FAQ| IR

s-oil

Owners & Other Stakeholders

C·E·O

Sustainability management at S-OIL starts from understanding the expectations of C.E.O. (Customers, Employees, Owners & other stakeholders). Going forward, the Company will create economic, environmental, and social values reflecting the expectations of C.E.O. and contribute to the development of society and the nation.

S-OIL has been investing in the RUC/ODC Project based on a stable financial structure with the aim of laying the foundation for sustainable growth. The Company is also proactive in transparently and accurately disclosing management information to protect stakeholders’ interest as well as pursuing shared growth with business partners. We are not only joining climate change response activities conducted at the global level but also carrying out differentiated environmental management activities. Our social contribution is implemented in line with our management strategies in order to pursue co-prosperity with local communities.

Investment in New Projects

To realize the Vision 2025 aimed at evolving into the most competitive and admired energy & chemical company in Asia Pacific, S-OIL has been promoting the Residue Upgrading Complex & Olefin Downstream Complex (RUC/ODC) Project since 2015 after receiving approval from the BOD. In addition, the Technical Service & Development Center (TS&D Center) is under construction with the aim of strengthening technological competitiveness needed for developing petrochemical downstream products and ensuring smooth technical support for customers.

Successful Progress of the RUC/ODC Project

Through years of meticulous examination into the strategic directions, S-OIL has been implementing the RUC/ODC Project by investing about KRW 4.79 trillion, the largest investment in its history. As of the end of 2016, about 35% of the entire process was completed with favorable progress in all areas, including detailed design, procurement, and construction. Detailed design was perfectly finished with a 3D modeling technology in view of the stability of facility operation, operational efficiency, and maintenance conditions. Currently, the blueprint is being produced in line with the construction schedule on time. We selected suppliers and contractors through a fair and transparent bid process and have made assurance for quality control and timely supply of materials. The construction processes, including civil engineering, steel-frame works, plumbing, and equipment installation, are being actively implemented. S-OIL will strive to ensure high-quality construction management and strict onsite safety control to make this project move forward as planned. Now we are also setting up plans for commissioning before the commercial operation in 2018. Upon the completion of the RUC/ODC Project, S-OIL will demonstrate its unrivaled competence to produce high value-added products such as gasoline by capitalizing on residue, thereby increasing profitability from the fuel business. This project will also allow us to produce high value-added petrochemical products including polypropylene (PP) and propylene oxide (PO), which will ensure high profitability and stable business diversification. S-OIL will focus its capabilities on successfully completing the RUC/ODC Project in order to enhance competitiveness and eventually increase corporate value. The International Maritime Organization (IMO) intends to significantly strengthen global sulfur cap on marine fuel from 3.5% to 0.5% in order to protect the atmospheric environment. This is a great risk for oil refineries that do not have sufficient desulfurization facilities. The RUC/ODC Project will significantly increase the capacity of our desulfurization capacity and it is an optimal response to sulfur regulations.

Enhancement of Technical Service Capabilities for the Petrochemical Downstream Business

In the petrochemical downstream business with a wide spectrum of products, it is essential to enhance Technical Service capabilities needed for product development and technical assistance tailored to meet market needs. To this end, S-OIL started the construction of the TS&D Center on a site spanning 29,100 square meters in the Magok Industrial Complex, Seoul, in 2016. The construction of the Chemical Pilot Building and the Lube Test Building is progressing favorably with a schedule of completion set in 2017, which will contribute to enhancing R&D capabilities for the petrochemical downstream business and the existing lube business, respectively. The Company also gives impetus to building systems and processes to support the development of value-added products and core technologies. Diverse joint researches with prestigious colleges have been conducted since 2015 with the aim of cultivating talented researchers and securing technological competitiveness. In 2016, we started the development of a variety of training programs in cooperation with major technical partners. Going forward, the TS&D Center will play a key role in securing new technologies as well as supporting existing businesses, contributing to developing new business opportunities and creating future growth engines.

