Progress in 2022

Governance

While we continue to work on a complete set of direct Governance and Organization KPIs, we have already recognized the themes that are governing this pillar and have started measuring them internally.

We are utilizing a draft-set of KPIs that have been developed within our organization, which is raising awareness on ESG issues across the Group and enhancing our ESG strategy.

Likewise does the Agenda 2030 newsletter, sent regularly to all Mercuria employees since 2019, which has become the main communication tool throughout the company concerning various ESG initiatives, strategy and developments. As recognition of the importance of defining material issues impacting the company’s stakeholders, we conducted an internal survey which sought employees’ views on a set of ESG topics and will serve as a first step for the construction of Mercuria’s Materiality matrix. The survey was based on the GRI standards because of their good definition of ESG metrics.

Finally, we are continuing to look at the different themes (governing purpose, quality of governing body, stakeholder engagement, ethical behaviour or risk and opportunity oversight) in order to consider all aspects of the Governance pillar in our sustainability strategy. We continue to enhance and add additional KPIs in order to improve our performance and our reporting.

Materiality matrix

We continue to conduct our Materiality Analysis on an annual basis and gather feedback from employees using an anonymous questionnaire. Employees complete the survey and provide their analysis on a range of Agenda 2030 related ESG topics.

For each topic, the employee gives a score from 0-10 for how important the topic is and how they perceive Mercuria considers the importance. The results are then presented in the scatter plot where the x-axis represents the ideal importance and the y-axis the perceived importance.

Broadly, the results indicate that our employees judge our organization is managing issues effectively in that the emphasis placed on all topics is at least as strong, if not stronger than is felt to be warranted by the topic, as is indicated by data points falling above the inclined 45-degree line.

When comparing the 2022 results clustering as shown with the blue oval with scores from the previous 2 years (2020 in purple and 2021 in green) a distinct shift can be seen. Not only has the clustering of the scores moved further along the trendline indicating an increase in both the ideal and perceived importance of the topics, but it has moved further

 

away from the trendline. This indicates that employees perceive that Mercuria is placing greater emphasis on these elements than the employees’ ideal.

This shift can likely be explained by not only the increased amount of internal discussion of ESG related topics, but also the increasing action that Mercuria is taking with regard to ESG related topics.

For example, Mercuria’s commitment that over 50% of its investments would be into the energy transition by 2025, for which we are well ahead, as well as the achievement of being net zero by offsetting all of the company’s scope 1 and scope 2 carbon emissions for 2022.

In 2022, the areas of focus that our employees want Mercuria to treat with the highest importance were anti-corruption, both environmental and socioeconomic compliance, as well as forced, compulsory and child labour, non-discrimination and anti-competitive behaviour. These points are reflective of Mercuria’s reputation and culture.

As our organization continues on its journey of development along with our place in society, we will also continue to reflect upon the feedback from our stakeholders for ways we can further improve.

Payments to governments

As part of its Anti-Bribery and Anti-Corruption Policy, Mercuria prohibits the payment of facilitation fees. Mercuria takes care to ensure that any fees being paid to a government agency in relation to deals are legitimate payments and not facilitation payments, including payments in the form of gifts or entertainment.

Below you can find information on the payments that Mercuria has made to governments in relation to our extraction facilities.

Table below shows the relevant payments made by Mercuria Energy Group in the year ended 31 December 2022

The consolidated overview presented above discloses the sum of the Group’s payments to governments in each country where the Group had extractive operations. The overview is based on the location of the receiving government.

About Payments to Governments in 2022

This information has been prepared in line with the EU Accounting Directive 2013/34/EU, as amended which has been transposed into Cyprus legislation. Its publication aims to provide for enhanced transparency of payments made to governments in the context of extractive activities.
Article 42 of Directive 2013/34/EU states that “Member States shall require large undertakings and all public interest entities active in the extractive industry or the logging of primary forests to prepare and make public a report on payments made to governments on an annual basis.”
The provisions of this Directive are integrated in 13th Schedule of the Companies Law, Cap 113 in Cyprus.

Basis of Preparation and Scope

Mercuria Energy Group Ltd as parent of the Mercuria group of companies (the “Group”) has prepared the report on a consolidated basis and reports the activity of any of its subsidiary undertakings that perform extractive operations. Taxes, royalties, license fees, production entitlements and infrastructure improvements to governments are presented as incurred during the reporting period.
This report includes all payments to governments for activities which relate to exploration, discovery, development and extraction of minerals and other materials resulting from extractive operations of each of the Group’s consolidated subsidiaries during the 12 month period ended December 31, 2022.
Payments made to a government as a single payment or as a series of related payments of EUR 100,000 or more in financial year 2022 form part of this report.
This report excludes payments by non-consolidated entities (such as those that are accounted for using the equity method) regardless of the amounts paid and also excludes payments to governments related to the processing, marketing and trading of any of the Group’s products. Equally, any donations made, for example in respect of social or community programs, are excluded.
Unless otherwise noted, the following terms have the meanings as explained below:
Government
Any national, regional or local authority of a country, and includes a department, agency or other undertakings controlled by that authority.
Materiality Payments
Payments made as a single payment exceeding EUR 100,000 or as part of series of related payments within a financial year exceeding EUR 100,000.
Reporting Currency
All payments have been reported in USD.
Amounts in currencies other than USD (presentation currency for this report) have been converted based on the average annual foreign exchange rates prevailing as at December 31, 2022.
Payment Types
“Payment” is defined as an amount paid whether in money or in kind, for relevant activities where the payment is of any one of the types listed below:
Production Entitlements
Represents host government’s share of production. This payment is generally made in kind.
Taxes
Represents taxes levied on the income, production or profits of a consolidated subsidiary, excluding taxes levied on consumption such as value added taxes, personal income taxes or sales taxes. Where practical, we have reported the amounts associated with the extractive operations only. Tax payments are made in accordance with current local regulations, which may include instalments.
Royalties
Represents percentage of production payable to the owner of the mineral rights.
Fees
Represents license fees, surface or rental fees, and other consideration for licenses and / or concessions paid for access to the area where extractive operations are conducted.
Infrastructure Improvements
Represents payments for local development, including the improvement of infrastructure, not directly necessary for the conduct of extractive operations but mandatory pursuant to the terms of a production sharing contract or to the terms of a law.

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