reducto logo
Loading PDF…

# Partnership with Our Tribal Neighbors

MPC and MPLX are committed to engage, communicate and partner with tribal nations and communities where we operate. We understand each tribe has its own unique culture, government, language and customs, and we value and welcome their valuable perspectives as we work together to create shared value opportunities.

To improve our collaboration with tribes, we educate our employees on tribal history, culture and the best methods of communication These training sessions were created with input from MPC employees who are members of tribes such as Blackfeet, Navajo and Muscogee (Creek) Nations. Additional input comes from subject matter experts within tribes such as Mandan, Hidatsa and Arikara (MHA) and Cherokee.

Our Tribal Affairs Working Group consists of internal MPC employees who work hard to build strong relationships with tribes. This group helps make recommendations on community investment projects focused on workforce development, sustainability and helping drive impact toward thriving tribal communities. In 2022, our Tribal Affairs Working Group meetings included guests from Tribal Nation leaders, including the Chairman of the Navajo Nation and the Chief of the Osage Nation. Their valuable perspective on how to best engage in their communities continues to enhance the way we work together.

This year, we celebrated a milestone partnership by including members of the Standing Rock Sioux Tribe and the MHA Nation in emergency preparedness training in partnership with the EPA. We will continue to incorporate unique tribal perspectives on our approach to safety and preservation of cultural and environmental resources in our strategy and planning for project execution and operational activities.

## Shared Values and Purposeful Engagement Drive Impact

In addition to direct partnerships with tribal nations, we recently partnered with several national tribal organizations that aim to provide education and elevate members of tribal communities, including:

  • - American Indian Science and Engineering Society
  • - American Indian Business Leaders
  • - Native Forward
  • - National Native American Hall of Fame
  • - American Indian College Fund
  • - Tribal Colleges and Universities Navajo Technical University and United Tribes Technical College
  • Each new partnership has the potential for impact on a national scale and will help improve access to scholarships, internships, career planning and employment opportunities for native students.

    $1 million+ invested by MPC and MPLX in 2022 to directly support tribal communities where we operate

    These investments directly serve community members and demonstrate our shared value and commitment to tribal country. We are excited to continue to engage, collaborate and drive positive impact with our tribal neighbors.

    Figure
    Figure Text:
    The image shows a map of the United States highlighting various tribal partners and their locations. It includes a list of 20 tribal nations and corporations, along with symbols indicating MPC refineries, renewable fuels facilities, and pipelines across the country. The map is labeled as an illustrative representation of asset locations for Marathon Petroleum Corporation and MPLX, and notes that the company was named a Top 50 Place to Work in 2023 for STEM Professionals by AISES.

    ## Tribal Partnerships Highlights

    American Indian Science & Engineering Society (AISES) is the largest, oldest leader in STEM students and professionals in Indian country. AISES membership represents over 200 tribal nations. MPC invested $100,000 to support the Full Circle Program, a community- focused after-school STEM college and career readiness program incorporating a full- circle approach to workforce development among Indigenous students of Navajo Nation. In 2022, about 80% of students in this program successfully advanced to college.

    American Indian College Fund is an educational partner that has helped establish the Future Energy Professionals Project. The project provides scholarships and academic and career services for Native college students pursuing post- secondary credentials at tribal colleges and universities in New Mexico and North Dakota, areas where MPC operates and has strong community ties. Our $100,000 grant will help provide a guided pathway to Native students interested in energy-specific professions where Native people are underrepresented.

    Nueta Hidatsa Sahnish College (NHS College) supports students of the MHA Nation. A $100,000 grant from MPC is helping to restart their commercial driver's license (CDL) program and fund equipment for their welding trades program. Welders and CDL drivers are in high demand across the state of North Dakota and with MPLX. These programs will help Natives secure jobs in high demand with above average pay. MPLX leadership will help to develop curriculum for NHSC College and promote employee involvement in these programs.

    Pueblo of Santa Ana expressed a need to renovate ponding areas, restore wetlands and create a new pond for their community. A $75,000 grant from MPC is helping to provide environmental and wildlife habitat enhancements and improving the area to be used for educational and outreach opportunities for the Pueblo Santa Ana tribal community members. The renovated space will serve as an outdoor classroom for the Departments of Natural Resources, Education and Wellness and will allow visitors to learn more about the area's natural history.