Improvement of Operational Efficiency

Promotion of the SUPER Project

In order to elevate the profitability of existing production facilities, S-OIL is promoted the SUPER Project (S-OIL Upgrading Project of Existing Refinery) for Onsan Refinery. This project aims to secure higher process volume of production facilities, increase the production capacity of high value-added products, extend the repair cycle, and reduce energy consumption. Started in 2015 after receiving approval from the BOD, the SUPER Project has been implemented in three packages in consideration of construction volume, level of difficulty in revamping by process, schedule by process, and work efficiency. The first stage of the package-1 project to upgrade the hydrocracking process, completed in 2015, allowed us to increase the production capacity of kerosene, diesel, and lube oil as well as to extend our repair cycle to four years. The second stage of the package-1 project aimed at lube upgrading and RFCC upgrading, completed in 2016, contributed to increasing the production capacity of lube oil, gasoline, propylene, and steam, and reducing energy consumption with the extension of the repair cycle. The package-2 MHC (Mild Hydrocracker) revamping project, completed in 2016, increased the diesel production capacity by over 20 thousand barrels, upgraded diesel quality, and reduced the use of additives. The annual production capacity of para-xylene rose by 140 thousand tons backed by the completion of the first stage of the package-3 CFU/Aromatics revamping project in 2015. Upon the completion of the second stage in the 1st half of 2017, the production capacity of aromatics further increases as crude oil can be treated through the CFU. The Company sees the SUPER Project creating higher profits compared with the investment of KRW 370 billion. The profitability improvement effect of this project amounts to KRW 200 billion a year in consideration of current oil prices. We expect it to reach KRW 230 billion when completed the second stage of the package-3 project in 2017 and to create approximately 130 thousand jobs every year. Our strict safety control has tolerated no industrial accident until now.

Profitability Improvement Activities

S-OIL has made a concerted effort to improve operational efficiency by minimizing loss factors throughout all processes from import of crude oil to production and market distribution. Major focuses have been on optimizing operational conditions of production facilities, increasing production capacity of high value-added products, and reducing fuel consumption. To this end, a dedicated team was organized to monitor and control the quantification of profitability and diverse relevant indices in a consistent manner. The profitability improvement reward system and the company-wide proposal system were launched to encourage employees to join the activities. As a result, we achieved an estimated profit increase of KRW 190.5 billion in 2016.

Reduction of Energy Consumption and Efficiency Improvement

The Company has reduced energy consumption by commissioning professional consulting agencies and gathering the ideas of engineers. In 2016, we reduced GHG emissions of 61 thousand tons and created profitability improvement of KRW 2.5 billion through successful commercial operation of waste heat power generation facilities. The introduction of low cost steam from LS-Nikko Copper and Korea Zinc Company around our Onsan Refinery has allowed us to cut energy consumption and those companies to create additional profits. S-OIL will continue to explore new items for shared growth in energy by cooperating with neighboring suppliers, participating in government-led energy efficiency policy and pushing to become a refinery with the highest energy efficiency in the Asia Pacific.

Realization of Work-Smart by Upgrading IT Systems

S-OIL has been creating the Work-Smart environment by capitalizing on IT systems with the aim of swiftly and flexibly responding to changes of management surroundings and conducting work more efficiently. In 2016, upgrading the ERP-BW Analytics system enabled information analysis to be more convenient and competitive, and revamping the ERP for polymer premarketing also supported the RUC/ODC Project in an efficient manner. Moreover, upgrading and dualizing the ATSS (Automated T/T Scheduling System) server ensured higher safety and efficiency in product transportation, while replacing outdated IT infrastructure improved stability and performance of entire IT systems.

Establishment of Financial Soundness / Transparent Management Information Disclosure

Maintenance of a Stable Financial Structure

To ensure stable fundraising and financial soundness, S-OIL monitors major financial indices on a regular basis and makes financial decisions based on the results. Particularly, our credit ratings from both domestic and foreign credit rating agencies have remained at a high level backed by proactively managing key indicators needed for credit evaluation. Credit rating agencies have highly appreciated our credit rating in consideration of S-OIL’s strategic importance to Saudi Aramco and increasing possibility of business and financial support from the parent company as well as our excellence in financial soundness. For these reasons, despite large-scale capital financing for the investments in new projects, S-OIL has maintained the highest credit ratings among domestic refiners.

Securing Financial Resources for Sustainable Investment

S-OIL has been raising large-scale funds on competitive terms and conditions for the successful completion of the RUC/UDC Project by capitalizing on its financial excellence. For example, the Company signed an agreement on a KRW 1.5 trillion long-term loan for facility construction and a KRW 1.2 trillion standby credit line commitment with nine financial companies, securing financial flexibility that helps raise funds any time during the project. What’s more, we have secured KRW 400 billion in 2015 and KRW 700 billion in 2016 by issuing corporate bonds at the most competitive conditions in the financial market. These results allow us not only to reduce financial costs but also to preemptively respond to possible interest rate increase risks. Meanwhile, S-OIL has secured KRW 4.2 trillion in available cash as of the end of 2016 by achieving record-high operating performance. By capitalizing on funds raised by an optimal plan and cash flows generated by business activities, S-OIL will push ahead with the largest-ever investment project in its history without setbacks.

