TCFD
Task Force on Climate-Related Financial Disclosures
Kirby has committed to its stakeholders to enhancing its ESG disclosures by integrating elements of TCFD into its sustainability reporting. Established in 2015 by the Financial Stability Board (FSB), the Task Force on Climate-related Disclosures (TCFD) was asked to develop recommendations for more effective, voluntary climate-related disclosures that could promote more informed investment, credit, and insurance underwriting decisions.
The task force developed four widely adoptable recommendations on climate-related financial disclosures that are applicable to organizations across different sectors and jurisdictions. The recommendations represent core elements of how organizations operate: governance, strategy, risk management, and metrics and targets. Each of the TCFD thematic elements is reflected in the structure of our disclosures on the following pages. In this initial TCFD report, Kirby has primarily focused on scenarios in the marine transportation business which represents 98% of the company’s greenhouse gas emissions. We anticipate further enhancements, refinements, and disclosures in the future as the experience and practice of TCFD reporting becomes more common amongst global companies.

Petrochemicals are a key driver of Kirby’s growth

“The chemical sector is the largest industrial consumer of both oil and gas.”
“Petrochemicals, components derived from oil and gas that are used in all sorts of daily products such as plastics, fertilizers, packaging, clothing, digital devices, medical equipment, detergents and tires – are becoming the largest drivers of global oil demand, in front of cars, planes and trucks.”
Total petrochemical consumption outlook

Despite the decline in demand due to the COVID-19 pandemic, oil demand for petrochemical feedstock is expected to grow by 3 mb/d through to 2030, and by a further 1.5 mb/d to just over 17 mb/d in 2030.
Black Oil

- Crude Oil
- Asphalt
- Fuel Oil
- Carbon Black
- Vacuum Gas Oil
- Vacuum Tower
- Bottoms
- Bunker Fuel
- Residual Fuel
- Etc.
Pressurized

- LPG
- Propane
- Butadiene
- Isobutane
- Propylene
- Ethylene
- Butane
- Raffinate
- Natural Gasoline
- Etc.
Petrochemicals

- Methanol
- Ethanol
- Reformate
- Naphtha
- Ethylene
- Propylene Oxide
- Menoethylene Glycol
- Vinyl Acetate Monomer
- Benzene
- Ethyl Benzene
- Toluene
- Xylene
- Paraxylene
- Styrene
- Caustic Soda
- Acrylonitrile
- Etc.
Refined Products

- Kerosene / Jet Fuel
- No. 2 Oil
– Diesel Oil
– Heating Oil - Lube Oil
- Etc.
Agriculture

- Ammonia
- Ammonium Thiosulfate
- Urea Ammonium Nitrate (UAN)
- Etc.