    # Emergency Preparedness

    Robust preparedness is essential to ensuring we can respond effectively should an emergency event occur. Consistently investing in our response capabilities equips us to mitigate and manage impacts to people and the environment in the event of an incident.

    Each of our operating locations have emergency response teams assigned and site-specific emergency preparedness and response plans tailored to the risks they may encounter. These plans are subject to regular drills to test proper execution in preparation for an actual incident.

    Several agencies review and approve our plans, including the U.S. EPA, the U.S. Coast Guard, the Pipeline and Hazardous Materials Safety Administration (PHMSA) and various state agencies.

    MPC's Emergency Preparedness Group (EPG) oversees our response program, which includes companywide guidelines and procedures on how to prepare for and respond to emergencies. The group's focus is to continuously strengthen our capability to respond rapidly and appropriately to an emergency incident anywhere we operate. The EPG staff coordinates with business components to share best practices and resources across the company.

    For incidents that may require resources beyond those available at a local facility, the EPG maintains a Corporate Emergency Response Team (CERT). It is comprised of approximately 250 employees with response expertise and training in the Incident Command System (ICS), a globally recognized organizational structure designed to integrate resources across multiple agencies and organizations, should an emergency event occur.

    Tiered Response System:Tiered Response System:
    TierIncidents are directed by a local response team
    Tier 2Incidents are directed by a district/regional
    response team
    Tier 3Incidents are larger in scope and complexity and
    directed by the CERT

    ## Simulated Response Exercise

    To maintain readiness, our CERT members and other emergency response personnel participate in various exercises and work alongside federal, state, local and tribal responders, such as the U.S. EPA, the U.S. Coast Guard, state environmental protection or wildlife agencies, tribal government representatives and local emergency responders, such as law enforcement and firefighters. MPC and MPLX maintain a simulated response program to test and continually improve our response capabilities:

  • - Our exercises follow the guidelines of the federal government's National Preparedness for Response Exercise Program (PREP), which meets the requirements of the Oil Pollution Act of 1990 and all federal, state and local requirements.
  • - Exercises not only help prepare for emergency situations, but are also used to review, critique and improve our emergency response plans.
  • - We take a collaborative approach to emergency preparedness. In addition to training our own employees and contractors, we engage federal, state, local and tribal agencies, local fire departments and other first responders, and community leaders who have an interest in the design and development of our plans and exercises.
  • Figure
    Figure Text:
    The image shows two men standing outdoors near a body of water. One man is wearing a blue cap and jacket, pointing towards something off-screen. The other man, dressed in dark clothing and sunglasses, is standing next to him looking in the same direction.

    ## CERT Resources and Support for Responding to and Managing Emergencies

  • - Emergency Strike Team - A stand-alone response management team capable of supplementing, relieving or taking command of a major emergency.
  • - Emergency Support Group - Provides key support functions, such as IT, communications and geographic information system mapping during an incident.
  • - Crisis Management Team A group of executive-level advisors prepared to respond to MPC's and MPLX's needs during significant incidents.
  • - Business Recovery Team - Works to meet MPC's. MPLX's and customers' needs during supply disruptions.
  • - Threat Assessment Group - Tasked with determining the potential impact of a threat to MPC or MPLX, informing impacted stakeholders and recommending steps to protect people and assets.
  • - International Team - Determines the potential impact, recommends response strategies and responds to incidents related to the shipment of products outside the United States.
  • ## Key Partnerships for Improved Response

    In 2022, we took emergency preparedness partnerships to the next level. Collaboration, safety and incident resolution continued to be the focus of our exercises, with added enhancements to key relationship components.

    An exercise at our Mandan refinery in North Dakota overseen by the U.S. EPA included participation from 14 federal, state and local agencies, BNSF Railway and strong representation from local tribes, including members of the Standing Rock Sioux Tribe and the Mandan, Hidatsa and Arikara (MHA) Nation. In this exercise, we demonstrated the strength of our response to regulators and commitment to transparency and collaboration with tribal and neighboring communities.

    In the Pacific Northwest, a relationship built during an MPC spill exercise resulted in the U.S. EPA calling on MPLX to request a spill response equipment trailer to assist a third party during an actual spill response. Leaders acted swiftly to ensure the trailer was prepped and available for use.

    In a similar fashion, our St. Paul Park, Minnesota, refinery Fire Department was called on to aid in a rescue mission when a boat capsized on the Mississippi River after encountering rough waters. The department's resources and quick response helped save the individual from a potential catastrophe.