Budget Management for Efficient Resource Allocation

The Company makes up and executes its budget in a systematic manner to ensure efficient allocation of fund resources. The ZBB (Zero Base Budgeting) system is operating to avoid waste in the budget and formulate optimized budget that is organically linked with corporate management policies and strategies, and a strict review of budget management departments should be preceded before executing the budget. In 2016, we also focused on minimizing waste in the budget and reducing costs at the enterprise level in order to support the successful completion of the RUC/UDC Project. Going forward, the systematic and objective setup and execution of the budget will continue to improve the efficiency of resource allocation.

Honest Tax Payment

S-OIL believes honest tax payment is one of its responsibilities for the development of the national economy and local communities as a corporate citizen. Therefore, we always comply with tax related laws and regulations and pay our taxes faithfully according to our tax policy. Moreover, detailed tax items such as corporate tax, deferred corporate tax, and the available tax rate are reported on through the independent auditors’ report and disclosed to the public through the DART system as well.
Tax Policy
With a belief that honest tax payment is one of its responsibilities for the development of the national economy and local communities as a corporate citizen, S-OIL complies with the following tax policies.
  1. We faithfully comply with tax related laws and international standards (OECD guidelines, etc.).
  2. We disclose tax payment results based on timeliness, transparency, and clarity principles.
  3. We do not practice tax accounting that is abnormal or that distorts the original intention of tax law.
  4. We respect local tax regulations in countries or regions where we do business.

Balanced Performance Sharing

We promote a rational dividend policy aimed at harmonizing internal capital reserves and the return of profits to shareholders, thereby maximizing corporate value and increasing shareholder value. Despite the largest-ever investments, S-OIL paid a record-high dividend in 2016 backed by achieving excellent operating performance and retaining financial soundness. The Company will continue to return profits created through business activities to shareholders in consideration of financial conditions, the level of profit reserves, and debt redemption ability, pursuing shareholder-centric management.

Compliance with Disclosure Regulations

In order to enhance shareholder trust and comply with disclosure regulations, S-OIL is proactive in monitoring enactment and amendment of relevant regulations and offering education on those matters to employees, which prevents omissions of disclosure items. In 2016, we educated all employees about what we should pay attention in accordance with amended disclosure regulations. As a result, we were able to transparently announce our management information to shareholders and investors by disclosing 55 items with no violation of disclosure regulations in 2016. Education on disclosure will continue with the aim of raising the awareness of the importance of transparent disclosure and ensuring compliance with regulations.

IR Activities to Enhance Corporate Value

S-OIL is working on IR activities to provide shareholders and investors with management information and enhance corporate value. For example, we survey analysts about their satisfaction on our IR activities every year and then reflect the results in upgrading the quality of IR activities. In particular, the major focus of the IR in 2016 was on delivering correct information on the RUC/ODC Project as well as the favorable business environment. We conducted non-deal road shows eight times and participated in large-scale IR conferences seven times in 2016. We will make efforts to actively announce the anticipated effects from the completion of the RUC/ODC Project more efficiently in order to be held in high esteem by shareholders and investors.

Management of Sustainability in Supply Chain

Improvement of the Procurement Process

Transparency, objectivity, and fairness in procurement have innovatively improved since the introduction of new systems such as Auto-Invitation and Blind-Bidding in 2013. Procurement of goods and services is initiated through automatically inviting all suppliers who joined each sourcing group through preliminary reviews of the Sourcing Group(SG) Deliberation Committee in accordance with the Auto-Invitation procedure. And then main suppliers are selected through the Blind-Bidding procedure guided by automatic quotation bidding of the e-Procurement system. This new procurement process enables the selection of suppliers to be more transparent and fair. We plan to consistently upgrade our procurement process by activating communication with suppliers.
Critical Suppliers: 18 companies including Saudi Aramco
Selection Standards
  1. Stable and sustainable crude oil supplier: Saudi Aramco
  2. Irreplaceable supplier
  3. Long-term stable maintenance service supplier
  4. Patent supplier such as main process licensor

Improvement of the SRM System

The Company has been operating the SRM (Supplier Relationship Management) system since 2010 with the purpose of selecting suppliers in a fair and transparent manner. The SRM system ensures objectivity and reliability as supplier evaluation is conducted on the basis of the Korea Enterprise Data (KED)’s credit ratings and performance assessment on suppliers.

