FAQ| IR

s-oil

Owners & Other Stakeholders

C·E·O

Sustainability management at S-OIL starts from understanding the expectations of C.E.O. (Customers, Employees, Owners & other stakeholders). Going forward, the Company will create economic, environmental, and social values reflecting the expectations of C.E.O. and contribute to the development of society and the nation.

With the aim of securing the core competencies for sustainable growth, S-OIL has been making continuous investments based on a stable financial structure and carrying out activities to improve operational efficiency. S-OIL is also proactive in transparently and accurately disclosing management information to protect stakeholders' interest as well as pursuing shared growth with its suppliers based on mutual trust. S-OIL is not only joining the global efforts to tackle climate change through analyzing associated risks and opportunities and incorporating them into management decisions but also carrying out differentiated environment management activities. S-OIL's social contribution is in line with its management strategies in order to pursue co-prosperity with local communities.

O1 Investment in New Projects

In order to attain Vision and realize sustainable growth even amid greater uncertainties in the energy industry, S-OIL is making consistent efforts to enhance existing business, expand petrochemical business and seed future growth engine, based on its investment roadmap.

Shaheen Project

In 2018, S-OIL successfully delivered the Residue Upgrading Complex & Olefin Downstream Complex Project (RUC/ODC Project), the largest scale investment in its history with a total investment of KRW 4.8 trillion. To enhance profitability and diversify its business, S-OIL plans to continue investing in the petrochemical business following the successful completion of the RUC/ODC Project. As part of such effort, S-OIL is pushing for Shaheen Project, the 2nd phase investment for petrochemical expansion, to build a steam cracker that produces ethylene from naphtha and off-gas, and an olefin downstream facility that produces polyethylene and polypropylene. In 2019, S-OIL completed selection of the technology providers for steam cracker and olefin downstream, and in 2020, the Company plans to carry out the basic design in consideration of synergy with existing facilities. If Shaheen Project, which will incorporate highly advanced Thermal Crude to Chemicals (TC2C) technology, is implemented as planned with the final investment decision to be made by the BOD, S-OIL is expected to further strengthen the foundation for sustainable growth by diversifying its business portfolio, enhancing competitiveness and creating a stable profit structure.

Venture Investments

In order to proactively and preemptively cope with changes in the future business environment, S-OIL is looking for opportunities for venture investments in areas which can create synergy with the existing businesses in fuel, lube and petrochemicals, and new business areas which have great potential to become a new growth engine for the Company. To attain this goal, S-OIL actively communicates with various players in the industry to identify target start-ups and develop potential investment options. Currently, S-OIL is steadily making direct investment as well as indirect investment through venture fund in target business areas such as new energy, chemicals, mobility and smart plant that can enhance its competitiveness of existing business or become new growth engines in the future.

O2 Improvement of Operational Efficiency

Faced with the greater volatility in the energy and chemical industry, S-OIL seeks to continuously improve its operational efficiency through various profitability activities, such as ramping up production of high value-added products and saving energy cost. S-OIL is also constantly striving to sharpen its competitive edge and creating new values by tapping into core technologies of the 4th Industrial Revolution, including big data.

SUPER-II Project

With the aim of increasing the profitability of existing production facilities in Onsan Refinery, S-OIL has successfully completed its S-OIL Upgrading Project of Existing Facilities (SUPER Project) with a total investment of KRW 320 billion over three years from 2015 to 2017. Building upon the knowhow and success DNA acquired through the SUPER Project, S-OIL is implementing the SUPER-II Project for continued profit improvement. Recognizing the International Maritime Organization's (IMO) move to tighten regulations on the sulfur content of marine fuel from 2020, S-OIL responded to the risk and created new revenue through the RUC/ODC Project by reducing the production of high-sulfur fuel oil and increasing that of light oil products, for which demand is expected to increase. Without complacency, S-OIL will focus on delivering the residue hydro-desulfurization unit (RHDS) revamping, the first task of the SUPER-II Project, to convert surplus high-sulfur fuel oil generated during T&A into high value-added low sulfur marine fuel oil in preparation for the IMO's tougher regulations on sulfuric content on marine fuel.