    Strong public-private partnerships are critical, especially when it comes to the safety and well-being of our people.

    JOE KEGLEY Assistant Fire Chief, City of St. Paul Park, Minnesota

    Figure
    Figure Text:
    ROSNEFT

    ABOUT THE COMPANY

    CORPORATE GOVERNANCE

    APPENDICES

    or maintaining it, that are significantly higher than those originally budgeted; Actual net cash flows or operating profit or loss flowing from the asset that are significantly worse than those budgeted;

  • - A significant decline in budgeted net cash flows or operating profit, or a significant increase in budgeted losses, flowing from the asset;
  • - Operating losses or net cash outflows for the asset, when current period amounts are aggregated with budgeted amounts for the future.
  • The following factors indicate that exploration and evaluation assets may be impaired:

  • - The period for which the Company has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed;
  • - Substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned;
  • - Exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the Company has decided to discontinue such activities in the specific area;
  • - Sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.
  • The recoverable amount of an asset or a cash-generating unit is the higher of:

  • - The value in use of an asset (cash- generating unit); and
  • - The fair value of an asset (cash- generating unit) less costs to sell.
  • If the asset does not generate cash inflows that are largely independent of those from other assets, its recoverable amount is determined for the asset's cash-generating unit.

    The Company initially measures the value in use of a cash-generating unit. When the carrying amount of a

    cash-generating unit is greater than its value in use, the Company measures the unit's fair value less costs of disposal for the purpose of measuring the recoverable amount. When the fair value is less than the carrying value an impairment loss is recognized.

    Value in use is determined by discounting the estimated value of the future cash inflows expected to be derived from the asset or cash-generating unit, including cash inflows from its sale. The value of the future cash inflows from a cash-generating unit is determined based on the forecast approved by management of the business unit to which the unit in question pertains.

    # Impairment of financial assets

    At each balance sheet date the Company recognizes an allowance for expected credit losses on a financial asset measured at amortised cost, and at fair value through other comprehensive income, a lease receivable, a contract asset or a loan commitment and a financial guarantee contract to which the impairment requirements apply. Requirements of IFRS 9 concerning impairment do not apply to equity instruments of any category as well as to the instruments at fair value though profit or loss.

    Expected credit losses for significant counterparties, including banks, are determined based on credit rating of particular counterparty and relevant probability of default.

    The allowance for financial asset at amortised cost is recognized in profit or loss in correspondence with a balance sheet account reducing the carrying amount of the financial asset. The allowance for financial assets at fair value through other comprehensive income shall be recognized in other funds and reserves and shall not reduce the carrying amount of the financial asset in the statement of financial position.

    # Capitalized interest

    Interest expense on borrowed funds used for capital construction projects and the acquisition of property, plant and equipment is

    capitalized provided that the interest expense could have been avoided if the Company had not made capital investments. Interest is capitalized only during the period when construction activities are actually in progress and until the resulting properties are put into operation.

    Capitalized borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

    # Leasing agreements

    In respect of the contracts (or separate components of a contract), which convey to the Company the right to control the use of an identified asset (as it is determined in IFRS 16 Lease) for a period of time in exchange for consideration, the Company recognizes a right-of-use asset and a lease liability at the commencement date. Non-lease components of the contract are accounted for in accordance with other relevant IFRS.

    In accordance with requirements of IFRS 16 Lease para 3-8, the Company does not apply the Standard to leases to explore for or use minerals, oil, natural gas and similar non- regenerative resources and to leases of wells, to short-term leases (taking into consideration economically feasible prolongations), as well as to leases for which the underlying asset is of low value (less kRUB 300).

    The Company determines the lease term as the non-cancellable period of a lease, together with both: periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.

    At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the incremental borrowing rate, as interest rate implicit in the lease, as a rule, cannot be readily determined. As the finance function lays predominantly within the parent company, incremental

    66

    borrowing rates are calculated centrally, except for the banks of the Group and cases of direct financing of the subsidiaries.

    At the commencement date, the Company measures the right-of-use asset at cost, which comprises the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date, less any lease incentives received, any initial direct costs incurred by the lessee, an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories.

    Lease payments are evenly distributed between finance expenses and a decrease of a lease liability so that a constant periodic rate of interest is produced on the remaining balance of the lease liability. Finance expenses are recognized in the consolidated statement of profit or loss.

    In respect of subsequent accounting for a leased property the same accounting policies are applied as for the owned assets, e.g. depreciation policy.

