Compania Espanola de Petroleos (CEPSA)

CEPSA currently discloses some figures for its low-carbon capital expenditure (CapEx) and research and development (R&D) investments. However, the company needs to be clearer about the breakdown of its low-carbon investments and R&D to allow for an assessment using the ACT methodology. CEPSA has not disclosed the source of the biofuels when describing its biofuel activity. As such, its low-carbon revenue from the manufacture of biofuels this year could not be assessed. The company can improve its R&D disclosure by outlining specific projects it is working on and providing clear links between its low-carbon innovation efforts and its strategy to decarbonise.

CEPSA has conducted scenario analysis using three International Energy Agency (IEA) scenarios: Net Zero Emissions by 2050 (NZE), Sustainable Development Scenario (SDS) and Stated Policies Scenario (STEPS). It has appropriately assessed the risks and opportunities for its business in the face of the climate crisis and used the output of the scenario analysis to test the resilience of its transition plan. However, there is limited evidence that the results of the analysis have been integrated into or used to inform the development of CEPSA’s transition plan. To obtain more robust findings, CEPSA should assess the results of its scenario analysis quantitatively and qualitatively, as well as financially.

There is no evidence that CEPSA has an engagement policy with regard to the trade associations it is involved with. There is also some inconsistency in how CEPSA describes its relationships with its trade associations. CEPSA is a member of two trade associations not aligned with climate policy: Fuels Europe and the International Association of Oil and Gas Producers (IOGP). Although it is not clear if any of CEPSA’s executives sit on the board of either association, CEPSA has paid a sum of USD 443,536 to Fuels Europe in 2022. This sum is higher than a standard membership fee, which may suggest a more significant relationship between the company and the trade association. CEPSA needs to employ a review process for its trade association memberships in order to align with the Paris Agreement.

CEPSA has a net-zero target for 2050 that applies to its scope 1, 2 and 3 emissions. In the interim, CEPSA is aiming to reduce its scope 1 and 2 emissions by 55% and its scope 3 emissions by 15-20% by 2030, against a 2019 baseline. CEPSA is also aiming to become a leader in sustainable aviation fuels (SAFs) by producing 0.8 million tonnes per year by 2030. Moreover, CEPSA has committed to spending more than 60% of its USD 8.4 billion investment budget into sustainable businesses by 2030 to achieve its targets. CEPSA’s goal for this decade is to develop a renewable energy portfolio of 7 GW.

CEPSA is keen to transform its energy business and is aiming to lead the energy sector’s climate transition. The company has a transition plan with 2030 and 2040 targets and a core aim of becoming net zero by 2050. CEPSA plans to create new low-carbon business models focused on biofuels, e-charging, green hydrogen production and SAFs. To achieve this, CEPSA will invest over USD 79 million until 2027 in cross-functional R&D projects related to the energy transition. However, CEPSA has also outlined its intention to maximise the value of its existing oil and gas portfolio.

CEPSA acknowledges the impact of its scope 3 emissions and is working towards transforming its current business strategy, which is focused on its upstream portfolio, to steer focus towards creating decarbonisation solutions for its customers, including superfast e-charging using renewable energy from its solar and wind projects. The company is invested in supporting sustainable mobility through the development of green molecules, such as renewable hydrogen and biofuels. However, in 2022, a significant proportion of CEPSA’s low-carbon CapEx was on activities nonaligned with the EU Taxonomy, such as biofuel and green hydrogen production. CEPSA has also outlined its intention to continue to extract value from its current fossil-fuel portfolio.

CEPSA’s scope 1, 2 and 3 emissions intensity has remained static between 2017-2022. The company recently published its Positive Motion strategy which sets out its climate transition and sustainability plans. Since 2017, CEPSA has been increasing its midstream oil refining and reducing its upstream exploration and production. As part of this, in 2022 CEPSA divested its UAE exploration and production business.

CEPSA’s Positive Motion strategy sets out its plan to become net zero by 2050. However, the company needs to grow its low-carbon businesses rapidly to reduce its dependency on high-carbon activities. Although CEPSA has divested some of its upstream portfolio, it is still exploring for oil and gas, including in areas of the Amazon Basin. These projects are unsanctioned under the IEA NZE Scenario and conflict with the company’s 1.5°C pathway.

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 just transition planning to mitigate the social impacts of the low-carbon 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 actions 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 reskilling and upskilling opportunities for workers and affected stakeholders. For instance, it has a corporate university which provides experiential training and necessary skills to professionals in different technologies and work methods. However, no relevant disclosure was found of the company embedding equality of opportunity for women and vulnerable groups in these actions. Furthermore, no evidence was found of the company having a process for identifying skills gaps for workers and affected stakeholders 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.

The company commits to respecting human rights and the ILO fundamental rights at work, and it expects its business relationships to respect the ILO fundamental rights at work. While the company discloses how it carries out risk identification as part of human rights due diligence for its own operations and for its supply chain, no evidence was found of the company’s process to assess and mitigate salient human rights risks in its own operations and in its supply chain. The company discloses the stakeholders whose human rights have been affected by its activities. The company also has a grievance mechanism available to workers and external stakeholders.

The company commits to respecting the health and safety of its workers and expects the same commitment of its business relationships. However, no evidence was found of the company having a time-bound target for paying all workers a living wage. While the company discloses the proportion of its direct workforce covered by collective bargaining agreements, no relevant disclosure was found of the company’s 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. The company commits to gender equality and women’s empowerment.

The company commits to protecting personal data. However, no evidence was found of a privacy statement regarding the collection, sharing and access to personal data. The company discloses its global tax strategy and the corporate income tax it pays in each relevant jurisdiction. The company also has a policy prohibiting bribery and corruption, and it includes corresponding clauses in its business relationship contracts. Further, he company has a lobbying and political engagement policy, and it specifies that it does not make political contributions. However, no relevant disclosure was found of the company’s expenditure on lobbying activities.