Kirby Contributes to a Better Quality of Life Every Day
Kirby’s products and services are vital to the development of common end-products illustrated in this slide and are used by people daily. Our involvement stretches from our marine transportation business which safely and efficiently moves millions of cargo tons of petrochemicals, refined products, and agricultural liquids annually, to the environmentally friendly oilfield equipment manufactured by Kirby Distribution and Services. We are proud to play a critical role in the supply chain of countless products which create a better quality of life for people around the world.
Governance
a) Describe the board’s oversight of climate-related risks and opportunities.
Strategy: Overview
Strategy: Transition Risks
RISK:
Increased climate-change-related
regulations and disclosures
[Long Term]
- Capital investments into new technologies to improve data capture and facilitate increased disclosure
- Capital investments to retrofit existing equipment
- Increased costs for enhanced emissions reporting and oversight
- Additional administrative, compliance, and legal costs
- Proactive implementation of monitoring, data aggregation, and calculations
- Reporting in accordance with SASB, TCFD, and other reporting frameworks
- Increase monitoring of carbon emissions associated with fuel consumption associated with marine operations to identify and assess operational or technological improvements
RISK:
Changes to oil and gas exploration regulations
[Short Term]
- Distribution & Services oil and gas businesses could be impacted financially with loss of business and revenue
- Impact to market segments as the need to move certain petroleum products could decline
- Low-cost feedstock advantages for U.S. petrochemical companies could diminish, reducing production and likely limit new petrochemical plant construction
- Monitor legislation and potential regulatory/administrative proposals
- Research and monitor new trends in the industry
RISK AND OPPORTUNITY:
Transition to low-emissions technology in the marine fleet
[Long Term]
- Investment in the development of new technologies, assets, and vessels
- Retrofit equipment, modify mariner training, and adopt new practices and procedures including operating standards for new equipment
- Potential increase or decrease in operating, engineering, and asset costs
- Potential impact to valuation of certain existing vessels
- Opportunity to be an industry leader in the development and adoption of low-emissions marine equipment
- Long-term strategy of investing in efficient boat fleet, including integrating high tier standard marine engines and vessel hull design
- Early partnership with original equipment manufacturers (OEMs) regarding designs for low emission marine engines to achieve future emission standards
- Proactive engagement with customers to understand their future carbon emissions targets and develop complimentary initiatives
[Short Term]
- Development of new distribution and dealer relationships with OEMs
- Capital investment in new technologies and R&D
- Opportunity to be an industry leader in the distribution of low-emissions alternative power sources for vehicles, trucks, oilfield equipment, and power generation
- Adopt new practices and modify technician training including operating standards for new equipment
- Executive management plus Board oversight and assessment to monitor emerging innovative technologies in the marketplace
- Investment in new technologies
- Engage with OEMs to lead the transition and develop new advanced technologies
- Proactive engagement with customers to understand their future carbon emissions strategies
- Hydrogen infrastructure is extensive along the Gulf Coast; utilize this to develop knowledge about supply chain opportunities
RISK AND OPPORTUNITY:
[Medium Term]
- Unexpected changes in commodity prices (i.e. fuel costs)
- Potential impact on valuation of certain existing vessels
- Opportunity to develop an industry leading position in the development and adoption of low-emissions marine equipment
- Executive management plus Board oversight and assessment to follow market trends and stakeholder concerns
- Monitoring and disclosure of the Company’s carbon emissions with longterm targets to reduce impact on the environment
- Adopt long-term strategy to develop new efficient low carbon emission vessels
- Early partnership with OEMs to develop low emission marine engines
- Proactive engagement with customers to understand their future carbon emissions targets
[Medium Term]
- Demand for low noise, electric, or dual fuel fracking equipment could offset some of the demand for conventional fracking equipment that may be reduced due to negative perception of fracking industry
- New revenue streams for manufacturing of eco-friendly pressure pumping equipment
- Proactive engagement with customers to understand their future carbon emissions strategies
- Investment in new technologies
- Develop and construct new eco-friendly technologies and equipment to support customers transitioning away from conventional fracking equipment
RISK:
[Short & Long Term]
- Potential reduced revenue from negative customer impacts of the incident
- Increased litigation exposure, mitigation, and clean-up costs
- Higher insurance rates
- Effective U.S. Coast Guard training programs for all mariners
- Safety culture committed to Zero Harm to the Environment, Equipment and People
- Train well-prepared incident response teams and perform emergency drills with customers, stakeholders, and government authorities
- Spill contingency plans
- Approved procedures
- etted equipment
- Maintenance program and oversight
[Medium Term]
- Increased revenue opportunities from customers seeking vendors with leading ESG platforms
- Increased development costs and investments in new technologies
- Cost to retrofit existing marine equipment, train mariners, and adopt new practices and procedures
- Executive management plus Board oversight and assessment to follow trends in the marketplace
- Early partnership with original equipment manufacturers (OEMs) regarding designs for low emission marine engines to achieve future emission standards
- Proactive engagement with customers to understand their future carbon emissions targets
Strategy: Physical Risks
[Long Term]
- Loss of revenues resulting from extensive delays due to severe weather events and lower barge utilization
- Increased operating costs
- Self-insured losses for damage to equipment and facilities
- Increased litigation exposure and mitigation/recovery expenses in the event of casualties or spills
- Executive oversight of hurricane preparedness
- Robust hurricane preparedness and emergency management plan
- Proactive coordination and effective communication with the industry and government stakeholders such as the U.S. Coast Guard, Gulf Intracoastal Canal Association, etc.
- Contingency plan identifies safe berths for weather events to protect marine assets
[Long Term]
- Reduced revenue as a result of increased delay days
- Reduced revenue as a result of tow size restrictions
- Increased operating costs resulting from additional boat/horsepower requirements, reduced efficiencies, and higher maintenance
- Increased fuel consumption per ton mile
- Increased costs to mitigate and potential legal expense associated with navigation incidents
- Increased administrative costs to advocate for waterway infrastructure repairs and maintenance
- Effective leadership, participation, and involvement in forecasting, preparing for, and managing high water
- Coordination with industry peers to establish additional horsepower support
- Proactive engagement associations that can advocate waterway infrastructure repairs and maintenance
- Effective communication strategy
- Additional safety preparedness policies and procedures to manage through high water situations
- Effective training programs for mariners to safely navigate high water conditions