Systematic Supplier Sustainability Management

The Company established the zero accident of safety & environment and the ethics management as the goal of supply chain sustainability management, and systemically manages its suppliers. The Company evaluates not only suppliers’ basic competence such as financial stability and technological prowess but also their sustainability competence encompassing business ethics, conflicts of interest, safety, and the environment. Bidding opportunities are given to only suppliers who pass the evaluation process, and all suppliers are required to be reevaluated annually. When there is necessary to conduct an in-depth evaluation due to risks, etc., we conduct in-depth evaluations through the SG Deliberation Committee consisting of professionals in the fields of compliance, technology, and management. In 2016, a total of 144 suppliers were evaluated by the SG Deliberation Committee. Suppliers who fall short of the standards or have disqualifications in the aspect of sustainability are excluded from the sourcing group. Moreover, suppliers of S-OIL are required to submit and practice a pledge on complying with our Code of Ethics. The Company has invited suppliers for training on our procurement system and our Code of Ethics and checking their compliance every year since 2013. In 2016, a total of 413 suppliers were invited to this program.
Ethics Policy for Suppliers
S-OIL’s suppliers shall comply with the S-OIL Supplier Ethics Policy as stated below and shall make efforts to build sustainable supply chains.
  1. We comply with international ethics-related regulations as well as anti-corruption and anti-bribery regulations as a member of the nation and local communities.
  2. We do not carry out any illegal act such as bid rigging that affects cost estimates.
  3. We do not provide or promise to give valuables or entertainment to project owners.
  4. We eliminate discrimination in terms of gender, race, nationality, disability, religion, and union activity.
  5. We respect business partners and their employees, and do not have an impersonal manner. We do not restrain employees’ physical and psychological freedom illegally, and we do not force people to work against their will.
  6. We comply with the working hour requirement and the minimum wage as determined by labor-related laws and regulations.
  7. We prohibit employment of minors under the age of 15, and exclude employees under the age of 18 from work with higher potential health and safety risks.
  8. We guarantee the freedom of association, and prohibit any disadvantage from it.
  9. We comply with labor conditions determined by labor-related laws and regulations in each country and region.
  10. We provide employees and relevant staff with a safe and healthy work environment, and take proper action to prevent them from being exposed to potential safety risks.
  11. We comply with environmental laws and regulations, and recognize that environmental protection is our basic social responsibility.
  12. We strive for continuous job creation, and implement social contribution activities for the development of local communities and the national economy.
  13. We make our best effort to apply S-OIL’s procurement policy to our suppliers.
Direction of Supply Chain Sustainability Management
  • Enhancement of fairness and transparency in the selection of bidders by systematically improving the supplier evaluation process
  • Saving on purchasing prices and quality management costs through the differentiation of suppliers
  • Integration of procurement processes & enhancement of interactive information sharing with the suppliers
  • Enhancement of collaboration with outstanding suppliers
  • Provision of adequate information to support decision-making for effective purchasing

Environment Management

To minimize pollutant discharge and environmental impacts, S-OIL has been operating a methodical environmental management system and preemptively responding to diverse environmental regulations.

Methodical Environmental Management System

Environmental Management Strategy and System
At S-OIL, preemptive green management has been the first priority of its environmental policy. We not only produce high-quality eco-friendly products by continuously revamping production processes and introducing new technologies, but also secure environmental impact reduction facilities such as desulfurization, denitrification, wastewater treatment, and dust collection facilities. Since 1996, ISO 14001 has been adopted to all production processes and terminals step by step, which has enabled us to carry out systematic environmental management activities throughout the entire product life cycle. Moreover, our environmental management system has been upgraded by continuously increasing environmental investment, conducting objective evaluations on environmental performance, and operating the ISO 14031 certification. The environmental performance evaluation process includes selecting environmental indices, gathering and analyzing environmental data, assessing environmental performance, conducting regular reviews and making improvements to help stakeholders and the management make decisions.
Environmental Accounting (EA) System
S-OIL established and has been operating an in-house environmental accounting system in accordance with the government’s guidelines with the aim of objectively judging environmental investments and their ensuing performance as well as practicing the philosophy of environmental management. In 2016, our environmental investment focused on replacing pump dual seals, introducing digital TMS to prevent the direct emission* of HAPs (Hazardous Air Pollutants) and improving energy efficiency. Going forward, the Company will continue to develop mid- and long-term environmental investment items to take the initiative in environmental management.

