SK Innovation

SK Innovation plans to reduce the scope 1 and 2 emissions of its energy business by 100% by 2050 and its scope 3 emissions by 70% by 2050. The company has also set interim targets for 2025, 2030 and 2040. The company’s scope 1 and 2 targets are close to being aligned with its 1.5°C pathway for 2025, 2030 and 2050. The company’s scope 3 targets, however, are not aligned with its 1.5°C pathway. In order to align the company should aim to achieve net-zero emissions by 2050 and significantly increase the ambition of its interim scope 3 targets.

SK Innovation has created a detailed transition plan for its core energy and battery businesses. The plan contains multiple interim targets, and has been informed by scenario analysis. The company is clear about the decarbonisation levers it plans to use and provides a vision of what the company will look like in the future. However, the ambition of the company’s transition plan does not align with its 1.5°C pathway, as it only intends to reduce its scope 3 emissions by 70% by 2050 compared to 2019.

SK Innovation’s subsidiary, SK On, has a mature battery business which contributed 10% of the company’s total revenue in 2022. The company plans to significantly expand its battery production output from 40 gigawatt hours (GWh) in 2021 by 220 GWh by 2025. The company could further improve by providing details of the growth potential and deployment schedule of this business model beyond 2025.

SK Innovation plans to reduce the scope 1 and 2 emissions of its energy business by 100% by 2050, and its scope 3 emissions by 70% by 2050. The company has also set interim targets for 2025, 2030 and 2040. SK Innovation plans to significantly expand its battery business.

SK Innovation outlines a number of actions it intends to take to reduce its emissions. The company is planning to improve operational efficiency, use carbon capture and storage (CCS), switch to renewable energy sources, reduce the proportion of energy products produced at its refinery, use ’net zero crude’ (oil where the lifecycle emissions have been offset by direct air capture and sequestration) and purchase carbon credits.

SK Innovation is increasing its battery production, reviewing the implementation of CCS, building electric vehicle charging stations and switching to from oil to gas to power its refineries. SK Innovation is also investing significantly in research and development (R&D) with 62% of its R&D investment going to low-carbon technologies including improved battery technologies and CCS This is the fourth highest proportion of low-carbon R&D in the sample.

SK Innovation has decreased its absolute scope 1, 2 and 3 emissions over the last three years and is on track to achieve its targets. However, the scope 1 and 2 emissions intensity of its refining operations has increased over the same period. There is no evidence to suggest that the company’s scope 1, 2 and 3 emissions intensity has decreased over the last three years. In order to align with its 1.5°C pathway the company needs to reduce its scope 1 and 2 intensity by approximately 6% and its scope 1, 2 and 3 intensity by over 4% per year between 2021 and 2026.

SK Innovation has a detailed transition plan and is significantly expanding its battery business which can help facilitate the low-carbon transition. However, the company has not committed to net-zero, has not ceased exploring for new oil and gas, and does not have a plan to transition away from its carbon intensive activities.

The company commits to engaging in social dialogue with workers and unions. It also discloses the categories of stakeholders it engages with on a just transition, including labour unions, which SK innovation acknowledges employees can join and leave as they choose, with management actively communicating and negotiating with labour unions. However, no evidence was found to demonstrate the company’s ongoing social dialogue and meaningful engagement with affected stakeholders. The company incorporates social dialogue and stakeholder engagement in its just transition planning. However, no evidence was found that the company has a set of time-bound, measurable indicators to mitigate the social impacts of the low-carbon transition on workers, affected stakeholders and its business relationships.

The company has a commitment to create and support access to green and decent jobs as part of the low-carbon transition. Furthermore, it discloses the actions it takes to create jobs through their mySUNI green college programme which supports employees and creates jobs in the energy sector. The company also discloses the measures it takes to ensure that these jobs embed equality of opportunity for women and vulnerable groups. However, no relevant disclosure was found of the company’s assessment of employment dislocation risks. The company has a commitment to re- and up-skill workers and stakeholders affected by the low-carbon transition and discloses the actions it takes in this regard. For instance, it aims to create jobs and employment services for people with disabilities, this rendered 37 jobs for people with disabilities.. Furthermore, the company discloses the measures it takes to embed equality of opportunity for women and vulnerable groups in these actions. However, 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.

There is no evidence that 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. However, the company has a process to identify, assess and mitigate salient human rights risks in its own operations and supply chain. The company does, however, disclose the stakeholders whose human rights have been affected by its activities. The company does also have a grievance mechanism available to workers and external stakeholders.

No evidence of the company’s policies or commitments related to key decent work issues were found in the public domain. These issues include the provision of secure, safe and healthy workplaces, where workers are fairly renumerated and have a meaningful say in decision-making.

No policies or commitments of the company related to key ethical business topics – personal data protection, tax, bribery and corruption, and lobbying and political engagement – were found in the public domain. This includes ensuring ethical business conduct throughout its operations and in its relationships with business partners.