November 2020 InvestorValero.com
Slide 2: Contents
Contents 1 Business Overview and Operations 2 ESG Summary 3 Refining 4 Renewable Fuels 5 Guiding Principles 6 E: Environmental S: Human Capital, Safety and 7 Community 8 G: Governance 1
Slide 3: Largest Global Independent Refiner and North America's Largest Renewable Fuels Producer
BUSINESS OVERVIEW & OPERATIONS ESG SUMMARY REFINING RENEWABLE FUELS GUIDING PRINCIPLES Largest Global Independent Refiner and North America’s Largest Renewable Fuels Producer Largest global World’s 2nd World’s 2nd independent largest renewable largest refiner diesel producer** corn ethanol producer
Slide 4: Valero's Vision
BUSINESS OVERVIEW & OPERATIONS ESG SUMMARY REFINING RENEWABLE FUELS GUIDING PRINCIPLES Valero’s Vision Our products fuel modern life and make a Fortune 32 ~10,000 better future possible. company employees NYSE: VLO Headquartered in San Antonio, Texas WHAT FUELS HOW WE FUEL OUR US THE WORLD VISION We
Slide 5: Global Operations
BUSINESS OVERVIEW & OPERATIONS ESG SUMMARY REFINING RENEWABLE FUELS GUIDING PRINCIPLES Global Operations UNITED IRELAND KINGDOM CANADA LONDON MONTREAL UNITED LIMA STATES PERU WHOLESALE MARKETING PRESENCE BRANDED WHOLESALE PRESENCE VALERO REFINERIES VALERO ETHANOL PLANTS VALERO TERMINALS DIAMOND GREE
Slide 6: 2019 ESG Summary
BUSINESS OVERVIEW & OPERATIONS ESG SUMMARY REFINING RENEWABLE FUELS GUIDING PRINCIPLES 2019 ESG Summary E ENVIRONMENTAL S SOCIAL G GOVERNANCE Recognized as one of More than World’s Best $64 million in Renewable fuels Employers, America’s donations and along with blending Robust Best Large Employers
Slide 7: Largest Global Independent Refiner: Refining
Largest Global Independent Refiner Refining © 2020 Valero. All rights reserved.
Slide 8: The Lowest Cost Operator in a Highly Competitive Industry
BUSINESS OVERVIEW & OPERATIONS ESG SUMMARY REFINING RENEWABLE FUELS GUIDING PRINCIPLES The Lowest Cost Operator in a Highly Competitive Industry Valero’s Refineries 3.2 million barrels per day throughput 15 petroleum refineries capacity Best-in-class producer of fuels Fuels marketed and products tha
Slide 9: Investing in our Assets and Reducing our Energy Consumption Lowers our Operating Costs
BUSINESS OVERVIEW & OPERATIONS ESG SUMMARY REFINING RENEWABLE FUELS GUIDING PRINCIPLES Investing in our Assets and Reducing our Energy Consumption Lowers our Operating Costs Lowest-cost producer while Safety is our foundation for success, maintaining high mechanical with our best year ever in 2019 a
Slide 10: Comprehensive Roadmap to Further Reduce Emissions with Projects in Execution
BUSINESS OVERVIEW & OPERATIONS ESG SUMMARY REFINING RENEWABLE FUELS GUIDING PRINCIPLES Comprehensive Roadmap to Further Reduce Emissions with Projects in Execution GHG Emissions Intensity Target Absolute Reductions and Offsets through Existing Board Approved Projects (Scope 1 & 2)) 1.4 35.8 31.8 20%
Slide 11: North America's Largest Renewable Fuels Producer
North America’s Largest Renewable Fuels Producer Renewable Fuels: Renewable Diesel + Ethanol © 2020 Valero. All rights reserved.