Environmental Pollutant Control and Environmental Effect Evaluation

Air Pollutant Control
S-OIL has in place much stricter in-house emission standards than legally required to reduce air pollutants. Using clean by-product gases and low-sulfur fuel oil as fuel, S-OIL commits itself to cutting emissions. We have made continued investment in environmental facilities such as ULNB (Ultra Low NOx Burner) and SCR (Selective Catalytic Reduction), and electrical precipitator, which resulted in maintaining a high rate of pollutant control. In addition, the LDAR (Leak Detection and Repair) systemically controls the direct emission of HAPs, which may be produced during product storage, delivery, and processing, into the air without being filtered by vents as prescribed by the enforcement decree of the Ministry of Environment. Since 2015, we have expanded the LDAR management point from the existing 130,000 to 430,000 points, efficiently innovatively reducing the leakage rate of HAPs. In 2016, we strictly controlled the leakage density under 500 ppm compared with the legal 2,000 ppm, resulting in lowering the rate of fugitive emissions to 0.13%. Meanwhile, S-OIL is upgrading facilities based on ready-made in-house guidelines in response to the Clean Air Conservation Act, which was amended in 2015 for tightening fugitive emissions of HAPs. In addition, we signed an agreement on autonomous environmental management aimed at reducing 31% of benzene discharge by 2017, compared to that of 2009. In response, the Company set up its internal reduction target at 50% and thoroughly controlled benzene emissions, resulting in outperforming the target and reaching 65%.
Water Quality Control
S-OIL runs a waste water treatment plant in a stable manner to minimize the impact on the nearby sea. Waste water is treated by physical, chemical, and biological methods at the plant to ensure pollutants are effectively removed. The Tele-Metering System (TMS) transmits data on water quality to administrative agencies in real time in preparation of an emergency. These efforts have resulted in the Company being recognized as a leading business in TMS operation in 2015. S-OIL also expanded rainfall storage tanks and strengthened monitoring of 20 kinds of specific substances harmful to water quality such as Cu, Pb, and As, contributing to improving water quality
Soil Environment Control
The Company carries out regular checks as well as legally mandatory inspections to prevent soil pollution in plant areas, including terminals. We also continue to improve facilities in a systematic manner by laying pipes on the ground instead of underground. Signing the “Voluntary Agreement on Soil Environmental Protection” with the Ministry of Environment, S-OIL conducts not only voluntary soil pollution inspections on its terminals and service stations but also prompt soil restoration activities in case of discovering soil pollution. To follow the agreement, we conduct legal inspections as necessary to monitor soil pollution while carrying out voluntary inspections every three years to prevent soil pollution. Moreover, our new and remodeled service stations are built with the concept of “Clean Service Station.” Clean Service Stations are environmentally-friendly facilities as they prevent leakage of pollutants with double-layered tanks and pipelines. Even if pollutants are leaked, leakage sensors and alarms go off instantly, stopping spread of pollution in a swift manner.
Waste Control
S-OIL has strived to reduce waste discharge while increasing the recycling rate to create a virtuous circle of eco-friendly resources. We have maintained a high rate of waste recycling by strictly practicing separate waste collection. In 2015, S-OIL participated in the “Industrial Sectors’ Declaration for Sustainable Korea 2030,” affirming its strong commitment to enhancing the nation’s resources circulation and resources productivity. Other activities for better waste control include discovering competitive waste recycling companies and upgrading waste control facilities for preventing fire accidents and pollutant emissions. We will continue to invest in technology development to improve the recycling rate.
Prevention of Hazardous Substance Leakage
S-OIL has systematic response procedures to prevent leakage of hazardous chemical substances on land under which facilities are subject to regular inspection and drills are held to beef up emergency response capabilities. For example, we have installed oil spill detectors in more than 30 rain water drains and monitoring wells to prevent oil spill accidents. Moreover, the Company executes refinery-wide emergency drills against leakage of hazardous chemical substances and oils based on readymade scenarios every year. Going forward, S-OIL plans to develop various scenarios and manuals in preparation for oil spills and chemical leakage and enhance tailored emergency drills.
Prevention of Oil Spills
In order to prevent marine oil spills, S-OIL operates the Vetting System which bars vessels that fall short of strict safety standards from entering port facilities. Under the system, all vessels are evaluated on their risk factors and only double-hulled tankers are permitted into the port in order to minimize risk of oil spill resulting from vessel accidents. We also have a protection system consisting of radar, tidal current measurement, and mooring tension measurement systems as well as the SPM (Single Point Mooring), which is the onshore mooring facilities for VLCCs, for the first time among domestic refining companies. In 2015, the Oil Spill Free TFT was organized with a mission to lower oil spill accidents to zero. We also installed CCTVs on water surface cleaners for 24-hour monitoring of SPMs and oil fences around the pier for bunker-c oil, enhancing our capabilities to respond to an emergency and to prevent the expansion of oil spills. We have a plan to install oil spill detectors on the seafront and emergency shut-down valves to fundamentally prevent marine pollution. Also, the Company will install oil spills detectors at the coast and emergency block valves at pipelines of a loading port to prevent marine oil spills until 2018.