    # Asset retirement (decommissioning) obligations

    The Company has asset retirement (decommissioning) obligations associated with its core business activities.

    The Company's exploration, development and production activities involve the use of wells, related equipment and operating sites, oil gathering and treatment facilities, tank farms and in-field pipelines.

    Generally, licenses and other regulatory acts require that such assets be decommissioned upon the completion of production. According to these requirements, the Company is obliged to decommission wells, dismantle equipment, restore the sites and perform other related activities. The Company's estimates of

    these obligations are based on current regulatory or license requirements, as well as actual dismantling and other related costs. These liabilities are measured by the Company using the present value of the estimated future costs of decommissioning of these assets. The discount rate is reviewed at each reporting date and reflects current market assessments of the time value of money and the risks specific to the liability.

    In accordance with IFRS Interpretations Committee ("IFRIC") Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities, the provision is reviewed at each balance sheet date as follows:

  • - Upon changes in the estimates of future cash flows (e.g., the costs of and timeframe for abandoning one well) or the discount rate, changes in the amount of the liability are included in the cost of the item of property, plant, and equipment, whereby such cost may not be negative and may not exceed the recoverable value of the item of property, plant, and equipment;
  • - Any changes in the liability due to its nearing maturity (change in the discount) are recognized in Finance expenses.
  • The Company's refining and distribution activities involve refining operations, marine and other distribution terminals, and retail sales. The Company's refining operations consist of major petrochemical operations and industrial complexes. Legal or contractual asset retirement (decommissioning) obligations related to petrochemical, oil refining and distribution activities are not recognized due to the limited history of such activities in these segments, the lack of clear legal requirements as to the recognition of obligations, as well as the fact that decommissioning periods for such assets are not determinable.

    Because of the reasons described above, the fair value of an asset retirement (decommissioning) obligation in the refining and distribution segment cannot be reasonably estimated.

    Due to continuous changes in the Russian regulatory and legal environment, there could be future

    changes to the requirements and contingencies associated with the retirement of long-lived assets.

    # Income tax

    Since 2012 Russian tax legislation had allowed income taxes to be calculated on a consolidated basis. The main subsidiaries of the Company were therefore combined into a consolidated group of taxpayers. For subsidiaries which were not included in the consolidated group of taxpayers, income tax was calculated on an individual subsidiary basis. In accordance with the provisions of the Tax Code of the Russian Federation, starting from January 1, 2023, the institution of consolidated groups of taxpayers ceased to operate.

    Deferred income tax assets and liabilities are recognized in the accompanying consolidated financial statements in the amount determined by the Company in accordance with IAS 12 Income Taxes. Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

    A deferred tax liability is recognized for all taxable temporary differences, except to the extent that the deferred tax liability arises from:

  • - The initial recognition of goodwill;
  • - The initial recognition of an asset or liability in a transaction which:
  • - Is not a business combination;
  • - At the time of the transaction, affects neither accounting profit, nor taxable profit (tax loss): and
  • - At the time of the transaction, does not give rise to equal taxable and deductible temporary differences.
  • - Investments in subsidiaries when the Company is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.
  • A prior period tax loss planned to be used to reduce the current or future amount of income tax is recognized as a deferred tax asset.

    A deferred tax asset is recognized only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can

    67

    # Social Responsibility

    forwarded to our EHS function; individual worker complaints are handled by Human Resources; and business integrity or ethics complaints are referred to our Code of Conduct hotline. By engaging each discipline as appropriate, we escalate management of the grievance upward in the company as necessary to help resolve the issue. The response team strives to complete each investigation within 14 days of the original report and to provide a response and/or resolution within 30 days. Before closing the feedback or complaint, we contact the stakeholder to confirm the issue has been adequately addressed. Trending data on grievances are reported upward to the Bakken Leadership team, composed of key senior decision makers for the Bakken asset. This approach bolsters accountability and sharing of lessons learned throughout the organization. Our internal database - the stakeholder management system (SMS) - helps us to track grievances from start to closeout.

    We receive and address concerns related to our operations. Although feedback and complaints can cover any topic related to our operations, including workplace, procurement and supplier issues or EHS concerns, the most commonly raised topics at the Bakken asset include road conditions, erosion, land reclamation, fencing, cattle guards and weed control.