Various Activities for Profitability Enhancement

To minimize unnecessary loss and improve operational efficiency throughout the entire processes from import of crude oil to production and market distribution, S-OIL continues to carry out various profit improvement activities, including optimizing the operational conditions of production facilities, expanding production capacity of high value-added products, adjusting mixture ratios of products and reducing fuel consumption. The profitability improvement reward system and Employee Suggestion Program are in operation in order to promote profit improvement activities and encourage voluntary employee participation. In addition, S-OIL operates S-RICH (S-OIL Refinery Improvement Communication Hub) system to efficiently manage the identified profit improvement tasks and provide a platform for sharing data among employees. This effort resulted in a profit improvement of about KRW 66.2 billion in 2019 in terms of increased production capacity, improved high value-added product yield, energy saving and off-site optimization.

Energy Consumption Reduction and Efficiency Improvement

S-OIL continues to reduce its energy use through in-house energy saving programs and external consulting. In 2019, S-OIL found energy saving ideas through in-house reviews that could improve Energy Intensity Index (EII) by 0.48. S-OIL is also implementing ideas that could improve EII by 0.75 through an energy saving consulting on No. 2 RFCC. In 2020, S-OIL plans to conduct an energy saving consulting on the olefin process jointly with the Korea Energy Agency. In addition, S-OIL receives low-cost steam from LS-Nikko Copper and Korea Zinc, adjacent to the Refinery, to cut costs and greenhouse gas emissions, while the steam supplying companies create additional profits from selling surplus steam, achieving shared energy growth.

Digital Transformation

S-OIL has selected digital transformation using big data and ICT, key technologies of the 4th Industrial Revolution, as one of strategic tasks to achieve Vision, and is developing innovative action items to drive digital transformation, to achieve greater work efficiency, cost reduction, operational optimization and business capabilities enhancement. In 2019, dedicated team conducted 4 Proof of Concepts (PoC) and executed 3 projects. As a result, S-OIL established a demand forecasting model on domestic light oil and used it for actual market demand forecasts. S-OIL also implemented a chatbot system to streamline the Call Center, enabling customer services 24 hours a day. In addition, S-OIL developed a chatbot system to enable efficient training for service station attendants who have high turnover rates. S-OIL continues to look for areas that require digital transformation across the board, especially in relation to the plant and marketing. In particular, S-OIL plans to develop a mid- to long-term roadmap for digital transformation in all aspects of operations, including safety, production, maintenance, quality control, and inventory management, in order to improve productivity and efficiency. In addition, the Refinery drives digital transformation by the Smart Transformation for Advanced Refinery (STAR) project and finding and prioritizes innovation tasks in a systematic manner.

Realization of Work-Smart through Upgrading IT Systems

S-OIL is committed to implementing a work-smart environment that enables IT systems to respond more flexibly and quickly to changes in its business environment, and to work efficiently to improve profitability. In 2019, S-OIL upgraded the e-Procurement systems to ensure the reliability and improve business convenience and efficiency. At the same time, S-OIL enhanced the ERP system for polymer business and introduced the e-Biz system for lubricants export, to increase work efficiency. S-OIL has also made efforts to realize Work-Smart by replacing obsolete IT infrastructure to improve system performance and stability.

O3 Financial Soundness / Transparent Disclosure of Management Information

S-OIL maintains a stable financial structure through efficient financial management and optimized financing in response to rapid changes in its business environment. S-OIL is protecting investors and contributing to the national economy through balanced performance distribution, responsible tax compliance, and transparent management information disclosure.

Establishment of Financial Soundness and Efficient Financial Management

S-OIL closely tracks key indicators of financial soundness and periodically forecasts future cash flows to minimize unnecessary borrowing and maintain a stable financial structure even amidst rapidly changing business environment. When the financial structure is expected to deteriorate, S-OIL establishes countermeasures at the enterprise level in advance to ensure financial soundness. In addition, S-OIL maintains the highest credit rating in the industry, and actively communicates with domestic and overseas credit rating agencies so that its excellent financial flexibility, potential financial support from parent company, Saudi Aramco, and strategic importance of the Company can be reflected in its credit ratings.

