Devon Energy Corporation (DVN)

Criticisms on file

• Seismic Activity and Water Disposal Concerns: Company acknowledges in 10-K that earthquakes in southeastern New Mexico, western Texas, and elsewhere have prompted regulatory and litigation concerns about possible connections between wastewater disposal in salt-water disposal wells and seismic activity. New Mexico implemented protocols limiting injection rates in response to seismic events; Texas Railroad Commission suspended disposal well permits in Northern Culberson-Reeves area due to seismicity concerns. These constraints could increase operating expenses and curtail development.

  Source: DVN 10-K, Item 1A. Risk Factors—Water Disposal
• Climate-Related Litigation Risk: Company discloses that governmental entities and other plaintiffs have brought, and may continue to bring, claims against Devon and other oil and gas companies for purported damages caused by alleged effects of climate change. Company notes heightened societal and political pressures may increase possibility of liability without regard to causation or mitigation factors.

  Source: DVN 10-K, Item 1A. Risk Factors—Climate Change and Related Regulatory, Social and Market Actions
• New York Climate Superfund Law: Company discloses it has been identified by New York as a potentially responsible party under the 'Climate Superfund Law' passed in December 2024, which provides for assessment of a fee for emitters found responsible for releasing more than one billion tons of CO2 during 2000–2018. No cost recovery demand has been received to date, but company remains exposed to future assessments.

  Source: DVN 10-K, Item 1A. Risk Factors—Climate Change and Related Regulatory, Social and Market Actions
• Hydraulic Fracturing Regulation: Company is subject to federal EPA and state-level regulations on hydraulic fracturing, including disclosure of chemicals, permitting requirements, and air emissions capture standards. Various jurisdictions have proposed restrictions or bans. Company acknowledges potential for increased compliance costs, delays, or cessation of development.

  Source: DVN 10-K, Item 1A. Risk Factors—Hydraulic Fracturing
• Federal Methane Fee (Inflation Reduction Act): IRA imposed a methane fee on excess emissions from petroleum and natural gas facilities starting 2024, initially increasing through 2026. Current U.S. administration delayed imposition until 2034, but company cannot predict future changes or repeal.

  Source: DVN 10-K, Item 1A. Risk Factors—Climate Change and Related Regulatory, Social and Market Actions

Disclosed initiatives

• Methane Emissions Reduction Program

  Expanded leak detection and repair (LDAR) program; deployment of advanced optical gas imaging and other leak detection technologies; reduction of flared volumes and flaring intensity (72% reduction in flared volumes, 76% intensity reduction 2019–2024)

  45% reduction in methane emissions intensity 2019–2024
• Water Stewardship & Recycled Water Use

  Target to use 90% or more non-freshwater for completions activities in Delaware Basin; recycled water usage in 2024: 95 million barrels

  14% year-over-year increase in recycled water use 2023–2024
• Facility Electrification

  Electrifying facilities to reduce on-site natural gas and diesel consumption; optimizing facility design to minimize leaks and equipment failures

  Contributes to Scope 1 & 2 emissions reductions; capital allocation ~$100M annually for emissions-reduction projects
• Capital Allocation to Emissions Reduction

  Approximately $100 million in 2025 capital expenditures directed toward projects that directly or indirectly result in emissions reduction; anticipates similar spending in 2026

  Operational emissions intensity improvements; no structural transition away from fossil fuel production

Criticisms on file

No material criticisms on file for this pillar.

Disclosed initiatives

• Employee Compensation and Benefits

  Competitive annual bonuses; 401(k) with Devon contribution up to 14% of earnings; stock awards for all employees; medical, dental, vision coverage; health savings and dependent-care FSAs; maternity and parental leave; adoption assistance; alternate work schedules; flexible hours; part-time options; telecommuting; four-week Paid Family and Medical Leave for all employees; health care premium suspension (continued).

  Company reports strong productivity, low absenteeism, and high retention rates
• Employee Wellness Programs

  Comprehensive wellness benefits including annual physical exams, preventive health screenings, financial wellness series (all at no cost); mental health counseling (365 days/year, 24/7); Employee Assistance Program (EAP) with free counseling, financial experts, staff attorneys, elder-care consultants.

  Supports employee physical, mental, and financial well-being
• STEM Education and Community Investment

  188 STEM centers opened in elementary and middle schools across operating regions since 2019; $1.5M STEM investment in 2024; training and orientation for workforce safety and development; community partnerships focused on social services, environment/conservation, emergency response, arts/culture, and STEM.

  108,805 students and 3,163 teachers impacted through STEM programs in 2024; record $2.78M raised for local food banks and United Way agencies in Give for Good campaign
• Safety Training and Workforce Development

  Comprehensive safety training, on-the-job guidance, safety engagement and recognition programs; continuous training and drills for emergency response; performance-based training and development conversations for career advancement.