Risk Management
Kirby is already experiencing some of the consequences of growing climate-related risks. While many companies are forecasting what could happen in the future, Kirby is exposed to certain climate-related risks in the Company’s marine transportation business given its exposure to hurricanes and high water. In accessing TCFD disclosure and climate-related risks, the impact of weather volatility is a risk that has been identified as evidenced by a National Oceanic and Atmospheric Administration report on Global Warming and Hurricanes.
The Board has the overall responsibility for risk oversight, with a focus on the most significant risks facing the company, including climate change. The Board implements its risk oversight function both as a whole and through delegation to the Committees. Each of the Board Committees is responsible for oversight of risk management practices for categories of risks relevant to its functions, with the Governance Committee being responsible for risks and opportunities related to ESG and the Audit Committee being responsible for the oversight of the Company’s comprehensive risk management plan.
As part of our enterprise risk management process, Kirby is performing a scenario analysis of risks and opportunities associated with changing weather patterns that could have significant impact on our marine transportation operations. Scenario planning is not intended to predict the future, but to highlight potential climate change risks and better prepare the Company for possible future business interruptions and decisions.
The following slides are examples of Kirby’s scenario planning for hurricanes and seasonal high river level conditions, which are growing climate-related risks to the Company’s marine transportation business. In these scenarios, the Company has highlighted why these events are important, the potential financial and operational impacts, and the strategy, processes, and procedures management uses to mitigate the risks.
- Creates a ripple effect for customers
- End user of products may be impacted by supply shock and higher commodity prices
- Nonprofit charitable organization that provides support to Kirby employees, families, and communities affected by natural disasters or qualified family hardship
Strategy & Risk Management


