Performance Overview

Below are brief summaries of performance achievements and events in 2006 that underscore our commitment to operating in a responsible manner.

Corporate ESHIA

Developed in 2006, our integrated Environmental, Social and Health Impact Assessment (ESHIA) process was released as a corporate standard in January 2007. It will be implemented across the company over three years. The ESHIA process will be applied to all new capital projects to systematically identify, analyze and develop measures to enhance project benefits and mitigate environmental, social and health impacts.

Community Engagement

A record of nearly $91 million was invested in community engagement initiatives, with approximately 68 percent of these funds used to help meet basic human needs, provide education and career training, and support local businesses. Initiatives were under way in regions of Indonesia affected by the 2004 tsunami to increase educational levels and build economic capacity. We reached agreements with eight communities in Nigeria's Niger Delta as part of a new community engagement model. Stakeholder engagement was at the center of initiatives focused on employees and communities in Angola. Chevron launched an $18 million initiative to help support public education in 23 Louisiana and Mississippi school districts affected by the 2005 hurricanes.

Continued OEMS Implementation

During 2006, we continued to work to fully and effectively implement our Operational Excellence Management System (OEMS) enterprisewide. We established an operational excellence (OE) governance board responsible for endorsing OE policy, processes and decisions. A corporate standard process for identifying and managing risks, including those related to health, the environment and safety, was released companywide.

Climate Change and Energy Efficiency

Chevron continued to implement its Fourfold Plan of Action on Climate Change, which is now in its fifth year, to address climate change issues. We emitted 61.9 million metric tons of CO2 equivalent, well under our goal of 68.5 million metric tons. We continued working toward our goal to eliminate routine flaring and venting, where feasible. Our operations were 27 percent more energy efficient per unit of output in 2006 than in 1992, when the Chevron Energy Index was established.

Renewable Energy and Biofuels

Renewable energy was added as the fourth key component of our corporate strategic plan. A biofuels business unit was created to advance technology and pursue commercial opportunities related to ethanol and biodiesel. We invested in a biodiesel facility in Galveston, Texas, that will initially produce 20 million gallons of fuel per year and has the potential capacity to produce 100 million gallons per year. Several strategic research alliances were established with government and academic institutions to develop second-generation biofuels.

Board Adoption of Majority Vote Policy

In 2006, the board adopted the Policy on Stockholder Proposals Receiving Majority Approval for inclusion in the Corporate Governance Guidelines. This policy provides for board reconsideration of any proposal not supported by the board that receives a majority vote.

Health and Safety

Implementation of our HIV/AIDS policy continued. Existing programs that address road safety and contractor safety were strengthened. New initiatives were developed to heighten employees' awareness of cardiovascular health and to respond to health emergencies. Despite a high priority given to safety, there were 12 workforce fatalities in 2006. Chevron continues to vigorously review the root causes of major incidents or near misses and incorporate the results of the reviews into the OEMS improvement process.