Ecopetrol

Ecopetrol aims to reduce its scope 1 and 2 emissions by 25% by 2030 compared to 2019. The company aims to achieve zero scope 1 and 2 emissions by 2050 with reliance on offsets. This does not align with the International Energy Agency’s recommendation that offsets should not be used in scope 1 and 2 emissions reductions. It also aims to reduce scope 1, 2 and 3 emissions by 50% by 2050 compared to 2019. To improve, the company should disclose the proportion of each target that it plans to meet through offsets versus direct action.

Ecopetrol has plans to produce green hydrogen from renewable sources. However, the company performs poorly on intangible investment because it does not disclose its overall research and development (R&D) expenditure for low-carbon technologies in 2022 – the period covered in this benchmark assessment. Ecopetrol should disclose its R&D expenditures to demonstrate its level of alignment with the sectoral expectation for a 1.5°C scenario.

The company has implemented board-level oversight of climate change and has three board members with significant expertise in the low-carbon transition. One of these board members has served as an independent member of the Investment Committee of the MGM Sustainable Energy Funds, another has published two studies on the topic of economy and climate change and a third board member has jointly led projects and participated in formulating regulations for the future development of smart grids and renewable energies. Ecopetrol has an opportunity to use the expertise of its board members to ramp up the ambition of its transition plan and close the gap with its 1.5°C pathway.

Ecopetrol’s only low-carbon business activity is its green hydrogen plans. The company aims to produce 400,000 tonnes of green hydrogen by 2040. Ecopetrol’s green hydrogen plans are an opportunity for a low-carbon revenue stream. However, to substantiate and increase the credibility of its green hydrogen business activity, the company should report its profitability and current size.

Ecopetrol aims to reduce scope 1 and 2 emissions by 25% by 2030 compared to 2019. The company aims to achieve zero scope 1 and 2 emissions by 2050 with reliance on offsets. It also aims to reduce scope 1, 2 and 3 emissions by 50% by 2050. However, apart from the second target (zero scope 1 and 2 emissions by 2050), the company is reliant on an undisclosed amount of nature-based offsets for its targets. This, in conjunction with the lack of a net-zero scope 1, 2 and 3 target, undermines the company’s commitment to a low-carbon transition.

Ecopetrol aims to eliminate flaring by 2030 and is focused on operational greenhouse gas (GHG) emissions reduction in the short term. It plans to generate 1 gigawatt (GW) of renewable energy for its own operations by 2030 and increase its energy efficiency by approximately 10% by 2040. The company also aims to produce 400,000 tonnes of green hydrogen by 2040. However, Ecopetrol has not committed to phasing out fossil fuels and its low-carbon transition relies on offsets.

There is no evidence that Ecopetrol is investing in R&D of climate change mitigation and carbon removal technologies. The company does not report its capital expenditure (CapEx) on low-carbon technologies. There is evidence that the company is developing a new low-carbon business activity for green hydrogen production. However, this development appears to be in the pilot phase and is not supported by specific investment or R&D information.

Ecopetrol’s scope 1 and 2 emissions intensity increased between 2017 and 2021 and is projected to remain constant until 2026. Its scope 1, 2 and 3 emissions intensity has remained stable between 2018 and 2021 and is projected to increase by 2026. The company is required to annually decrease its scope 1, 2 and 3 emissions intensity by approximately 4% to align with its 1.5°C pathway. The company is projected to narrowly stay within its overall 1.5°C carbon budget until 2050.

Ecopetrol’s emissions reduction targets are undermined by relying on nature-based offsets. Moreover, the company lacks a net-zero target covering all of scope 1, 2 and 3 emissions. The company’s lack of disclosure of its investment in green hydrogen also undermines its transition plan. Despite its planned green hydrogen projects, the company intends to increase its natural gas supply, offshore exploration and development of unconventional reservoirs, which makes it unclear how and whether it aims to align with a 1.5°C pathway.

The company publicly discloses a commitment to engaging 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 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 has a commitment to reskill and upskill workers and stakeholders affected by the low-carbon transition and discloses the actions it takes in this regard. For instance, it provides an energy transition training programme to its employees covering basic knowledge of climate change, the circular economy, energy transition and decarbonisation. 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 reskill or upskill.

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. Furthermore, the company discloses a human rights due diligence process that includes the identification and assessment of salient human rights risks. The company takes action to mitigate these risks in its own operations and supply chain, and it engages with affected stakeholders. Additionally, the company 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 indicators of workforce diversity, including the age, gender disabilities and LGBTQI composition of its workforce. Additionally, the company commits to gender equality and women’s empowerment.

No evidence was found that the company commits to protecting personal data and that it has 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. Moreover, the company has a lobbying and political engagement policy, and it specifies that it does not make political contributions. Additionally, the company discloses its expenditure on lobbying activities.