Maintenance program and oversight
2020 Named Storms Impacting Kirby Operations

- Cristobal – June 7
- Hanna – July 25
- Marco – August 24
- Laura – August 27
- Sally – September 16
- Beta – September 22
- Delta – October 9
- Epsilon – October 21
- Zeta – October 28
- Iota – November 17
- Water current velocity increases which can increase the rate that barges and tugs move
- Eddies can form under river bends and water flows in different directions could create potential navigation risks
- High water conditions could increase risk of navigational incidents
- Mandated waterway closures and daylight-only travel restrictions implemented by the Coast Guard increase delays and may reduce revenue
- Reduced tow size requirements may lead to reduced revenue
- Increased operating costs for additional boats at bridges and docks
- Increased costs to mitigate and litigate potential navigational incidents
Strategy & Risk Management
Trade association
- Waterways Council, Inc. - the only national organization that advocates for a modern, efficient and wellmaintained of inland waterways, including lock and dam infrastructure, and channel maintenance
- Gulf Intracoastal Canal Association - mission is to facilitate commerce through ensuring safe, reliable, and efficient Gulf Coast waterways
- The National Waterways Foundation is a center for research and learning where industry leaders and thinkers can address public policy issues related to America's inland waterways system
- Through studies, education and training programs, grants, forums and similar activities, the Foundation helps the public to understand how to maintain our waterways system, enhance its capabilities and promote its value in the years ahead
In addition to the trend in low-emission technology, there is a potential for reduced demand for conventional oil and gas pressure pumping services as new alternative energy technologies become viable. However, Kirby is uniquely positioned in that its partnership with OEMs enables it to market its equipment to new markets. This is an emerging opportunity for Kirby, and it is one that Kirby is pursuing as a long-term strategy.
Why is the energy technology transition an opportunity for the distribution and services businesses?
- As described in Kirby’s Form 10-K, greenhouse gas emissions, including carbon emissions or energy use, have increasingly become the subject of a large amount of international, national, regional, state and local attention.
- Investors and customers are encouraging oil and gas companies to invest in emissions reducing alternatives and to consider low emission alternative energy technologies. Thus, there is increased demand for low emission oil and gas pressure pumping equipment through low-emissions technology and electrification.
- KDS is positioned as a leader due to its technology solutions. KDS designs and manufactures equipment that can significantly reduce the emissions from hydraulic fracturing.
- Through its subsidiary, S&S, it was the first to bring electric fracturing equipment to the market that reduces emissions compared to traditional diesel combustion units
- KDS has designed and is further developing natural gas power generation and energy storage systems solutions, which offer expansion opportunities into new commercial and industrial markets while reducing emissions
- Demand for low noise, electric, or dual fuel equipment is anticipated to offset reduced demand for conventional pressure pumping equipment
- Focus on industry leadership in the distribution of low-emissions alternative power sources for vehicles, trucks, oilfield equipment, and power generation
- Diversification through applying its expertise to new markets
Kirby manufactures power generation equipment that is creating opportunities in new commercial and industrial markets
Natural Gas Reciprocating Generators
- High Power Output: 2.5 MW
- High Mobility: 53’ x 8.5’ x 13.5’
- Wide Operating Range: Up to 122ºF operation
- Sound attenuated environmental enclosure
- Scalable operation with multiple generators
- Integrates with existing S&S power distribution products
- 27.5% more fuel efficient than turbines assuming zero grid power supply at net zero consumption
- Reduces CO2e by 32% resulting in the cleanest power platform available for e-frac

- High Power Density: Up to 3 MWh storage capacity
- High Power Output: Up to 3 MW
- High Mobility: 53’ x 8.5’ x 13.5’
- Self Contained: Drive-up and plug-in (no additional rig-up)
- Output Voltage Flexibility: 13,800 volt shown
- Wide Operating Range: Up to 122ºF operation
- Intelligent Operation: Advanced Battery Management System (BMS) and Power Management System (PMS)
- Highly Scalable: Platform Based Design (allows for smaller systems or use of multiple systems to meet different power demands)
- Integrated Turnkey Packages: ESS compliments existing S&S power generation and power distribution products
Strategy & Opportunity Management
Opportunity Readiness – Governance
- Executive management plus Board oversight and assessment to monitor emerging innovative technologies in the marketplace
- Monitoring state and federal policy regarding legislation impacting oil and gas production and policies to increase environmentally friendly technologies or mandates
- Monitor emerging macro level insights to better understand market trends and forecasting
Strategy
- Investment in new technologies and partnerships with OEMs to meet customer demands
- Develop and construct new eco-friendly technologies and equipment to support customers transitioning away from conventional fracking equipment
- Enable customers to achieve their carbon emissions reduction goals and commitments
- Capital investment in new technologies and R&D
- Adopt new practices and modify technician training including operating standards for new equipment
- Development of new distribution and dealer relationships with OEMs
- Industry leadership in the distribution of low-emissions alternative power sources for vehicles, trucks, oilfield equipment, and power generation
- Continue innovation and commercialization of eco-friendly pressure pumping equipment with electric, dual fuel, and low noise products that support our customers needs to reduce emissions and environmental impact.
- New revenue streams from applying natural gas power generation equipment to new markets including back-up power in commercial and industrial applications
- Develop and expand energy storage system solutions that have combined high powered storage and the capability to work in challenging operation conditions with the potential for vast application use
Marine Transportation – GHG Emissions

Kirby Corporation – GHG Emissions Summary
