Good governance is at the core of how Aramco operates and is fundamental to sustainable success.
Aramco has had the opportunity to leverage shared knowledge, expertise and experience since its earliest days, and continues to advance its operating platforms and governance mechanisms.
Environmental, social and governance considerations have long been an integral part of Aramco’s approach to business. The Company has implemented an internal governance model that integrates sustainability principles into business strategy, streamlines decision making, and provides internal clarity with regard to roles and responsibilities.
This oversight model supports a disciplined internal approach, providing for accountability, transparency and responsibility at all levels. It also enables the Company to identify and address the key issues and opportunities to integrate sustainability principles within business strategy and align sustainability targets with business objectives.
Risk and Health, Safety, and Environment (HSE) Committee
The primary role of the Risk and HSE Committee is to monitor overall management of risk and activities relating to health, safety and the environment and to assist the Board of Directors with:
- leadership, direction, and oversight with respect to Aramco’s risk appetite, risk tolerance, risk framework and risk strategy;
- governance and management of strategic and operational risks and sustainability; and
- fostering a culture within Aramco that emphasizes and demonstrates the benefits of risk management.
A Sustainability function has been established to oversee the management of ESG issues and is responsible for developing, ensuring implementation, and communicating Company positions on emerging sustainability topics, aligning with Company strategy and objectives, building awareness, and sustainability reporting.
Aramco’s performance dashboards include ESG-related Key Performance Indicators (KPIs), and are reviewed by management on a regular basis. Corporate KPIs are used to measure performance and to allocate annual performance bonuses for all employees.
Sustainability Steering Committee
The Company formed the Sustainability Steering Committee (SSC) in 2020 to align sustainability related action under the guidance and oversight of a single body. The SSC replaced the Company’s Climate Initiatives Steering Committee and ESG Taskforce and their activities were absorbed into the SSC.
The SSC is responsible for identifying and managing sustainability issues and their impact on long-term value creation. It informs investment and business decisions and aligns them with sustainability commitments, and provides a platform for management of cross-business issues, as well as a mutual understanding of corporate sustainability for strategy development and external communications. The SSC reports to, and informs, the Company’s Strategy Council and Management Committee. It also updates the Board of Directors’ Risk and Health, Safety and Environment (HSE) Committee on the Company’s sustainability strategy and ESG performance.
The primary role of the Nomination Committee is to lead the process of nominating, appointing and evaluating members of the Company’s Board and to ensure the effectiveness of the Board and the individual Directors.
The Nomination Committee also evaluates and makes recommendations with respect to the structure of the Board and composition of the Board’s Committees. Further, the Nomination Committee evaluates and recommends to the Board the appointments of individuals (other than Directors) as Company officers, including those proposed to hold the title of Vice President or higher or that are otherwise authorized by virtue of such appointment to bind or act on behalf of the Company.
The Nomination Committee also proposes and makes recommendations to the Board with respect to the Company’s relevant corporate governance practices and procedures.
The primary role of the Audit Committee is to monitor the Company’s affairs and assist the Board and its Directors with oversight of the financial reporting and disclosure process, including oversight of:
- the integrity, effectiveness and accuracy of the Company’s consolidated financial statements and reports, and the performance, soundness and effectiveness of the Company’s internal controls, audit, financial reporting, and financial risk management systems;
- the qualifications and performance of the Company’s internal auditor;
- the qualifications, independence, and performance of the Company’s independent external auditor; and
- the Company’s compliance with legal and regulatory requirements.
The primary role of the Compensation Committee is to oversee the Company’s policy on compensation and its implementation. The Compensation Committee reviews the annual individual compensation plans for Directors and Senior Executives. The Compensation Committee also reviews and approves the annual compensation plans of other Company Executives.