Slide 12: Renewable Fuels: Low-Carbon Life Cycle GHG Emissions
BUSINESS OVERVIEW & OPERATIONS ESG SUMMARY REFINING RENEWABLE FUELS GUIDING PRINCIPLES Renewable Fuels: Low-Carbon Life Cycle GHG Emissions Combined, our renewable diesel and ethanol production along with our blending and purchase of renewable fuels credits offset more than 10 MILLION metric tons of
Slide 13: $2.7 Billion Invested in Low-Carbon Fuels
BUSINESS OVERVIEW & OPERATIONS ESG SUMMARY REFINING RENEWABLE FUELS GUIDING PRINCIPLES $2.7 Billion Invested in Low-Carbon Fuels World’s 2nd largest World’s 2nd largest renewable diesel producer corn ethanol producer $1.7 billion $1 billion invested and committed total ethanol in renewable diesel si
Slide 14: Renewable Diesel Reduces Life Cycle GHG Emissions up to 80%
BUSINESS OVERVIEW & OPERATIONS ESG SUMMARY REFINING RENEWABLE FUELS GUIDING PRINCIPLES Renewable Diesel Reduces Life Cycle GHG Emissions up to 80% World’s 2nd largest Uses recycled animal Production Capacity: renewable diesel fats, used cooking oil, producer inedible corn oil and/or 275 million gall
Slide 15: Ethanol Offers up to 30% Lower Life Cycle GHG Emissions
BUSINESS OVERVIEW & OPERATIONS ESG SUMMARY REFINING RENEWABLE FUELS GUIDING PRINCIPLES Ethanol offers up to 30% Lower Life Cycle GHG Emissions Valero’s Ethanol Plants Compared with non- blended gasoline, ethanol offers up to 30% lower life cycle GHG emissions 14 ethanol plants in the U.S. 1st tradit
Slide 16: Guiding Principles
BUSINESS OVERVIEW & OPERATIONS ESG SUMMARY REFINING RENEWABLE FUELS GUIDING PRINCIPLES Guiding Principles Safety is our foundation for success. We view our stakeholders as partners to whom we We are committed stewards seek to deliver of the environment. operational excellence, disciplined management
Slide 17: Environmental
ENVIRONMENTAL SOCIAL GOVERNANCE Environmental Multi-billion-dollar capital investments along with continuous improvement in process safety and reliability have driven down our environmental events to record lows World’s 2nd World’s 2nd 50 megawatt Capturing more Record low largest largest wind farm
Slide 18: Growing our Leadership Position with Low-carbon Opportunities
ENVIRONMENTAL SOCIAL GOVERNANCE Growing our Leadership Position with Low-carbon Opportunities As part of our vision to be the best-in-class producer of fuels and products that are essential to modern life, we will continue our efforts to: Focus on safety, reliability and operational Lead the industr
Slide 19: Robust Operational and Environmental Management Systems
ENVIRONMENTAL SOCIAL GOVERNANCE Robust Operational and Environmental Management Systems Our Environmental Management Systems include the following three programs: 1 2 3 Commitment to Excellence Environmental Excellence and Management System (CTEMS) Fuels Compliance Risk Assessment (EERA) • A proprie
Slide 20: Our Approach to Environmental Management
ENVIRONMENTAL SOCIAL GOVERNANCE Our Approach to Environmental Management* Key Characteristics of our environmental management systems include: 1. Responsibility 2. Risk Assessment 3. Compliance All Valero refineries have Formal environmental risk To assure compliance with legal environmental managem
Slide 21: Our Approach to Environmental Management (Continued)
ENVIRONMENTAL SOCIAL GOVERNANCE Our Approach to Environmental Management Continued Key Characteristics of our environmental management systems include: 4. Objectives and 5. Record Keeping 6. Training Continuous Improvement Refineries follow the requirements With the support of corporate Refineries h
Slide 22: Our Approach to Environmental Management (Continued)
ENVIRONMENTAL SOCIAL GOVERNANCE Our Approach to Environmental Management Continued Key characteristics of our environmental management systems include: 7. Monitoring and Communication 8. Audits and Assessments To determine if environmental goals and objectives are being The environmental teams worki
Slide 23: Our Approach to Environmental Management: Governance
ENVIRONMENTAL SOCIAL GOVERNANCE Our Approach to Environmental Management Continued Governance and Managerial Responsibility The Nominating/Governance and Public Policy Committee of our board of directors provides oversight of Valero’s health, safety and environmental matters as well as climate-relat
Slide 24: Our Excellence Commitment with EERA
ENVIRONMENTAL SOCIAL GOVERNANCE Our Excellence Commitment with EERA Valero’s Environmental Excellence and Risk Assessment (EERA) defines more than 100 expectations and involves a five-step process using a combination of external assessors and internal subject matter experts: 1. On-site: self-assessm
Slide 25: Environmental Metrics
