Phillips 66

Since the previous benchmark assessment, Phillips 66 has set emissions reduction targets. It plans to reduce scope 1 and 2 emissions by 30% by 2030 and 50% by 2050 compared to 2019. It is one of the few companies in the sample to have set a scope 3 target, aiming to reduce product-related emissions by 15% by 2030 compared to 2019, but has not specified how of or how it intends to use offsets for this target. In addition to these, the company should set a net-zero target, as well as interim targets no more than five years apart to incentivise short-term action on its long-term goals.

Phillips 66 does not disclose if it invests in low-carbon research and development (R&D). The company launched its Emerging Energy business platform in 2021 to focus on the development of renewable energies, batteries and carbon capture. However, it does not disclose the amount invested into R&D for or provide a breakdown of these activities. The company will require commercial investment in low-carbon R&D alongside other investment sources to enable a swift low-carbon transition.

Phillips 66 is converting its San Francisco crude oil refinery into a biofuel refinery under the Rodeo Renewed project. The company made the final investment decision in 2021, and the project is expected to finish in 2023. However, the company has listed several possible feedstocks, meaning the biofuels could be first or second generation. First-generation biofuels are not a low-carbon technology. Furthermore, the company has given mixed messages as to whether it will still process hydrocarbon products at the site or not.

Phillips 66 has not developed a policy to engage suppliers on the climate crisis. The company has a Business Partners Code of Conduct, but it does not specify requirements for emissions reduction or disclosure of emissions data, or any other low-carbon transition related requirements, for suppliers. To achieve the scale of value chain emissions reductions required by the low-carbon transition, it is imperative that midstream companies with activities that focus on oil and biofuel refining, such as Phillips 66, engage their upstream suppliers and create demand for low-carbon alternatives.

Phillips 66 has set emissions reduction targets to reduce scope 1 and 2 emissions by 50% by 2050, and scope 3 emissions by 15% by 2030, compared to 2019. It is planning to diversify its fuel mix and has made some investments into green hydrogen, biofuels and batteries. Phillips 66 has also committed to spending USD 1 billion on energy efficiency projects between 2021 and 2031, but it does not disclose a breakdown of this planned spending.

Phillips 66 has an incomplete transition plan with no net-zero target. However, it plans to use carbon capture technology to reduce its operational emissions through the Humber Zero project, which is in the early stages of development. It also plans to increase the use of renewable energy in its operations. The company is beginning to develop some low-carbon activities, but it does not yet show signs of strategically repositioning itself.

The company has bought a 16% stake in a batteries company in 2021, and it has also signed agreements to produce sustainable aviation fuel (SAF) for two airlines in the US. However, Phillips 66 is still assigning 70% of its capital expenditure (CapEx) to fossil fuel expansion. It has committed to converting its San Francisco crude oil refinery to a biofuel refinery, but without the company disclosing its feedstock it is not possible to determine if it will produce low-carbon biofuel or not.

Phillips 66’s scope 1 and 2 emissions intensity has increased between 2017 and 2021. In the same period, there is also no evidence of a significant reduction in its scope 1, 2 and 3 emissions intensity. This does not align with the respective annual 6% and 4% decrease in these emissions intensities required for the company to align with its 1.5˚C pathway.

Phillips 66 is signalling its intention to diversify its portfolio away from oil and gas, with the conversion of its crude oil refinery to a biodiesel refinery. However, given the lack of feedstock information, it is not possible to determine if this is truly a low-carbon technology. The company has an incomplete transition plan and does not look set to develop one as it remains committed to oil and gas.

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 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.

The company discloses the actions it takes to preserve jobs in its refinery that produces sustainable fuels. However, 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. However, no evidence was found that the company discloses the measures it takes to embed equality of opportunity for women and vulnerable groups in these actions. Moreover, no relevant disclosure was found of a process for identifying skills gaps for workers and affected stakeholders in the context of the transition.

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.

No evidence was found that the company commits to respecting human rights and the ILO fundamental rights at work and that it expects its business relationships to respect the ILO fundamental rights at work. Moreover, no evidence was found of the company’s process to identify, assess and mitigate salient human rights risks in its own operations and in its supply chain. 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.

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. 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 some indicators of workforce diversity, including the age, gender and race/ethnicity of its workforce by employee category. However, 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. The company has a policy prohibiting bribery and corruption, and 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 specifies that it does not make political contributions. Moreover, no relevant disclosure was found of the company’s expenditure on lobbying activities.