  Emphasis on workplace safety culture and continuous learning; commitment to preventing disruptions and ensuring workforce preparedness
• Diversity, Equity, and Inclusion Culture

  Company policies and leadership commitment to equal opportunity in all aspects of employment; emphasis on bringing range of thoughts, experiences, and points of view to problem-solving and decision-making; focus on creating workforce with integrity, accountability, perseverance, and results-driven mindset.

  Stated cultural objective of inclusion and belonging; specific quantified metrics not provided in 10-K excerpts

Criticisms on file

• Proposed Climate-Related Shareholder Activism and Anti-ESG Scrutiny: Company discloses in 10-K that it faces heightened scrutiny from both pro-climate stakeholders (advocating ESG goals) and anti-ESG actors (opposing diversity, equity, inclusion programs and sustainability initiatives). Regulatory bodies and NGOs have filed lawsuits alleging greenwashing or misleading ESG statements. Company acknowledges reputational risk and market access restrictions from these competing pressures.

  Source: DVN 10-K, Item 1A. Risk Factors—Our Environmental Performance Targets and Other Sustainability Initiatives May Expose Us to Risks
• Federal Lands and Regulatory Permitting Risk: Company operates approximately 15% of total acreage on federal lands (Delaware and Powder River Basins). 2024 Department of Interior rule enhanced bonding, increased royalty rates, rental rates, and minimum bids for federal leases. NGOs and trade groups have filed lawsuits challenging federal leasing and permitting decisions. Company acknowledges potential for future regulatory restrictions or delays impacting operations on federal lands.

  Source: DVN 10-K, Item 1A. Risk Factors—Federal Lands
• Regulatory Exposure on Climate Disclosure and Reporting: SEC finalized climate disclosure rules in March 2024 requiring extensive climate-related disclosures; rules were stayed in April 2024 pending judicial review. Current U.S. administration declined to defend rules, resulting in indefinite stay. California enacted climate disclosure legislation in October 2023; similar laws proposed in other states. Company acknowledges uncertainty regarding applicability and substantial compliance costs if disclosure mandates are enforced.

  Source: DVN 10-K, Item 1A. Risk Factors—Climate Change and Related Regulatory, Social and Market Actions
• European Union Sustainability Reporting and Due Diligence Directives: Company discloses that EU enacted Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive imposing expansive sustainability reporting and due diligence requirements for EU and certain non-EU companies. Company is still assessing applicability but expects substantial compliance costs and heightened risk of greenwashing allegations if directives apply.

  Source: DVN 10-K, Item 1A. Risk Factors—Climate Change and Related Regulatory, Social and Market Actions

Disclosed initiatives

• Board Independence and Governance Structure

  11-member Board with 82% independence (9 independent directors); Lead Independent Director appointed May 2026; Board committees include Audit, Compensation, Safety/Operations/Resource, Governance/Environmental/Public Policy, and Dividend committees; all Board members attended 92%+ of meetings in 2025.

  Strong independent oversight; committee structure addresses strategic, risk, and compliance matters
• Code of Business Conduct and Ethics

  Company has adopted comprehensive Code of Business Conduct and Ethics covering harassment/discrimination prohibition, conflict-of-interest protocols, anti-corruption laws, privacy, cybersecurity, and confidential information. Annual acknowledgment and training required for all employees, directors, and officers. Retaliation-minimizing reporting systems in place.

  Establishes culture of compliance and ethical conduct across organization
• Insider Trading Policy and Securities Compliance

  Policy prohibits trading while in possession of material nonpublic information (except Rule 10b5-1 Plans); blackout periods and preclearance procedures for Directors, officers, and designated employees; prohibition on short-term trading, short sales, puts/calls; prohibition on hedging, margin accounts, and pledging by Directors and officers.

  Aligns insider conduct with securities laws and exchange listing standards; reduces conflicts of interest
• Environmental and Sustainability Governance

  Board's Governance, Environmental, and Public Policy (GEPP) Committee oversees environmental policies, performance, sustainability strategy, and integration into business decisions. GEPP Committee reviews environmental targets, sustainability reporting, and stakeholder feedback on ESG matters.

  Elevates EHS oversight and strategic integration of sustainability into capital allocation and business planning
• Cybersecurity Governance

  Cybersecurity awareness training required during onboarding and refreshed frequently; security operations team professionals required to earn industry certifications; alignment with NIST Cybersecurity Framework for risk assessment; training on emerging threats (malware, ransomware, phishing).

  Institutional readiness for digital security threats; reduced cybersecurity risk exposure