Dril-Quip is actively engaged in helping the world transition to a low-carbon future.
We recognize that climate change is an issue that warrants attention across all aspects of our business. We are committed to environmental stewardship by actively engaging in sustainable practices throughout our operations and doing our part, as a member of the greater energy industry, to deliver products that allow our customers to responsibly provide greater access to affordable, reliable energy for people everywhere.
Sustainability has always been at the core of our operations. We believe that our technology enables our customers to reduce their carbon footprint, minimize environmental and safety risks and enhance operational efficiency.
Dril-Quip recognizes the impact that interaction with the environment has on the quality of life now and in the future worldwide. As a Participant of the United Nations (UN) Global Compact, we support the organization's Ten Principles on human rights, labor, environment, and anti-corruption.
Given our global operations, we are committed to finding ways to drive environmental responsibility across our organization and making progress towards addressing two of the UN's Sustainable Development Goals (SDGs) – SDG 7 Affordable and Clean Energy and SDG 13 Climate Action – within our Company and for our customers.
We believe technological innovation is the key to improving energy efficiency and providing people around the world with universal access to reliable, affordable, clean energy. It spurs economic growth and enhances the standard of living for all, creating employment opportunities and improving health globally.
We will continue in our ongoing mission to develop differentiating solutions that help our customers achieve their carbon reduction targets, while finding ways to lower emissions from our own manufacturing operations.
With R&D deeply engrained in our Power of e™ culture, we have engineered our e-Series products to be Green By Design™ and enable our customers to lower their costs, adhere to best-in-class health and safety standards, and help reach their carbon reduction targets.
As the market becomes increasingly focused on energy transition, we are aligning our capabilities and dedicating R&D resources to bring higher levels of innovation to the energy transition initiatives of our customers. As a company, we are driven to meet the complex challenges facing the energy industry, now and in the future, and we have designed our climate change objectives to similarly aspire to drive positive climate impact.
Evaluating Climate Risks and Opportunities
Climate risk management is part of our overall risk assessment and strategy. Dril-Quip recognizes both the physical and transition risks related to climate change and is committed to managing these risks. Our multidisciplinary, company-wide risk management process for climate change accounts for physical, regulatory, reputational and market risks. Both senior management and our Board of Directors are responsible for addressing the potential impacts of climate risk across Dril-Quip.
Physical risks considered material to Dril-Quip include extreme weather, hurricanes, and flooding. An increase in severe weather patterns could result in damages to or loss of our property and equipment, impact our ability to conduct our operations, and/or disrupt our customers’ operations. Our business continuity plans allow us to flex capabilities to other locations to mitigate physical risks and reduce the impact on our customers.
Transition risks considered material to Dril-Quip include energy regulation, carbon pricing, loss of business, higher costs, technology transition, lower demand, oversupply, loss of customers and suppliers, and difficulties accessing funding.
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, business diversification, 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.
We have conducted a comprehensive scenario analysis across 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.
We publicly report our management of climate-related risks through our periodic filings with the U.S. Securities and Exchange Commission and in our TCFD Framework.