TCFD Framework

Evaluating climate risks and opportunities is the responsibility of all Board members, with climate updates scheduled at some Board meetings to review and guide strategy and major plans of action (including setting long-term targets), monitor progress towards goals as well as any changes in the regulatory environment, and review and guide risk management.

All C-suite positions are responsible for assessing the overall strategy, and reviewing and guiding major action plans, including setting targets and risk management policies, while identifying climate-related opportunities and establishing annual budgets for climate resilience and carbon reduction. Management meets regularly to discuss climate change-related topics. Main near- to mid-term target is a focus on emissions reduction. Climate-based incentive programs will be considered for implementation during the next 2 to 5 years.

Transition risks considered material to Dril-Quip include Policy and Legal, Technology, Market, and Reputational. These include energy regulation, carbon pricing, loss of business, higher costs, technology transition, lower demand, product oversupply, loss of customers and suppliers, and difficulties accessing funding. Physical Risks considered material to Dril-Quip include acute physical risks such as extreme weather, hurricanes, and flooding. Opportunities considered material to Dril-Quip are resource efficiency, energy sourcing, new product development, and access to new markets. These opportunities include recycling, waste management, energy efficiency, renewable sourcing, distributed energy sourcing, diversification of the business, aligning with customers, suppliers, and markets, and increased resilience of operations from acute physical risk or value chain disruption. From an energy transition standpoint over the long term, we view carbon storage and geothermal as our greatest opportunities. We are committed to investing in low-carbon solutions and more efficient manufacturing to drive a lower footprint. In addition to investing in carbon-conscious R&D, we are also engaged in market-leading collaborations.

Climate change has already influenced the strategy, operations, and financial planning of Dril-Quip's e-Series products. Planned/ongoing emissions abatement actions will further influence the value chain, capital allocation, and financing.

We have conducted a comprehensive scenario analysis around the business as usual (>3°C by the year 2100), middle of the road (>2°C), and green transition (1.5°C) scenarios across revenue, earnings, cash, and market value at risk for the business. In 2022, we will continue to evaluate various approaches toward incorporating the climate scenario analysis into our existing risk management and opportunity assessment processes.

The corporate executive team is responsible for identifying and escalating climate-related risks prioritized based upon revenue, earnings, and benchmarking versus peers. The Board oversees the risk management process.

Dril-Quip management will focus on regulatory compliance, financial optimization, and budget to achieve decarbonization, resilience, and emissions reduction goals.

Dril-Quip integrates climate risks into a multidisciplinary, company-wide management process. The Company deploys this process as part of the Health, Safety, and Environment (HSE) Strategy to support the carbon reduction execution plan across operations and improve overall environmental performance.

All public climate-related metrics, goals, and targets, as well as Scope 1, 2, and 3 emissions data, can be found here.

Greenhouse Gas Emissions, carbon dioxide equivalent (CO2e) metric tonnes:
Scope 1: 3,724
Scope 2: 8,161 (market-based)
Scope 3: 220,552

All public climate-related metrics, goals, and targets, as well as Scope 1, 2, and 3 emissions data, can be found here.

Greenhouse Gas Emissions, carbon dioxide equivalent (CO2e) metric tonnes:
Scope 1: 3,724
Scope 2: 8,161 (market-based)
Scope 3: 220,552

All public climate-related metrics, goals, and targets, as well as Scope 1, 2, and 3 emissions data, can be found here.

Greenhouse Gas Emissions, carbon dioxide equivalent (CO2e) metric tonnes:
Scope 1: 3,724
Scope 2: 8,161 (market-based)
Scope 3: 220,552