ENEOS

ENEOS has a target to achieve zero scope 1 and 2 emissions by 2040 and reach net zero, including its scope 3 emissions, by 2050. It is unclear if the company will use offsets to achieve these targets. The company has interim targets for both its scope 1 and 2 emissions and scope 3 emissions for 2030 compared to 2009. The company can improve by setting more interim targets, no more than five years apart, to incentivise near-term actions on its long-term goals. Additionally, the company can improve by disclosing its use of offsets to achieve its goals; this would allow for an assessment of whether the company’s targets align with a 1.5°C pathway.

ENEOS details its involvement in R&D for alternative energy sources. For example, ENEOS is exploring the commercialisation of liquid hydrogen and the technological development of methylcyclohexane for the transportation of hydrogen. ENEOS also reports its investment in manufacturing technology to produce synthetic fuels. However, the company does not disclose financial information on its climate-related R&D spending. To meet the sectoral-level expectation, at least 77% of the company’s total R&D investments should be dedicated to low-carbon technologies.

Despite ENEOS’s plans to focus on the growth of renewable hydrogen and renewable energy, the company does not disclose its current or expected revenue from low-carbon products. Additionally, no evidence was found that the company is offering energy-efficiency services to customers. The company can improve by expanding its disclosure in these areas.

ENEOS has set a target to reduce carbon dioxide emissions of customers by 1.2 million tonnes compared to 2009. However, the company does not disclose the proportion of total scope 3 emissions this represents. ENEOS also does not have a client engagement strategy. To meet its net-zero target, the company should set out a clear strategy to promote its low-carbon solutions to customers. This can include providing financial incentives, such as discounts or marketing campaigns.

ENEOS has maintained its target to achieve zero scope 1 and 2 emissions by 2040. Since the previous benchmark assessment, it has also set a new interim target to reduce scope 1 and 2 emissions by 44% by 2030 compared to 2009. ENEOS now also aims to reach zero scope 3 emissions by 2050 and has set an interim target to reduce its scope 3 emissions by 57% by 2030 compared to 2009. The company has not set any methane-specific targets.

While ENEOS acknowledges the need to transform its current business structure, its business approach does not include reducing the supply of petroleum products. By 2040, the company aims to implement large-scale renewable energy projects and create a “carbon dioxide-free” hydrogen business. The company also aims to become a platform provider for energy and mobility services. The company published its third medium-term management plan detailing its plans for 2023 to 2025 in May 2023, so could not be considered for this assessment.

To grow its renewable hydrogen business, ENEOS is investing in R&D for the commercialisation of liquid hydrogen and the technological development of methylcyclohexane for the transportation of hydrogen. It is also providing grants for research into the hydrogen supply chain. The company is also working closely with the Japanese government in the development of carbon capture and storage (CCS) technologies. However, the company does not disclose its low-carbon R&D spending.

ENEOS has no coal sales in 2021. Further, between 2017 and 2021, it increased its sale of low-carbon electricity almost tenfold, from 82,500 megawatt-hours (MWh) to 720,000 MWh. However, as most of the company’s emissions are driven by its oil refining activities, the company’s scope 1, 2 and 3 emissions intensity only decreased slightly between 2017 and 2021. This is a continuation of the trend from the previous benchmark assessment.

ENEOS has set net-zero targets for scope 1, 2 and 3 emissions. It also has plans to expand its activities in renewable hydrogen and renewable energy and is working closely with the Japanese government to develop CCS. However, the company is still heavily reliant on oil and gas, does not publish financial information or quantified objectives to support its plans, and is not projected to reduce its emissions intensity between 2021 and 2026. ENEOS must accelerate its transition and progress from talk to action.

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 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 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 provides basic training, leadership training and skill improvement training which are tailored to individual employees and encourage self-led career development. 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. While the company discloses its identification of human rights risks, no evidence was found that the company assesses and mitigates 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, but it is unclear whether the mechanism is available to external stakeholders.

The company commits to respecting the health and safety of its workers and expects the same commitment of its business relationships. No evidence was found, however, 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 the gender of its workforce by employee category. However, no relevant disclosure was found of additional indicators of workforce diversity. Additionally, no evidence was found that the company commits to gender equality and women’s empowerment.

The company commits to protecting personal data. However, no evidence was found of the company having a privacy statement regarding the collection, sharing and access to personal data. While the company discloses its global tax strategy, no relevant disclosure was found of the corporate income tax it pays in each relevant jurisdiction. Moreover, while the company has a policy prohibiting bribery and corruption, it is unclear whether it includes corresponding clauses in its business relationship contracts. No evidence was found that the company has a lobbying and political engagement policy and that it discloses its expenditure on lobbying activities.