ENVIRONMENTAL SOCIAL GOVERNANCE Environmental Metrics MSCI and Sustainalytics Global Refining1 2017 2018 2019 GHG Emissions Scope 1 1 24.8 25.4 24.8 GHG Emissions Scope 2 1 6.8 6.8 6.3 NOx 2 9,300 9,000 8,700 SOx 2 8,800 7,700 8,800 PM10 2 2,400 2,300 2,200 VOCs 2 9,500 10,300 7,700 Fresh water with
Slide 26: Energy Use: Multiple Renewable Sources
ENVIRONMENTAL SOCIAL GOVERNANCE Energy Use: Multiple Renewable Sources Many of our refineries are powered by a combination of renewable sources from local power grids and our own projects Hydropower Purchased Power Mix More than 99% of the electricity Our refineries in Wilmington used at our refiner
Slide 27: Wind Farm: Reducing Emissions and Energy Use
ENVIRONMENTAL SOCIAL GOVERNANCE Wind Farm: Reducing Emissions and Energy Use 50 Since 2009, the wind farm megawatts of power- has avoided generation capacity, partly powering the McKee Refinery 33 turbine wind farm in the Texas Panhandle at our McKee Refinery, built in 250 ~830,000 tons feet tall of
Slide 28: Cogeneration Plants and Expanders
ENVIRONMENTAL SOCIAL GOVERNANCE Cogeneration Plants and Expanders Boosting power and environmental performance, and reducing operating expenses • Fueled by natural gas, our cogeneration plants Combined, our cogeneration reduce our reliance on local power grids, which systems and expanders offset are
Slide 29: Carbon Capture: Innovation and New Technologies
ENVIRONMENTAL SOCIAL GOVERNANCE Carbon Capture: Innovation and New Technologies Capturing and Storing Carbon Dioxide National Petroleum Council Assessing the feasibility of Nature-based carbon storage (NPC) study on scaling carbon Carbon Capture in operations • Led by Rice University’s Baker capture
Slide 30: Innovative Solutions by Recycling, Reusing, Reclaiming and Reducing
ENVIRONMENTAL SOCIAL GOVERNANCE Innovative Solutions by Recycling, Reusing, Reclaiming and Reducing Many of our refinery units exist for Every drop counts, recovered product At our refineries we treat wastewater environmental purposes, such as from waste materials is converted into using specialized
Slide 31: Water Management
ENVIRONMENTAL SOCIAL GOVERNANCE Water Management Water is the most important resource. It is central to our lives and the ecosystem. It is also essential to our business and the ability to provide clean energy to a global society. At Valero, we work to address this global issue locally, through inno
Slide 32: Water Management: Risk Management
ENVIRONMENTAL SOCIAL GOVERNANCE Water Management Risk Management Most of our water consumption takes place in our refining operations. Based on the World Resources We have put in place water conservation and recycling initiatives, which have yielded significant Institute’s (WRI) Water Risk Atlas too
Slide 33: Water Management: Engagement
ENVIRONMENTAL SOCIAL GOVERNANCE Water Management Engagement Our participation in various committees of the Water Environment Federation has enriched our understanding of the value and impact of water conservation, and provided a platform for water management innovation. At the Benicia, CA refinery,
Slide 34: Reporting Frameworks: TCFD and SASB
ENVIRONMENTAL SOCIAL GOVERNANCE Reporting Frameworks: TCFD and SASB “Our investments in flexible and efficient manufacturing, Prepared under oversight of renewable fuels and the infrastructure critical to our operations our board of directors: help us meet today’s needs and prepare for future energy
Slide 35: Social: Human Capital, Safety and Community
Social: Human Capital, Safety and Community S © 2020 Valero. All rights reserved. 34
Slide 36: Outstanding Safety Performance
ENVIRONMENTAL SOCIAL GOVERNANCE Outstanding Safety Performance Valero Refineries vs. Other Sectors (Injuries recorded per 200,000 working hours) SOURCES: U.S. Bureau of Labor Statistics, Valero. Industry figures are for 2019; Valero refinery employee figure, 2019 35
Slide 37: Safety is our Foundation for Success
ENVIRONMENTAL SOCIAL GOVERNANCE Safety is our Foundation for Success Global Refining 2017 2018 2019 Personnel Safety Employee 1 0.28 0.40 0.25 Personnel Safety Contractor 1 0.36 0.32 0.39 Fatality Rate Employee 2 0.00 0.00 0.00 Fatality Rate Contractor 2 0.02 0.00 0.00 Process Safety Events Rates -
Slide 38: VPP: Highest Plant-Safety Designation
ENVIRONMENTAL SOCIAL GOVERNANCE VPP: Highest Plant-Safety Designation “Going beyond” has been a constant theme throughout our history, and one of the best examples has been our participation in the Voluntary Protection Program (VPP) of the U.S. Department of Labor’s Occupational Safety and Health Ad
Slide 39: Capital Investments in Reliability Drive Excellent Performance
