China Petroleum and Chemical Corporation Limited (Sinopec)

Sinopec plans to reduce its scope 1 and 2 carbon dioxide emissions by 12.6 million tonnes by 2023, a 7% reduction from 2018 levels. The company is also aiming to cut methane emissions intensity by 50% by 2025 compared to 2020, though 2021 data is not available. To align with its 1.5°C pathway, Sinopec should establish a long-term target covering its scope 1, 2 and 3 emissions, as well as intermediate targets no more than five years apart to encourage near-term action. Reporting relevant metrics is also necessary for the company to be able to track progress towards its targets.

Sinopec has disclosed some details on its climate action strategies; however, the company does not clearly define the timeframe for its planned actions. Sinopec has not included any financial commitments in its transition planning. The company’s strategy is not informed by either the carbon price or climate change scenario analysis. Although the company has implemented board-level oversight of climate change, there is no evidence that its board has adequate climate expertise.

While Sinopec evaluates its suppliers for environmental protection, there is no indication that emissions reduction is part of its supplier engagement process. The company does not require suppliers to report their emissions, and it does not factor in emissions reductions when selecting new suppliers or renewing existing contracts. The company can improve by including an emissions reduction requirement within its key procurement templates and evaluating the impact of its engagement with suppliers in terms of reduced emissions.

Sinopec is working on various low-carbon business models, such as constructing a low-carbon hydrogen plant, setting up a biojet fuel production facility and increasing its photovoltaic (PV) power generation capacity. Sinopec currently has just over 40 megawatts (MW) of installed PV capacity. However, the company does not disclose the profitability of its current low-carbon initiatives and has not revealed any plans beyond 2025. Given the company’s intentions to increase crude oil and fossil gas production, its low-carbon strategy lacks credibility.

Sinopec aims to reduce its scope 1 and 2 carbon dioxide emissions by 12.6 million tonnes by 2023 compared to 2018. This represents about a 7% reduction. The company also reports it is striving to reduce its methane emissions intensity by 50% by 2025 compared to 2020. However, the company did not report its methane emissions intensity in 2021. Sinopec has not set any targets beyond 2025.

Sinopec plans to develop a new business model with green hydrogen energy as the core, along with biofuel, photovoltaic and wind power businesses. Additionally, the company is exploring the possibility of establishing a research and development (R&D) centre to research carbon capture, utilisation and storage (CCUS) technologies.

Sinopec is building a green hydrogen plant in Kuqa City in China. The facility will be powered by a 300 MW photovoltaic plant and is expected to produce 20,000 tonnes of green hydrogen a year. At the same time, Sinopec has coal-powered generation units, which it upgrades to improve energy efficiency. The company sees fossil gas as a clean alternative to other fossil fuels.

Sinopec failed to decrease its scope 1 and 2, as well as scope 1, 2 and 3 emissions intensity between 2017 and 2021. To align with its 1.5°C pathway, Sinopec is required to deliver a 7% annual decrease in its scope 1 and 2 emissions intensity between 2022 and 2027.

Sinopec is planning to scale up its crude oil production. It is one of the top projected expanders globally with at least two large oil and gas extraction projects (in terms of potential cumulative carbon dioxide emissions) at risk of approval in 2023. Additionally, Sinopec’s consumption of coal more than doubled in 2021 compared to 2020.

The company publicly discloses a commitment to engage in social dialogue with workers and unions. However, no relevant disclosure was found regarding the categories of stakeholders it engages with on a just transition. Nor was there any evidence to show the company’s ongoing social dialogue and meaningful engagement with affected stakeholders. No evidence was found of the company undertaking low-carbon transition planning to mitigate the social impacts of the transition on workers, affected stakeholders and its business relationships. Additionally, no evidence was found to demonstrate the company’s engagement in social dialogue and with stakeholders in its just transition planning.

No public commitment by the company was found stating its intention to create and support access to green and decent jobs as part of the low-carbon transition. Moreover, no evidence was found of the company’s action to promote these jobs in a way that ensures gender balance and inclusion of vulnerable groups. Additionally, no relevant disclosure was found of the company’s assessment of employment dislocation risks. The company discloses the actions it takes to provide training opportunities for workers and affected stakeholders. For instance, it provides practical technical and digital transformation training for professional personnel and for overseas talent. Furthermore, the company discloses the measures it takes to embed equality of opportunity for women and vulnerable groups in these actions. It does this through providing administrative and technical training to youth, women and the elderly living in neighboring oil field areas. However, no evidence was found of the company having a process for identifying skills gaps for workers and stakeholders affected by the low-carbon transition or a public commitment to help workers displaced by the transition to re- or up-skill.

No relevant disclosure was found to show if the company identifies impacts of the low-carbon transition on social protection for workers and affected stakeholders, nor how it contributes to social protection. Additionally, no evidence was found that the company expects its business relationships to contribute to the social protection of their workers and affected stakeholders. No relevant disclosure was found to show how the company identifies any misalignment of its lobbying activities with policies and regulations that support the just transition, nor of the measures it takes to address misalignment. Furthermore, no evidence was found that the company lobbies for policies and regulations for green and decent job creation; retention, education and reskilling; and social protection for workers.

No policies or commitments of the company related to respect for human rights were found in the public domain. This includes the necessary policies and systems by which the company can ensure respect for basic human rights in its operations and supply chain.

While the company commits to respecting the health and safety of its workers, it is unclear whether it expects the same commitment of its business relationships. No evidence was found of the company having a time-bound target for paying all workers a living wage. Further, o evidence was found that the company discloses the proportion of its direct workforce covered by collective bargaining agreements or its required working hours. The company discloses some indicators of workforce diversity, including the age and gender of its workforce by employee category. However, no relevant disclosure was found of additional indicators of workforce diversity. No evidence was found that the company commits to gender equality and women’s empowerment.

The company has a policy prohibiting bribery and corruption, and it includes corresponding clauses in its business relationship contracts. However, no policies or commitments of the company related to other key ethical business topics – personal data protection, tax, and lobbying and political engagement – were found in the public domain. This includes ensuring ethical business conduct throughout its operations and in its relationships with business partners.