Response to Environmental Effect Evaluation and Environmental Regulations

Implementation of Environmental Effect Evaluation
S-OIL has been recognized as an eco-friendly company that fully complies with the Environmental Impact Assessment Act and pursues corporate growth with consideration of possible environmental impact on neighboring areas. In case of new projects or large-scale construction, we commission professional environmental effect evaluators to adopt pollutant reduction methods in project design and execute periodic measurements of air, water, the ecosystem, and soil quality. The result of environmental effect evaluation is submitted to administrative agencies before the project. What’s more, we implement follow-up environmental effect evaluations even during and after the project for the purpose of minimizing any environmental impact from our businesses.
Preemptive Response to Tightening Environmental Regulations
The Company responds to tightening environmental regulations in accordance with its environmental policy “Preemptive Green Management.” As part of this, we build optimized pollution prevention facilities from the initial stage of refinery construction and prepare stricter in-house environmental criteria than legal requirements. And daily self-inspection on potential environmental impact is carried out and insufficiencies are promptly corrected, solidifying our autonomous environmental management system. We also cope with the government’s environmental policy in a positive manner and reflect changes in environmental regulations in our management strategies. Particularly, relevant departments convene a meeting every month in order to review environmental regulations, report the results to the management, and share those with production departments.
Internal and External Communication
We collect global environmental management trends and changes in relevant regulations at home and abroad through communication with various stakeholders including local communities, the government, the media, and academia, and reflect those data in our company-wide environmental management system. Local communities, relevant institutions, and other stakeholders are also able to share our environmental management information and propose their opinions to the Company. S-OIL is proactive in participating diverse environmental events in local communities and supporting local small-sized companies for environmental activities, thereby widening relationships with local communities and contributing to their environmental improvement. We will continue to comply with environmental regulations and satisfy environmental requirements of local communities.

Response to Climate Change

We believe the Paris Agreement will bring more business opportunities to us and changing public attitudes regarding climate change will have an enormous effect on our brand value. In response, S-OIL considers climate change as a pressing issue and proactively participates in global GHG reduction efforts by operating an advanced carbon management system.

Establishment of a System to Respond to the Emissions Trading Scheme

Korea became the first Asian country to operate the emissions trading scheme (ETC) in 2015. The ETC price soared in 2016, which increased financial burden on a lot of companies. In order to preemptively respond to the ETC, S-OIL has established an IT-based carbon inventory system featuring its complex process since 2012. Today, our carbon monitoring competence outperforms the government’s requirements by adopting a stricter in-house inspection process and being certified by a third-party assessor. The real-time energy monitoring system built in 2010 has enabled us to analyze process operation information and energy consumption patterns. Moreover, we reformed the organization and procedures to build an enterprise-wide collaboration system for estimating emissions volume and ensuing financial costs and setting up emissions trading plans. In particular, we reflect carbon costs in our mid- to long-term operation and investment plans to ensure efficient resource allocation and encourage employees’ participation by introducing the energy efficiency index in connection with organizational strategy as an individual KPI. S-OIL is committed to systematically responding to the emissions trading scheme by capitalizing on accumulated GHG management knowhow.