ENVIRONMENTAL SOCIAL GOVERNANCE Capital Investments in Reliability Drive Excellent Performance We have consistently improved compared with industry peers, leading to lower operating expenses, better efficiency and improved environmental performance. Improvement Versus Industry Benchmarks Leads to Gr
Slide 40: Continuous Safety Improvement with Goal Zero
ENVIRONMENTAL SOCIAL GOVERNANCE Continuous Safety Improvement with Goal Zero Goal Zero focuses on eliminating incidents, supported by the use of assessments like our Control of Hazardous Energy and Materials (CHEM) assessment. A tool that examines the human aspect of An innovative data-based approac
Slide 41: Life-Saving Rules
ENVIRONMENTAL SOCIAL GOVERNANCE Life-Saving Rules Seven critical rules that must be followed at all times. 1 Work with a valid work permit when required. 5 Use specified life protection equipment. 2 Verify energy isolation before beginning work. 6 Protect yourself against a fall when working at heig
Slide 42: Training is Key to Safe and Reliable Operations
ENVIRONMENTAL SOCIAL GOVERNANCE Training is Key to Safe and Reliable Operations As part of our commitment to safe, reliable and environmentally responsible operations and as outlined in our Commitment to Excellence Management System (CTEMS), we offer a year-round robust and dynamic training program
Slide 43: Contractors Follow Our Safety Protocols
ENVIRONMENTAL SOCIAL GOVERNANCE Contractors Follow Our Safety Protocols As outlined in our Commitment to Excellence Management System (CTEMS), safety qualifications for all existing and new contractors performing work at our refineries are essential to improve safety performance, efficiency and safe
Slide 44: Emergency Preparedness
ENVIRONMENTAL SOCIAL GOVERNANCE Emergency Preparedness Valero evaluates and prepares for physical risks to its facilities from natural disasters and other threats, and works to mitigate risks to employees, assets, surrounding communities and the environment. Emergency Management Hurricane Planning P
Slide 45: COVID-19: Leveraging Existing Emergency Preparedness Protocols
ENVIRONMENTAL SOCIAL GOVERNANCE COVID-19: Leveraging Existing Emergency Preparedness Protocols As part of our emergency preparedness and response programs, and health and safety initiatives, we responded responsibly and quickly to protect the safety and well-being of our employees, their families an
Slide 46: Employees: Our Greatest Asset
ENVIRONMENTAL SOCIAL GOVERNANCE Employees: Our Greatest Asset Talent that Diversity and Robust Tuition Competitive Pension and drives inclusion to training and reimbursement pay and retirement organizational achieve our vision development offered to advance rewards for savings plans with results pro
Slide 47: Diversity, Equality and Inclusion
ENVIRONMENTAL SOCIAL GOVERNANCE Diversity, Equality and Inclusion To achieve operational excellence, we value the strengths and advantages of a diverse workforce as well as the As a participant of the Bloomberg Gender- impact that truly inclusive teams bring. Equality Index, Valero has been recogniz
Slide 48: Diversity, Equality and Inclusion: Recruitment
ENVIRONMENTAL SOCIAL GOVERNANCE Diversity, Equality and Inclusion Attracting the brightest minds is our main focus Recruitment • Our internship program, which attracts over 200 interns a year, sponsors and draws candidates from minority student groups such as NSBE, SHPE, SWE and SASE (reaching out t
Slide 49: Diversity, Equality and Inclusion: Training
ENVIRONMENTAL SOCIAL GOVERNANCE Diversity, Equality and Inclusion Training In our journey to operational excellence, training is fundamental to communicating our cultural values, company strategy and goals. Diversity, equality and inclusion (DEI) training is part of our development program and inclu
Slide 50: Diversity, Equality and Inclusion: Compensation, Retention
ENVIRONMENTAL SOCIAL GOVERNANCE Diversity, Equality and Inclusion $ Compensation Retention and Inclusion • Ongoing review of compensation data to • Retention is related to inclusion and talent ensure gender and racial parity. development. Once we find bright minds, we want to retain them, motivate t
Slide 51: Diversity, Equality and Inclusion: Benefits
ENVIRONMENTAL SOCIAL GOVERNANCE Diversity, Equality and Inclusion We aim to provide benefits to employees in every stage of life from recent college graduates to young families and in Benefits preparation for retirement • Health care plans are available to all full-time and part-time employees offer
Slide 52: Training and Development