Optimized Financing

In 2019, S-OIL issued corporate bonds worth KRW 660 billion on competitive terms thanks to its sound credit ratings and proactive IR activities. S-OIL lowered the average borrowing cost for corporate bonds through these optimized financing. In particular, the 10-year corporate bonds issued in June 2019 were recorded at 1.86%, the lowest interest rate among the bonds with the same maturity. If any new project for securing new growth engines is implemented as planned with the final endorsement from the BOD, S-OIL will establish the optimal financing strategy by closely reviewing both traditional financing at home and abroad and cutting edge and innovative financing, and taking on board the impact of such financing on its financial stability.

Budget Management for Efficient Resource Allocation

S-OIL sets and executes its budget in a systematic manner to ensure efficient allocation of limited resources. To prevent unnecessary items being budgeted, and to draw up a budget organically linked to its management policy and strategy, S-OIL uses the Zero Base Budgeting (ZBB) approach and have budget items undergo a thorough review by the relevant team before execution. In 2019, S-OIL curbed unnecessary budget execution to the fullest extent by making savings in existing business segments and minimizing the cost increase following the completion of the RUC/ODC Project.

Balanced Performance Sharing

In consideration of financial soundness, reserves for securing future growth engines, and ability to pay debt, S-OIL strives to grow with shareholders by returning profits created to them in a balanced manner. To this end, S-OIL allocates profits created to internal reserves for investments, financial soundness and the return of shareholder profits within the cap of distributable retained earnings in a reasonable and balanced manner. In accordance with its own dividend policy, the dividend, if available, shall be paid twice a year. In addition, S-OIL discloses future dividend guidelines along with dividend policies to provide investors with information in a transparent manner.
Dividend Policy
Cash dividends shall be paid to shareholders from distributable retained earnings with the aim of achieving a balanced capital structure after setting aside annual net profits for the amounts to support reasonable capital needs and other expenditures as agreed by the Board of Directors.

Sincere Tax Payment

S-OIL takes it as an important responsibility as a respected corporate citizen to contribute to the national economy and social development through faithful tax payments. In accordance with its own tax policy, S-OIL observes the regulations, maintains an honest and transparent relationship with the taxation authorities, and dutifully pays taxes. In addition, corporate tax, deferred tax and effective tax rate are reported in detail through an audit report of independent auditors, and disclosed to the public through the electronic disclosure system of the Financial Supervisory Service.
Tax Policy
S-OIL adheres to the following tax policies, recognizing that contributing to the national economy and social development through sincere tax payment is an important responsibility of corporate citizens.
  1. The Company shall strictly comply with the tax-related policies, laws, and international standards (OECD Guidelines, etc.) of the country or region where the Company operates its business.
  2. The Company shall not violate tax laws or conduct inappropriate tax accounting activities for the purpose of tax avoidance.
  3. The Company shall not use haven countries for offshore tax evasion or inappropriate tax reduction.
  4. The Company shall not engage in any transactions related to transferring income between countries by trading transparently and fairly in foreign transactions.
  5. The Company shall apply objective and reasonable transfer prices for transactions with specially related parties.

Full Compliance with Disclosure Regulations

In order to uplift investor confidence and comply with disclosure regulations, S-OIL closely monitors the enactment and amendment of relevant regulations, and provides public disclosure training to employees, taking extra care to prevent any omissions or delay in disclosure. To this end, S-OIL distributes new and revised regulations, and a reference material that classifies important disclosure items by each team to all employees. Through the stringent compliance with disclosure rules, S-OIL provided its management information transparently to shareholders and investors by making a total of 40 public disclosures, including autonomous disclosures, with no disclosure breach in 2019.

