Inpex

Inpex has a target to achieve zero absolute scope 1 and 2 emissions by 2050, with supporting targets to reduce net carbon intensity (scope 1 and 2) by 30% by 2030 and by 10% between 2022 and 2024. However, the company still has not set targets to cover emissions across all of its value chain, i.e. scope 3 emissions. Moreover, its existing targets include an unspecified amount of offsets. The company should set comprehensive targets covering its whole value chain and support these with interim targets no more than five years apart to incentivise near-term actions on its long-term goals.

Inpex is planning to dedicate around 21% of its growth investments between 2022 and 2030 to new business areas outside of its oil and gas segment. However, oil and gas companies should be aiming to invest 77% of capital expenditure (CapEx) in low-carbon and mitigation technologies to reduce emissions and accelerate their transition to low-carbon activities. To align with this sectoral expectation, Inpex needs to substantially increase its planned CapEx for low-carbon activities.

Inpex is projected to exceed its 1.5°C carbon budget by at least 60% between 2022 and 2050. Yet, the company continues exploration for new oil and gas sources. This does not align with the International Energy Agency (IEA) 1.5°C Net-Zero Emissions by 2050 Scenario, which does not allow for any expansion of producing assets beyond those sanctioned earlier than 2022.

Inpex lacks a policy for engagement with trade associations on climate change. This gap could undermine the credibility of the company’s statements on climate change and its transition strategy. The company is a member of trade associations that have been reported to oppose climate policies. This includes the Australian Petroleum Production & Exploration Association, which lobbied against the inclusion of scope 3 emissions in reporting requirements and supported fossil fuel development in response to the Covid-19 pandemic. This also includes the International Association of Oil & Gas Producers, which advocated for favourable regulatory frameworks to incentivise gas supply and argued for the long-term role of gas in the energy mix.

Inpex has set targets to achieve zero absolute scope 1 and 2 emissions by 2050. This is supported by interim targets of a 30% reduction in net carbon intensity by 2030 and a 10% reduction between 2022 and 2024. However, the company has not set any scope 3 emissions targets, despite scope 3 representing over 90% of the company’s emissions. In addition, the company’s targets rely on an unquantified amount of offsets.

Inpex’s strategy comprises reducing the emissions intensity of its oil and gas segment and developing five new business areas. These include hydrogen/ammonia production; carbon capture, utilisation and storage (CCUS); renewable energy; synthetic methane production and forest conservation. The company has set 2030 goals for each of these business areas. However, only one area (renewable energy) can be considered low-carbon. More information is needed to understand the associated emissions and technologies the company intends to use in the other business areas to assess their alignment with a low-carbon transition.

While Inpex has plans to grow its five new business areas mentioned under the transition plan, it does not appear to have any low-carbon business activities of a substantial size at present. The company does not report its research and development (R&D) spending on low-carbon technologies. In 2021, Inpex invested only about 3% of its total CapEx into renewable energy. While the company is planning to dedicate about 21% of its growth investment to the five new business areas between 2022 and 2030, not all of these business areas can be considered low-carbon as per the methodology used in this benchmark.

Inpex’s scope 1, 2 and 3 emissions intensity has decreased between 2019 and 2021, though not at the rate required by its 1.5°C pathway. To align with its 1.5°C pathway, the company should decrease its scope 1 and 2 emissions intensity by 8% annually and its scope 1, 2 and 3 emissions intensity by 4% annually.

The company’s lack of a scope 3 emissions target suggests a lack of commitment to achieving net-zero emissions. While Inpex is planning to develop business models alternative to its oil and gas operations, it continues to explore for new sources to expand its fossil gas production. Inpex needs to step up investment and ambition for its new business areas and increase the rate of emissions reduction to align with its 1.5°C pathway.

No evidence was found of the company’s commitment to social dialogue or of the categories of stakeholders the company engages with on a just transition. Furthermore, no evidence was found to demonstrate 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 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 discloses the actions it takes to provide training opportunities for workers and affected stakeholders. For instance, it provides young employees operational and practical training through on-the-job experience at overseas offices. 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.

While the company expects its business relationships to respect the ILO fundamental rights at work, it is unclear that the company demonstrates the same commitment. The company discloses a human rights due diligence process that includes the identification and assessment of salient human rights risks, such as impact on cultural heritage and traditional culture; infringement on the rights of the local community, discrimination in recruitment and employment; and environmental damage impacting local communities. However, no evidence was found of the company disclosing the stakeholders whose human rights have been affected by its activities. The company does, however, have a grievance mechanism available to workers and external stakeholders.

While the company expects its business relationships to respect the health and safety of their workers, no evidence was found that it demonstrates the same commitment. No evidence was found of the company having a time-bound target for paying all workers a living wage. Further, no 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 the gender of its workforce by employee category. However, no relevant disclosure was found of additional indicators of workforce diversity. The company does commit to gender equality and women’s empowerment.

No evidence was found that the company commits to protecting personal data. Moreover, 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. The company does have a policy prohibiting bribery and corruption, and it includes corresponding clauses in its business relationship contracts. However, no evidence was found that the company has a lobbying and political engagement policy or that it specifies it does not make political contributions. No relevant disclosure was found of the company’s expenditure on lobbying activities.