Saudi Aramco

Aramco aims to achieve zero scope 1 and 2 emissions across its wholly-owned and operated assets by 2050. The company has set an interim target of 1.5% reduction in scope 1 and 2 emissions by 2035 compared to 2021. It plans to use 16 million metric tonnes of offsets to achieve this interim target, the equivalent of 31% of its total emissions reduction goal. Aramco can strengthen its targets by reducing emissions through direct actions rather than offsets. Moreover, Aramco should set a target that covers its scope 3 emissions as well as sufficient interim targets set no more than five years apart to drive near-term action towards its long-term goal.

In 2022, Aramco announced a new USD 1.5 billion sustainability fund focused on CCS, greenhouse gas (GHG) emissions reduction, energy efficiency, nature-based solutions, digital sustainability, synthetic fuels, blue hydrogen and blue ammonia. The company does not disclose the amount of research and development (R&D) investment allocated for low-carbon mitigation or carbon removal technologies within this fund. This undermines the credibility of its statements about using technology and innovation to lower its climate impact.

Aramco expects its hydrocarbon businesses to grow for the rest of this decade in line with its expectations for demand for hydrocarbon products. Aramco is a member of several trade associations known for their negative stance on climate, including the International Association of Oil & Gas Producers (IOGP). Through its US subsidiary Motiva, Aramco is a member of the American Petroleum Institute (API) and the American Fuel & Petrochemical Manufacturers (AFPM). Motiva’s President and CEO sits on the board of the AFPM, which funded opposition to a Washington State referendum to institute a carbon tax. Aramco can show leadership by withdrawing from trade associations known for negative positions on climate policies and actively using its position in these associations to drive support for climate policy.

Since the previous benchmark assessment, Aramco states that it has developed multiple new business models. For instance, the company discloses its plans to produce hydrogen. However, it plans to generate blue hydrogen using gas and CCS rather than renewable energy. The company also reports its intention to expand its CCS capacity; however, this is linked to enhanced oil recovery (EOR) and not considered low-carbon under this assessment. The company’s only viable low-carbon business model is its plan to produce renewable energy equal to 12 gigawatts (GW) by 2030 from solar and wind projects. However, when compared to its oil and gas business, this is insignificant. Aramco must rapidly scale up its viable low-carbon business models to align with its 1.5°C pathway.

Aramco aims to achieve zero scope 1 and 2 emissions across its wholly-owned upstream and downstream operational assets by 2050. The company has set an interim target to reduce scope 1 and 2 emissions intensity by 1.5% by 2035 compared to 2021. Aramco plans to use offsets to achieve a third of this target. The company has not set any scope 3 emissions reduction targets.

The company has updated its climate change strategy. The initial focus of Aramco’s low-carbon transition plan includes development of CCS, GHG emissions reduction, energy efficiency, digital sustainability, synthetic fuels, blue hydrogen and blue ammonia. The company’s emissions reduction targets only cover its wholly-owned operational assets, which excludes some of the company’s subsidiaries.

The company announced a new USD 1.5 billion sustainability fund in 2022. In the same year, Aramco also partnered with the Saudi Arabian Ministry of Energy to develop one of the world’s largest CCS hubs globally. Aramco are aiming to increase their CCS capacity to 11 million tonnes per year by 2035. In addition, Aramco has invested in renewables to increase its solar and wind capacity to 12 GW by 2030. However, in 2022, the company’s oil and gas revenue still represented 99% of its total revenue.

Aramco’s scope 1, 2 and 3 emissions intensity has marginally declined between 2017 and 2022. The company’s scope 1, 2 and 3 emissions intensity is expected to slightly decline over the next five years, though not at the rate required by its 1.5°C pathway. To align with its 1.5°C pathway, Aramco needs to decrease its scope 1, 2 and 3 emissions intensity by over 4% annually. Aramco’s locked-in emissions are projected to exceed its scope 3 carbon budget by over 50% between 2022 and 2050.

Aramco’s transition plan and 2050 target is undermined by the company setting unambitious interim targets that do not align with a 1.5°C pathway, lack of reporting, lack of targets for its scope 3 emissions, and insignificant low-carbon business models. Aramco’s total scope 1 and 2 emissions has slightly increased since 2019. The company is still responsible for over 10% of global oil production and does not appear to be tackling its emissions at a proportional scale.

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 create employment through its Iktva, Namaat and Manifa oil field projects. It also discloses the measures it takes to ensure that these jobs embed equality of opportunity for women and vulnerable groups. In particular, it provides structural training to socially disadvantaged beneficiaries to help them become financially independent. However, no evidence was found of the company committing to create and support access to green and decent jobs as part of the low-carbon transition. Furthermore, 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 offers management, professional and technical training to its employees and an apprenticeship programme for young local talent. Furthermore, the company discloses the measures it takes to embed equality of opportunity for women and vulnerable groups in these actions. For instance, it has launched a center to support women by equipping them with sewing skills. However, no evidence was found of the company having a process for identifying skills gaps for workers and stakeholders affected by the low-carbon transition 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.

While the company has a grievance mechanism available to workers, no evidence was found that the same mechanism is available to external stakeholders. Moreover, no other policies or commitments of the company related to respect for human rights were found in the public domain. This includes the necessary policies and systems by which the company can ensure respect for basic human rights in its operations and supply chain.

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. While the company discloses the gender of its workforce by employee category, no relevant disclosure was found of additional indicators of workforce diversity. 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. No relevant disclosure was found of the company’s global tax strategy and 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. No evidence was found that the company has a lobbying and political engagement policy and that it specifies it does not make political contributions. No relevant disclosure was found of the company’s expenditure on lobbying activities.