GHG Reduction Performance

S-OIL devotes itself to reducing direct GHG emissions to minimize both regulatory and financial risks. To this end, we continuously develop new tasks for energy efficiency improvement through internal and external energy diagnosis, and adopt those to environmental management activities step by step. More than ten energy efficiency improvement projects are conducted every year. Particularly, the installation of the waste heat recovery system on the PX production process and the reuse of waste heat generated from neighboring factories enabled us to reduce 120 thousand and 140 thousand tons of GHG emissions, respectively. As a result, in 2016, S-OIL reduced 540 thousand tons of GHG emissions compared with 2011, and intensity GHG emissions also decreased 14% from 2011.

Participation in Public and Global Initiatives

S-OIL makes a wide array of efforts to build a national consensus on addressing climate change. As part of this, the Company obtained the “Carbon Trust Standard,” a global carbon management certification, in 2012 for the first time in Korea, and joined the Carbon Disclosure Project (CDP) to effectively respond to requirements on carbon emissions and reduction performance. Furthermore, as a member of the “Korea Business Council for Sustainable Development (KBCSD),” which was launched to promote government-industry cooperation on sustainable growth, we worked to encourage businesses to take proactive measures against climate change. In 2016, we initiated a cogeneration plant project in collaboration with KD POWERTECH. This project is to generate 16.4 MW of electricity by recycling waste heat from the petrochemical process and to sell it to KEPCO, which contributes to reducing GHG by 61 thousand tons every year. In addition, we have implemented various campaigns aimed at raising consumers’ awareness of carbon reduction, which include Eco Campaign since 2012, Car Diet, and Stopping Engine Idling, etc.

Business Diversification to Meet Changes in Demand

S-OIL is carrying out the RUC/ODC Project with a schedule of completion set in 2018 in order to flexibly respond to changing demand for oil products. This is our strategic choice that aims to positively cope with the rapidly-changing business environment by reorganizing our business portfolio. The Company will continue to examine possible risk and opportunity factors from climate change and reflect the results in our mid- and long-term strategies and management activities.
Analysis of Opportunities and Risks
Analysis of Opportunities and Risks : Classification, Item, Action Table.
Classification Item Action
Regulatory Risks
  • GHG & Energy Target Management System
  • Emissions trading
  • Increasing energy efficiency
  • Reducing opportunities GHG emissions
  • Emissions trading
Opportunities
  • Upgrading strategic carbon management
Business environment Opportunities & Risks
  • Evaluation by investors and NGOs
  • Participating in public policies and initiatives
  • Changes in demand for products
  • Diversifying business portfolio through pre-emptive investments
Physical Risks
  • Natural disasters like typhoon, heavy rain, etc.
  • Building systems such as IDAS to cope with natural disasters

Social Contribution Activities

Strategic Direction of Our Social Contribution

For more productive and strategic social contribution activities, S-OIL is proactive in understanding expectations of local communities through diverse communication channels. And then, we conduct differentiated social contribution activities in accordance with the three pillars of Impact, Timing, and Beneficiary under the vision statement of Sunshine Sharing.
For Heroes (applicable to SDGs #3)
The “For Heroes” program was prepared to support righteous people in our society: “Hero Firefighters” who commit themselves to saving lives despite tough working conditions; “Hero Maritime Policemen” who take the initiative in marine environmental protection and sea-rescue operations; and “Hero Neighbors” who throw themselves into helping neighbors in danger. This program helps make our society healthy and bright.
For the Environment (applicable to SDGs #14 and #15)
S-OIL has engaged in protecting endangered natural treasures since 2008 with the aim of bequeathing our valuable nature and ecosystem to succeeding generations. Major activities are as follows: supporting professional organizations dedicated to protecting natural treasures; running natural treasure classes for children; operating a university student natural treasure protection corps; and sponsoring natural habitat protection activities carried out by employees and customers. The Company is also expanding its green purchasing.
For Local Communities (applicable to SDGs #3 and #4)
The Company carries out a variety of social contribution activities for co-prosperity with local communities where our worksites are located. Those include promoting the Culture & Arts Sharing Campaign, supporting needy people who live around our terminals and the TS&D Center, operating the GOODOIL Café, establishing the Ulsan Welfare Foundation, sponsoring cultural events at Taewharu in Ulsan, and supporting welfare facilities in Ulsan.
For Needy People (applicable to SDGs #1 and #2)
The “For Needy People” program aims to help the underprivileged stand their own feet and contribute to society as healthy citizens. Major activities include supporting heating fuels, providing learning devices tailored to youths with disabilities, helping battered female migrants, aiding in the recovery of fire-damaged low-income families, and supporting the participation of the disabled in an overseas marathon race as well as implementing service stations’ sharing campaign and sponsoring Ethiopian children.
In addition to the four flagship activities, S-OIL has been executing a wide array of social contribution activities such as delivering Ttokguk (Korean rice soup), Songpyeon (rice cakes), Kimchi, and coal briquettes to low-income families since the launch of the Sunshine Sharing Public Service Corps in 2007. Our employees also participate in the wage tail-cut contribution to help children suffering from biliary atresia and in the 1 person-1 donation account campaign to support children raised by grandparents.