    We also maintain an owner relations telephone hotline, webpage and email address through which landowners and mineral rights owners at our Bakken asset can ask questions and share concerns and complaints. While most of the inquiries through this system are requests or questions related to owner accounts, the system also serves as a separate grievance mechanism for this key stakeholder group. Our Owner Relations and Owner Support teams manage this system and use the SMS to track open inquiries and grievances and to help ensure resolution.

    In 2021, we received 315 grievances through these processes, 94% of which

    ## Engaging with Local Stakeholders on the Tioga Gas Plant Turnaround

    At the Tioga Gas Plant, Hess Midstream safely and successfully completed a scheduled maintenance turnaround in 2021, which will help to increase processing capacity, maintain a safe and reliable plant and reduce flaring from production operations. The turnaround was completed in 35 days (10 days shorter than planned) and involved more than 650 workers, including 300 who were contracted specifically for the project.

    Turnarounds of this magnitude have the potential to result in impacts to the community, such as traffic congestion from increased construction activities and inflated short term housing costs from nonlocal workers. To help mitigate these potential impacts before the turnaround commenced, Hess and Hess Midstream developed a comprehensive engagement plan and proactively engaged our local stakeholders - including local residents, businesses and government officials - to explain the project and solicit their feedback. This engagement and planning drew on personnel from various disciplines within Hess, including External Affairs, EHS, infrastructure, operations, maintenance, civil construction and human resources.

    The turnaround was originally scheduled to occur in 2020, but we chose to delay all maintenance activities until 2021, in part due to local stakeholders' concerns related to COVID-19 and our priority to keep our workforce and community safe. To reduce COVID-19 related risks associated with assembling the large number of workers required to complete this project, we implemented strict safety practices for all workers including hygiene protocols, wearing masks, social distancing, completing daily health questionnaires and regular COVID-19 testing for the entire workforce.

    Once we began to progress the turnaround in 2021, we continued this dialogue with our stakeholders to solicit their input on the effectiveness of the mitigations in place. This involved, for example, our land team regularly meeting with landowners to provide a forum to review any new emerging issues and to spread awareness of our grievance mechanism.

    Figure
    Figure Text:
    The image shows a large industrial complex with numerous towers, pipes, and structures against a sunset sky. The facility appears to be an oil or gas processing plant located in a rural area, with an open field in the foreground. Text at the bottom identifies it as "Midstream Operations, North Dakota".

    have been resolved as of May 2022. We are committed to resolving the remaining 6%, which are primarily grievances that require construction activities and are planned to be completed in the spring or summer when both weather conditions and harvest season make these activities feasible.

    ## SOCIAL RISK AND IMPACT MANAGEMENT

    When entering a new geography, commissioning a new development or expanding an existing facility, Hess uses strategic planning processes to examine

    the social, political and reputational environments; identify nontechnical risks and impacts; and develop mitigations. Where our operations are ongoing, we regularly conduct heat map reviews through our enterprise risk management process that take into account new and emerging nontechnical risks and develop mitigations where appropriate. We identify, mitigate and manage human rights issues during the strategic planning process for new and expanding operations and the regular risk reviews of our ongoing operations.

    2021 HESS SUSTAINABILITY REPORT 23

    # Lowering Our Carbon Footprint

    We are committed to reducing the carbon footprint of our operations and the products we manufacture, improving the energy efficiency of our operations, and working with others to improve energy efficiency within the manufacturing, consumer and transportation sectors.

    ## Scope 1 and 2 GHG Emissions

    In 2020, we adopted a companywide Scope 1 and 2 GHG emissions intensity reduction target to reduce our GHG intensity 30% below 2014 levels by 2030. The metric is computed by aggregating the Scope 1 emissions - direct emissions from our operations - and Scope 2 emissions - indirect emissions from the electricity and steam we purchase to support our business activities across all our organizations - divided by total manufacturing inputs.

    25% reduction in companywide Scope 1 and 2 GHG emissions intensity since 2014

    Scope 1 and 2 GHG Emissions Intensity (tonnes e/thousand boe input)

    Figure
    Figure Text:
    The image shows a circular progress chart indicating a goal of 30% reduction in Scope 1 and 2 GHG emissions intensity by 2030 from 2014 levels. The chart is color-coded with dark green representing the 2030 goal and light green showing current progress at 25% reduction.

    We have achieved this reduction through multiple initiatives, including our Focus on Energy program, the acquisition and expansion of our MPLX Gathering and Processing (G&P) business, along with our growth in renewable fuels. In fact, we increased the percentage of natural gas, natural gas liquids and renewable feedstocks delivered to our manufacturing sites from less than 1% in 2011 to approximately 40% by the end of 2022.

