Sustainability Governance

Sustainability topics are fully integrated into the overall governance structure of the Company. These topics have the same weight as any other business consideration and, following the Company’s responsible approach to business, are integrated into the daily operation and management processes of the Company. For instance, sustainability criteria form part of the Capital Allocation Framework (see Climate Change). ESG due diligence is also part of mergers and acquisitions.

Governance Structure

OMV has a two-tier governance structure. The Executive Board, composed of the CEO, CFO, Executive Vice President (EVP) Chemicals & Materials, EVP Fuels & Feedstock, and EVP Energy, is the highest managing body of the Company and is responsible for setting and implementing the Company strategy, including climate and other sustainability targets. The Executive Board holds meetings at least every two weeks to exchange information and issue decisions on all matters requiring plenary approval.

The Supervisory Board is OMV’s highest governing body and consists of ten members elected at the Annual General Meeting (shareholders’ representatives) and five members delegated by the Group’s Works Council. All members elected at the Annual General Meeting (AGM) have declared their independence from the Company (according to the definition given in the Austrian Code of Corporate Governance).

The Supervisory Board appoints members of the Executive Board, monitors and supervises its decisions, and advises the Executive Board on strategy development. The Supervisory Board also assesses the performance of the Executive Board, including on sustainability criteria. The Executive Board reports to the Supervisory Board on a regular and ad hoc basis. The Supervisory Board appoints among its members qualified expert committees that support their decision-making process. A self-assessment of the Supervisory Board is performed on an annual basis with the support of an external consultant. The 2023 evaluation showed positive results overall, with several areas where improvement in the work of the Supervisory Board had been observed in comparison to the 2022 results. For instance, it was highlighted that sustainability criteria now have an increasing importance in discussions and their decision-making process.

The Chairman of OMV’s Supervisory Board regularly receives external feedback on the OMV Group’s strategy, for example through the Corporate Governance Roadshows he attends or at the Annual General Meeting, among others.

OMV’s management of sustainability issues is overseen and steered by several committees.

Sustainability & Transformation Committee

The Supervisory Board’s Sustainability & Transformation Committee meets on a quarterly basis to discuss and steer topics such as regulatory ESG requirements, which include non-financial reporting requirements, ESG-related capital market activities, ESG governance and steering, and critical concerns related to sustainability.¹ Critical concerns are cases that have raised significant attention from key stakeholders, have validity (e.g., legal decisions, allegations with significant proof etc.,), are in OMV’s direct operations or value chain, and that would constitute a violation of one of the ten principles of the UN Global Compact. In 2023, three such concerns were flagged and discussed by the Sustainability & Transformation Committee. These concerns included a fatality at the Petrobrazi refinery, climate litigation, and an update on the Borealis Kallo case. The committee has oversight of all of the Company’s material sustainability topics (e.g., health, safety, and security, carbon emissions reduction, circular economy, etc.) and their related KPIs and targets, as well as overall transformation topics, such as cultural changes and establishing ESG competency.

At the meetings of the Supervisory Board, the Chairman of the Sustainability & Transformation Committee gives a report to the entire plenary on a quarterly basis. The Sustainability & Transformation Committee and the entire Supervisory Board review and approve the OMV Group Sustainability Report every year. OMV’s Supervisory Board benefits from a training program to learn about relevant topics, including ESG-related fields of interest. In 2023, the content of the training program included an external presentation delivered by a researcher from the International Institute for Applied Systems Analysis (IIASA) on the key outcomes of the IPCC Sixth Assessment Report on Climate Change, which took place during a Sustainability & Transformation Committee meeting.

The evaluation of the Sustainability & Transformation Committee conducted as part of the Supervisory Board’s self-assessment highlighted strong development since its formation in 2022. For instance, the committee has been actively responsible for monitoring the progress made with regard to OMV’s Sustainability Strategy. In 2023, the committee saw that improvements had been made in ensuring that the response to significant incidents related to health, safety, security, and the environment was timely and effective.

Sustainability Coordination Forum

In 2023, a new committee called the Sustainability Coordination Forum was formed under the Executive Board. This committee is chaired by OMV’s CFO and consists of senior managers with responsibility and ownership for material topics, as well as relevant business representatives responsible for implementing OMV’s sustainability and transformation agenda. Its mandate is to coordinate the development of the sustainability agenda across the OMV Group, monitor progress on target achievement, propose measures in the event of deviations, discuss emerging business opportunities, and prepare sustainability topics to be discussed by the Executive and Supervisory Boards. The committee meets at least twelve times per year.