Social Contribution Activities That Reflect Stakeholder Opinions

S-OIL is proactive in developing distinctive social contribution programs such as a marketing idea contest that can attract stakeholders’ engagement, connect with our business, and have a positive effect on society. For example, the Company grants scholarships to college students majoring in engineering who should be discharged from residential facilities due to age requirements. We intend to expand the scholarship program to help high school students who live in residential facilities acquire diverse licenses, thereby developing their self-reliance even after being discharged from the facilities.

Continued Improvement through Assessment

S-OIL developed the Social Impact Index in collaboration with social contribution experts to assess the impact of its social contribution programs in 2014. The evaluation found the “Culture & Arts Sharing Campaign,” in particular, to be generating about KRW 24 million worth of economic value for S-OIL and KRW 50 million for the society for its role in boosting the culture industry. Building upon the areas to be improved, which were identified in the assessment of the “For Endangered Species” in 2015, S-OIL has strived to keep on developing new social contribution activities aimed at protecting biodiversity.

Contribution to Local Communities

Expansion of the Base for Local Culture and Arts

S-OIL supports local cultural events as a way to build a better quality of life including cultural exposure to local communities and motivate artists. In recognition of its wide-ranging efforts to expand cultural infrastructure for local communities, S-OIL was awarded the Minister of Culture, Sports and Tourism Prize in 2015.
Supporting Cultural Activities of Local Communities around the Head Office
Since 2011, S-OIL has been promoting the Culture & Arts Sharing Campaign at its Head office in Mapo, Seoul. As part of this, diverse culture and arts events are held at the auditorium every month, through which local residents enjoy high-quality culture and art performances for free. More than 3,000 local people join the campaign every year. In a survey of local people who participated in the campaign, they attend two cultural events on average every year, which attests to the fact that S-OIL is contributing to the growth of culture and arts for local communities.
Support of Cultural Infrastructure in Ulsan
Our activities for expanding the base of culture and arts have been active in Ulsan as well. S-OIL established one of Korea’s most prestigious literary awards, the “Oh Young-soo Literary Prize,” in 1993 in honor of the talented short story writer from the region. Additionally, S-OIL has been holding the “Beautiful Eye Art Festival” since 1996, an arts event that mainly invites amateur artists. Furthermore, S-OIL donated KRW 10 billion, the total budget required for the Taewharu Restoration Project, boosting the pride of Ulsan citizens while giving them access to a comfortable public rest area. This project was completed in 2014 and since then, we have supported culture and arts events held at Taewharu. We have also sponsored the “Taewharu Culture and Arts Academy” where local people can take culture classes provided by renowned local artists since 2015. Other events supported by us include the Cheoyong Cultural Festival, the Ulsan Whale Festival, Byeongyeong Seonang Chigi Folk Festival, and Onggi Expo Ulsan Korea.

Efforts for Handling Grievances of Local Communities

S-OIL has been expanding local purchasing to support economic stimulation of Ulsan. Particularly, in order to help local farmers who are suffering from the opening of the agricultural market, we purchase rice and pear produced in local communities around our refinery and donate them to social contribution activities. Moreover, we have employed local talent necessary for the RUC/ODC Project, contributing to the increase of local job creation. Another major activities aimed at solving local issues include donations of funds for school development, scholarships, and books to elementary, middle, and high schools in Ulsan. We also opened the GOODOIL drinking fountain in front of our head office in Seoul, our office building in Ulsan, and also our Gangnam branch where anyone can enjoy natural water and tea for free. The Company will continue to take the lead in solving local grievances and pursuing co-prosperity.
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