ENVIRONMENTAL SOCIAL GOVERNANCE Training and Development Training and Development As part of our commitment to employee development and operational excellence, we offer a robust and dynamic training and employee development program year-round to ensure Team Valero reaches peak performance • In 2019,
Slide 53: Our Culture is Rooted in Six Key Values
ENVIRONMENTAL SOCIAL GOVERNANCE Our Culture is Rooted in Six Key Values Safety Accountability Teamwork Excellence Do The Right Thing Caring 52
Slide 54: Record Donations and Fundraising Surpassed $64 million in 2019
ENVIRONMENTAL SOCIAL GOVERNANCE Record Donations and Fundraising Surpassed $64 million in 2019 We will be a good neighbor by sharing our success with the communities where we live and work through volunteerism, charitable giving and the economic support of being a good employer. Employee giving/ mis
Slide 55: Community Involvement: 150,000 Employee Volunteer Hours
ENVIRONMENTAL SOCIAL GOVERNANCE Community involvement: 150,000 employee volunteer hours Valero has been named to 20 years ago, More than $15.0 The Civic 50, employees collectively were a list of the 50 most giving approximately MILLION community-minded $1 million in net proceeds raised in 2019 compa
Slide 56: Human Rights – Indigenous Communities
ENVIRONMENTAL SOCIAL GOVERNANCE Human Rights – Indigenous Communities Respecting human rights is a fundamental value to Valero. Valero recognizes the dignity, value and worth of all human beings and conducts operations in compliance with all applicable laws and regulations, and consistent with the U
Slide 57: Engagement – Indigenous Communities
ENVIRONMENTAL SOCIAL GOVERNANCE Engagement – Indigenous Communities Our refinery in Ardmore, Oklahoma is in the heart of the Chickasaw Nation and has a long-standing relationship with this Indigenous community, contributing with the economic support we provide to employees, business partners and loc
Slide 58: Governance
Governance G © 2020 Valero. All rights reserved. 57
Slide 59: Strong Corporate Governance
ENVIRONMENTAL SOCIAL GOVERNANCE Strong Corporate Governance Board of Directors Code of Business Conduct and Ethics 10 Independent 3 members are and diverse fully independent independent committees 5 of 11 directors represent diversity of race or gender 3 of 11 are women Age Tenure We focus on From s
Slide 60: Nom/Gov and Public Policy Committee: Oversight of Climate-Related Risks
ENVIRONMENTAL SOCIAL GOVERNANCE Nom/Gov and Public Policy Committee: Oversight of Climate-Related Risks and Opportunities • Assists the board in oversight of corporate governance; board membership; health, safety and environmental matters; climate-related risk, public policy; political activities; c
Slide 61: All-Employee Bonus Program Includes ESG Factors
ENVIRONMENTAL SOCIAL GOVERNANCE All-Employee Bonus Program Includes ESG Factors Annual Incentive Bonus Updated in 2020, the Strategic Component of the bonus (evaluated by the Compensation Committee) Financial includes: Performance Goal (EPS) • ESG Efforts & Improvement 40% - Environmental stewardshi
Slide 62: All-Employee Bonus Program Incentivizes GHG Emissions Reduction and Offset Targets
ENVIRONMENTAL SOCIAL GOVERNANCE All-Employee Bonus Program Incentivizes GHG Emissions Reduction and Offset Targets Reaching GHG emissions reduction and offset targets is linked to refining efficiencies and offsets generated by low-carbon fuels. Bonus metrics associated with this effort include: Oper
Slide 63: Environmental, Social and Governance
Environmental, Social and Governance • Renewable fuels • Health and safety • Ethical standards • Greenhouse gas (GHG) • Working conditions • Board diversity and emissions governance • Employee benefits • Energy efficiency • Stakeholder engagement • Diversity and inclusion • Climate risk • Shareholde
Slide 64: Notes
Notes Slide 9 • Base year (2011) includes: • Prorated global refinery GHG emissions (Scope 1) associated with the acquisition of two refineries during the year 2011 as well as the emissions from a refinery that was active in 2011 and subsequently closed in 2012 • GHG emissions (Scope 2) from purchas
Slide 65: About this presentation
About this presentation Policies and Procedures This presentation includes statements regarding various policies, values, standards, approaches, procedures, processes, systems, programs, initiatives, assessments, technologies, practices, and similar measures related to our operations and ESG and com
Slide 66: Contacts
Contacts For more information, please contact: Giovanna Rueda Homer Bhullar Director, Regulatory Vice President, Compliance and ESG Investor Relations 210.345.6474 210.345.1982 giovanna.rueda@valero.com homer.bhullar@valero.com 65