Independent Assurance Report to Cairn Energy PLC

Cairn Energy PLC ("Cairn Energy") appointed ERM to provide independent assurance on selected information presented in its online 2009 Corporate Responsibility Report ("the CR Report").

Our brief

We were asked to provide independent assurance on the following subject matters:

• Selected Corporate Responsibility ("CR") KPIs:
  • Staff, contractor and third party fatalities (number of);
  • Lost time injury frequency rate (number of lost time incidents per 1,000,000 hours worked);
  • Total energy consumption (GJ);
  • Water consumption (m³);
  • Number and volume of oil spills to the environment (number and volume);
  • Amount of oil discharged in water (tonnes per million tonnes of hydrocarbon);
  • Social investment expenditure (Total expenditure in GBP);
  • Total direct greenhouse gas emissions (tonnes of CO₂ equivalent, and tonnes of CO₂ equivalent per million tones of hydrocarbon); and
  • NOx emissions (tonnes).
• Cairn Energy's CR Report's status of compliance against the GRI G3 Guidelines to level C+.

Our approach

Standards and criteria used

We delivered our work in accordance with ERM's assurance methodology which is based on the following international assurance and audit standards: ISAE 3000, ISO14064:3, and ISO 19011.

We planned and performed our work to obtain all the information and explanations that we believe were necessary to provide a basis for our assurance conclusions as to whether the reported information and data set out in the 'Our Brief' was appropriately reported.

We used Cairn's own definition of the selected CR KPIs as assessment criteria when undertaking our data systems review work. These are presented in more detail in the CR Report. Similarly, we used the GRI C level requirements as our criteria for the above subject matter B.

If we had been asked to conclude on whether the selected disclosures are materially accurate, we would have needed to conduct more work at corporate and site levels and to gather further evidence to support our assurance opinion.

The reliability of the reported information and data is subject to inherent uncertainties, given the available methods for determining, calculating or estimating the underlying information. It is important to understand our assurance conclusions in this context.

Our work

A multi-disciplinary team of corporate responsibility and assurance specialists performed work at Corporate level as well as at selected assets, and relied on the assurance work done by ERM India for Cairn India Limited on its 2009 IFC Annual Monitoring report in relation to the above subject matters. Our assurance activities included:

• Face-to-face interviews at Corporate level to understand the processes in place for reporting CR data and the underlying data management system. These were followed-up with a review of relevant documentation;
• Face-to-face interviews with country-level CR managers for key areas of operation (India, Bangladesh, Greenland, Tunisia, Albania) to test CR data reporting and application of GRI requirements;
• Reviewing and testing of selected evidence for the selected assurance subject matters e.g. design of CR report in accordance to GRI requirements, and data measurement, collection and reporting processes;
• Reviewing and relying upon the outcome of the report assurance work undertaken at Cairn India Limited by ERM India (e.g. assessment at two operational sites as well as Head Office reviews and interviews);
• Reporting our assurance findings to management as they arose to provide them with the opportunity to correct them prior to finalisation of our work; and
• Review of the presentation of information relevant to the scope of our work in the CR Report to ensure consistency with our findings.

Respective responsibilities and ERM's independence

Cairn is responsible for preparing the CR Report and for the information in it. ERM's responsibility is to express our assurance conclusions on the agreed brief.

During 2009, ERM has worked with Cairn on other consulting engagements. ERM operates strict conflict checks and we have confirmed our independence to Cairn for delivering our assurance.

Environmental Resources Management Limited (ERM)
Edinburgh, UK, 16 April 2010

ERM is an independent global provider of environmental, social and corporate responsibility consulting and assurance services. Over the past 4 years we have worked with over half of the world's 500 largest companies, in addition to numerous governments, international organisations and NGOs.

Our assurance statement provides no assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular whether any changes may have occurred to the information since it was first published. These matters are the responsibility of Cairn Energy but no control procedures can provide absolute assurance in this area.