Neste

In 2022, Neste reported investments of USD 2 billion in capital expenditure (CapEx) on renewables, constituting 88% of its total CapEx. This is above the sectoral expectation, which indicates that companies should invest 77% of their CapEx in low-carbon projects to align with a 1.5°C scenario. Neste has been increasing its low-carbon CapEx share since 2019, and in 2022, Neste invested just 8% of its CapEx in the oil and gas segment. Among its low-carbon investments is the 50/50 joint operation, Martinez Renewables, that Neste has established with Marathon Petroleum in the US for the production of renewable fuels. By the end of 2023, this joint operation is expected to increase Neste’s renewables production capacity by slightly over 1 million tonnes annually. However, the company does not report its future planned CapEx on low-carbon products.

Neste has an Advisory Council on Sustainability and New Markets, established in 2019. This is an independent external council consisting of a group of experts who provide strategic insight, guidance and assistance on the company’s sustainability work. The role of the council is to help accelerate Neste’s transformation and broaden its sustainability leadership activities. The council convenes three times a year and is chaired by John Elkington, author and advisor on sustainable business. In 2022, the council reviewed and evaluated the company’s materiality assessment results before they were presented to the Neste Executive Committee.

99% of Neste’s renewable raw material suppliers have committed to the Neste Supplier Code of Conduct, which considers the climate impact of operations and undertaking emissions reduction measures where reasonable. However, Neste does not require suppliers to publicly report their emissions or comply with any other low-carbon requirements, such as meeting quantified emissions reduction targets. Neste should consider setting quantified emissions targets to provide clear direction to its whole supply chain.

Neste is a member of the International Air Transport Association (IATA), Business Europe and Fuels Europe, all of which have been identified as climate-negative trade associations. The company can increase its credibility by establishing a clear position on climate policy and by implementing processes to withdraw from trade associations that oppose climate policies.

Neste’s vision is to lead the transformation towards a net-zero value chain by 2040 by reducing both its emission footprint and downstream scope 3 emissions. The company has a target of 50% reduction in scope 1 and 2 absolute emissions by 2030 compared to 2019. In 2022, the company also set a target of a 50% reduction in scope 3 emissions intensity by 2040 in comparison to 2020.

Neste’s strategy is to grow renewable and circular solutions to replace the use of fossil-based oils and feedstock. The company already produces SAF, renewable diesel and raw materials for plastics and chemicals refined from waste and residues. It collaborates with universities and researchers to introduce innovations to global-scale businesses. Neste’s long-term business development and innovation cover several areas, including algae, renewable hydrogen and Power-to-X technology combining renewable electricity and captured carbon dioxide.

In 2022, Neste made some significant acquisitions that will increase the size of its renewable products business model. In 2021, Neste announced that it will modify its existing renewable production capacity in Rotterdam to enable the production of SAF. Neste reports spending USD 2 billion on renewable products in 2022, which is 88% of the company’s CapEx. The company has been increasing this share of since 2019.

Neste aims for 100% renewable electricity use in its own operations globally by 2023. The company achieved this target ahead of schedule in Finland with a new hydropower agreement. The company’s scope 1, 2 and 3 emissions intensity has been decreasing since 2018, showing a slight increase in 2022. However, this decrease is not sufficient to align with its 1.5°C pathway.

Neste demonstrates its commitment to decarbonisation through its recent acquisitions of and increasing share of CapEx on renewable activities. The company launched a strategic study on transitioning its Porvoo refinery to a renewable and circular site and ending crude oil refining in the mid-2030s, with the ultimate target of replacing fully crude oil with renewable feedstocks. In 2022, the company appointed a new president and CEO who previously oversaw the Renewables Platform within Neste. Moreover, renewable products generated 37.5% of Neste’s total revenue in 2022, surpassing previous years. In 2019, the company’s renewable products division represented 23.1% of external revenue, which further grew to 35% in 2020. However, Neste has not yet made a commitment to phasing out fossil fuels and its scope 1, 2 and 3 emissions trend does not currently align with its 1.5°C pathway.

No evidence was found that the company commits to social dialogue or reports the categories of stakeholders it 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 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.

There is evidence of a public commitment by the company stating its intention to create and support access to green and decent jobs as part of the low-carbon transition. However, 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. No public commitment by the company was found stating its intention to re- and up-skill workers displaced by the transition to a low-carbon economy. Additionally, no evidence was found that the company re- and up-skills workers in a way that ensures gender balance and inclusion of vulnerable groups.

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 in its 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, the company has not set a time-bound target for paying all workers a living wage and it does not limit required working hours to 48 hours per week. The company discloses the proportion of its direct workforce covered by collective bargaining agreements. Additionally, the company commits to gender equality and women’s empowerment. However, it does not disclose indicators of workforce diversity.

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. The company has a policy prohibiting bribery and corruption, and it includes corresponding clauses in its business relationship contracts. Furthermore, the company has a lobbying and political engagement policy; however, it does not specify whether it makes political contributions. No relevant disclosure was found of the company’s expenditure on lobbying activities.