We integrate climate-related considerations into key business planning and risk management processes throughout the company.
As outlined in our Corporate Risk Management Policy, our Board is responsible for ensuring an effective risk management process is in place to identify, monitor and manage significant risks to our business and reputation.
Our enterprise risk management process and our environment, social and governance materiality assessment help identify and monitor any significant risks. Each quarter, we present risk reports to the Board with corresponding mitigation strategies.
Potential Climate-Related Impacts to Our Business
A carbon tax currently affects our Canadian operations, and we recognize that carbon taxes may impact our U.S. assets in the future. We account for an escalation of our Canadian carbon tax costs in our planning and budgeting processes. We also run scenarios to determine how a U.S. implementation would impact our costs structures.
Commodity Prices and Capital Management
To better predict the risks associated with future commodity prices, including potential GHG reductions, our scenario planning utilizes a range of prices that represent varying levels of supply and demand for our products. This planning considers how our cost structure and capital efficiency could be impacted by factors such as the oilfield service market, carbon mitigation, new technologies, well design challenges and quality of future inventory.
Severe weather events including hurricanes, fires and floods can impact our operations. We continue to identify and pilot new technology, equipment and processes to mitigate the physical risks of a changing climate.
We aim to be the leading North American E&P by generating free cash flow and delivering superior returns both to our shareholders and on the capital we invest in our multi-basin, multi-product portfolio. By focusing on execution excellence, disciplined capital allocation, commercial acumen and risk management, our business can thrive across a variety of scenarios and deliver results in a socially and environmentally responsible manner.
Our development portfolio is highly focused on short-cycle opportunities enabling us to maintain operational flexibility at both the asset and portfolio level. This allows for rapid conversion of capital into cash flow, and a high degree of agility in managing risk and responding to opportunities.
In an evolving commodities market, we have continued our track record of demonstrating capital discipline while driving efficiency and lowering costs in every part of our business. We will continue to be a leading North American operator by strategically managing our supply chain and utilizing technology and innovation to responsibly develop our assets.
We have experience operating under carbon tax jurisdictions in Canada. Our corporate culture and structure promote knowledge sharing, and we expect to apply carbon tax learnings to our U.S. assets in the event of carbon tax regulation.
Our culture of innovation encourages us to utilize technology and operational efficiencies, particularly to drive free cash flow and emissions reductions. Ovintiv closely follows technology advancements and will continue to deploy equipment proven to be effective in reducing emissions.