    Some other notable progress related to our 2022 Scope 1 and 2 GHG emissions are as follows:

  • - Since 2014, our Refining Scope 1 and 2 GHG emissions have decreased on an absolute basis by over 10% while absolute companywide Scope 1 and 2 emissions have decreased by nearly 5%, even with the expansion of our MPLX G&P and renewable fuels business.
  • - Since 2019, our companywide Scope 1 and 2 GHG emissions have decreased by over 10% on an absolute basis.
  • Overall, this metric is a direct measure of our climate performance and helps us assess progress with our energy initiatives. As we are on track to achieve this goal prior to 2030, we are currently undergoing an evaluation of this metric with plans to revise it by the end of 2024 and extend it at least through 2035.

    Companywide Scope 1 and 2 GHG Emissions Intensity (tonnes CO<sub>2</sub>e/thousand boe input)

    Actual Goal Trajectory

    Figure
    Figure Text:
    Year | Value -----|------ 2014 | 30 2016 | 28 2018 | 26 2020 | 24 2022 | 22.5 The chart shows a downward trend from 2014 to 2022, with projected values continuing to decrease until 2030. A 30% reduction goal is indicated for 2030.

    We have reduced our Scope 1 and 2 GHG intensity for the eighth straight year.

    ## Scope 3 Emissions

    MPC's Scope 3 GHG emissions reduction target covers Category 11: Use of Sold Products, which entail more than 70% of our total calculated Scope 3 GHG emissions. Informed by guidance from the Science Based Targets initiative (SBTi) and Ipieca, the target is based on refined product yields, as these represent larger emissions than our marketed volumes.

    In 2022 we achieved a 5% reduction of absolute Scope 3 Category 11 GHG emissions from our refineries since 2019. The reduction each year has varied based on utilization.

    To date, the reduction has been primarily from ceasing crude oil processing in 2020 at three refineries that were providing marginal returns and facing future regulatory expenditures. Two of these facilities have subsequently been repurposed to produce renewable diesel, helping to reduce CO<sub>2</sub> emissions in hard-to-abate sectors such as heavy-duty shipping.

    Additional details on our evolving view of Scope 3 emissions can be found on Page 12 of our annual Perspectives on Climate-Related Scenarios report.

    ## Absolute Scope 3 - Category 11 GHG Emissions (tonnes CO<sub>2</sub>e)

    Figure
    Figure Text:
    The image shows a circular progress chart indicating a 15% reduction goal for Scope 3 - Category 11 GHG emissions by 2030 from 2019 levels. The chart displays that 5% progress has been made towards this goal, represented by a light green segment, while the remaining 10% to reach the goal is shown in dark green.

    ## Capital Allocation

    At MPC and MPLX, we invest to strengthen the competitive position of our assets, increase our resilience and support the energy evolution.

    Our risk-based capital allocation strategy is designed to ensure strict capital discipline and long-term competitive returns for our shareholders. We require higher return-on-investment (ROI) thresholds for projects with greater financial and regulatory uncertainty than those with more stable cash flow and lower regulatory risk. The ROI thresholds are highest for refining investments. This has the effect of a de facto carbon price because refining projects, with the highest carbon exposure, must overcome a much higher minimum rate of return than, for instance, investments in our MPLX natural gas G&P business, with lower carbon exposure. Projects are also individually evaluated against our long-term price forecast, which considers the demand projections from various Paris aligned scenarios in alignment with our climate-related targets. This process has contributed to the significant shift in our manufacturing outputs.

    Our 2023 capital outlook projects approximately 40% of MPC's growth capital is expected to be directed toward renewables and carbon reduction projects. These projects include the remainder of MPC's 50% share to complete the $1.2 billion conversion of our Martinez, California, refinery into a renewable diesel facility, $56 million invested in a renewable natural gas (RNG) company and strategic investments to modernize and reduce nearly 1 million tonnes of Scope 1 and 2 GHG emissions at our Los Angeles, California, refinery. For MPLX, the majority of growth capital is being directed to expansion and optimization of our natural gas and natural gas liquids business.

    Does not include MPLX capital allocation ~$230 million is allocated to increase renewable fuels production and~$120 million is allocated to implement projects at the Los Angeles refinery that will reduce emissions and oxides of nitrogen and Scope and 2 GHG emissions