Management of Sustainability Impacts

The Executive Board is responsible for managing the organization’s impact on the economy, environment, and people. This includes oversight of all material topics described in this Report, such as climate change mitigation and adaptation, human rights, safety, etc. At Group level, responsibility for driving OMV’s sustainability agenda, sustainability reporting, and ESG governance lies with the Group Sustainability department in Investor Relations & Sustainability, which is among the responsibilities of the CFO. The Group Sustainability department works across the business to determine gaps in sustainability performance, define expectations, conduct benchmarking, and develop best practices.

The Group Sustainability department works in close collaboration with the various Group functions that are responsible for implementing OMV’s Sustainability Framework. Further details are disclosed in the Governance descriptions of each material topic found throughout this Report.

Group functions continuously develop and steer the processes relevant to the implementation of activities relating to social and environmental performance, and propose an action plan to functional experts in related business units on the ground. The functional experts remain in continuous communication regarding progress on the planned implementation. Each Group function reports directly to the Executive Board on the relevant social and environmental issues in conjunction with the Group Sustainability department. This includes reporting on progress in the implementation of the Sustainability Framework on a quarterly basis, presenting important events with regard to the material topics, and submitting implementation plans for sustainability initiatives for approval.

Executive Remuneration

The Supervisory Board assesses the performance of the Executive Board, including on the implementation of the sustainability strategy. The Remuneration Committee is authorized to determine the Executive Board’s remuneration, including the structure of the remuneration system and the actual target achievement. The Executive Board remuneration consists of fixed and variable remuneration elements. Selected employees at senior management level are also eligible to participate in the Long-Term Incentive Plan (LTIP). The variable remuneration – LTIP and the annual bonus – includes performance criteria related to the Company’s sustainability and greenhouse gas (GHG) performance. Long-term shareholder and other stakeholder interests are reflected in the performance-related remuneration, which includes both long-term and short-term elements.

The Remuneration Policy for the Executive Board was approved at the Annual General Meeting (AGM) in June 2022 and was effective in 2023. It sets out GHG and ESG targets as forming part of the annual bonus and LTIP. 15% of the annual bonus depends on the achievement of the defined reduction of net absolute Scope 1 and 2 GHG emissions. 20% of the LTIP is based on the achievement of ESG targets and includes the reduction of the net carbon intensity of energy supply. The GHG targets in the annual bonus (i.e., reduction of Scope 1 and 2 emissions) and the LTIP (i.e., reducing the carbon intensity of energy supply) are clearly linked and directly derived from the OMV Group GHG emissions reduction targets for 2030 and the required reduction pathways up to 2030 compared to the base year 2019. This means the achievement of the GHG targets set out in the annual bonus and the LTIP requires OMV to implement the defined decarbonization pathway to achieve its 2030 GHG emissions reduction targets, which include the reduction of absolute Scope 1 and 2 emissions by 30%, the reduction of Scope 3 emissions by 20%, and the reduction of the carbon intensity of energy supply by 20% – all compared to the base year, 2019.

The Remuneration Committee has established an OMV-specific catalog of criteria derived from OMV’s Strategy 2030, among which are strategic GHG emissions reduction KPIs that steer OMV’s decarbonization actions up to 2030. These include the reduction of Scope 1 and 2 GHG emissions and the reduction of the carbon intensity of energy supply.

The Remuneration Committee chooses the specific ESG targets and their weighting for each LTIP tranche based on this catalog. Within the ESG targets, GHG emissions reduction will always constitute a target in the LTIP. GHG and ESG targets and their weighting are published in the Remuneration Report for the grant year, which can be found on the OMV website. Based on predefined criteria (e.g., fatalities, TRIR, process safety – also in comparison to industry benchmarks), a health and safety malus of between 0.8 and 1.0 is applied to the overall target achievement for both the annual bonus and the LTIP. In the event of severe incidents, the Remuneration Committee may reduce the payout to zero. This malus considers OMV’s commitment to health and workplace safety.

An external review of actual target achievement is performed by the Group’s auditor, and the results are communicated to the Remuneration Committee and Supervisory Board.