About this report

This is Cairn's CR Report 2009, the 10th annual review of our CR performance.

Scope and Boundaries

This report covers the global operations of Cairn Energy from 1 January to 31 December 2009. It was launched on 19 April 2010.

We have adopted an 'operational control' approach, reporting on those operated assets over which we have significant influence in terms of CR Policies and practices. This includes Cairn India's operated assets and operated assets in Bangladesh, Nepal, Greenland, Tunisia and Albania. This report does not cover any non-operated assets.

Data

We measure our CR performance across the Group using a number of KPIs. Data for the business activities in different regions is recorded separately within a database that defines the KPIs to be measured and the frequency of recording. There are separate databases covering Cairn India and rest of Cairn. Data approval and updating is tracked within both databases.

HSE data represents total emissions, effluents, discharges and incidents occurring as the result of our operated activities, including operated joint ventures with other companies. HSE data covers production and exploration sites, and country head office locations in India, UK, Bangladesh, Nepal and Tunisia.

For all health and safety data and most environmental data, we use the definitions set by the International Association of Oil and Gas Producers (OGP) to provide comparable and credible data that can be benchmarked against our peers in the oil and gas sector. The main focus of the environmental data is direct emissions of greenhouse gases, namely carbon dioxide and methane. Emissions of these gases are quantified in accordance with the Methods for estimating atmospheric emissions from E&P operations (OGP 1994). Although the data as presented within this Report provides a good indication of our performance, we recognise that using 1994 emission factors is not best practice. Going forward, we will adopt and report according to the more recent Compendium of Greenhouse Gas Emissions Estmiation Methodologies for the Oil and Gas Industry (API, 2009). This is expected to increase materially the reported emissions for greenhouse gases and the results utilising this updated methodology will be presented later in 2010. This comment with regards to our Greenhouse Gas Emissions data also applies to the other air emissions performance we are reporting on, i.e. NOx, SOx and VOCs.

Content

Our aim is to report on all significant topics of common concern to our stakeholders. The issues addressed in this report – and the emphasis they have been given – were assessed by specialists within the business and approved by our Group CR Committee.

This report complements the Company's Annual Report and Accounts which contains detailed financial and operational information on the Group's wider activities during 2009, and may help in understanding the sustainability of our business.

Our Reporting

We have reported our CR performance annually since 2001, and our last CR report was issued in May 2009. Copies of all CR-related reports can be found at www.cairnenergy.com/corporate-responsibility/reports/.

Reporting Standards

In this report, we have made reference to the third version of the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines, known as G3, and been guided by its principles of materiality, stakeholder inclusiveness, sustainability context and completeness, and the qualities of balance, comparability, accuracy, timeliness, clarity and reliability. The G3 guidelines define three application levels for reports and allow self-assessment against them. We have assessed this report at Level C+ but have sought internal assurance against our progress towards Level B+.

Please see the GRI content index for details of the information contained within this report that meets the GRI's criteria.

External Assurance

Environmental Resources Management (ERM) has again provided independent assurance of selected information found in this report. ERM's assurance statement includes:

• our compliance against the GRI G3 Guidelines requirements; and
• selected data and Key Performance Indicators (KPIs).

The following logo   has been associated with the selected disclosures which have been provided assurance on. For details on ERM's assurance work and conclusions, please refer to their assurance statement.