IR Activities to Enhance Corporate Value

S-OIL actively engages in investor relations activities to provide shareholders and investors with management information in a transparent manner and enhance corporate value. Every year, S-OIL surveys analysts about their satisfaction on its IR activities and then incorporates their feedback to improve the quality of IR activities. In 2019, S-OIL conducted various IR activities with focus on delivering accurate information about the Company's growth engines based on the RUC/ODC Project to shareholders and investors. It held 4 earnings release conference calls and 7 non-deal roadshows to domestic and foreign investors, and delivered management information transparently through active IR activities, including participation in 11 large investor conferences.

O4 Management of Sustainability in Supply Chain

S-OIL strives to open up new business opportunities for co-prosperity with suppliers as well as to minimize risks associated with the supply chain by helping suppliers secure competitiveness.

Procurement Process Improvement

Since 2013, S-OIL has introduced advanced purchasing processes such as auto-invitation and blind-bidding to dramatically improve the transparency, objectivity and fairness of its purchases. Procurement of goods and services is initiated through automatically inviting all suppliers who joined each sourcing group after preliminary reviews of the Sourcing Group Deliberation Committee (SGDC) in accordance with the auto-invitation procedure. Then S-OIL selects contractors through Blind-Bidding, where the e-Procurement system automatically carries out the quotation process. Through the new purchase process, S-OIL improves the process of selecting contractors more transparently and fairly, and upgrades its procurement process through continuous communication with suppliers.
Critical Supplier : 36 companies
Selection Standards
  1. Large quantity of products and services suppliers
  2. Irreplaceable suppliers
  3. Long-term stable suppliers of products and services
  4. Essential suppliers for operation of main processes

Improvement of SRM System

S-OIL has been operating the Supplier Relationship Management (SRM) system since 2010 with the goal to select suppliers based on transparent procedures and fair evaluation. S-OIL secures objectivity and reliability of the SRM system by conducting a comprehensive evaluation on the basis of the Korea Enterprise Data's (KED) credit ratings and performance assessment on suppliers. In particular, S-OIL seeks a long-term win-win relationship with suppliers by selecting high performing suppliers in 9 categories based on the results of its annual comprehensive evaluation.

Systematic Supplier Sustainability Management

S-OIL has established the zero safety and environment accident and the ethics management as the goal of supply chain sustainability management, and systemically manages its suppliers. S-OIL evaluates not only suppliers' basic competence, such as financial stability and technological prowess but also their sustainability competence encompassing business ethics, conflicts of interest, safety, and the environment. Bidding opportunities are given to only suppliers who pass the evaluation process, and all suppliers are required to be reevaluated annually. When there is necessity to conduct an in-depth evaluation due to risks, etc., S-OIL conducts in-depth evaluations through the SGDC consisting of professionals in the fields of compliance, technology, and management. In 2019, a total of 410 suppliers were evaluated by the SGDC. In addition, in 2019, S-OIL visited business sites of 37 suppliers for sustainability risk assessment, and supported improvement activities of all 35 companies that were found to have risks. Moreover, suppliers of S-OIL are required to submit and practice a pledge on complying with its Ethics Code. S-OIL has invited suppliers for training on its procurement system and Ethics Code and checking their compliance every year since 2013. In 2019, a total of 583 suppliers participated in the program.
Ethics Policy for Suppliers

S-OIL's suppliers shall comply with the S-OIL Supplier Ethics Policy as stated below and shall make efforts to build sustainable supply chains.

  1. We comply with international ethics-related regulations as well as anti-corruption and anti-bribery regulations as a member of the nation and local communities.
  2. We do not carry out any illegal act such as bid rigging that affects cost estimates.
  3. We do not provide or promise to give valuables or entertainment to project owners.
  4. We eliminate discrimination in terms of gender, race, nationality, disability, religion, and union activity.
  5. We respect business partners and their employees, and do not have an impersonal manner. We do not restrain employees' physical and psychological freedom illegally, and we do not force people to work against their will.
  6. We comply with the working hour requirement and the minimum wage as determined by labor-related laws and regulations.
  7. We prohibit employment of minors under the age of 15, and exclude employees under the age of 18 from work with higher potential health and safety risks.
  8. We guarantee the freedom of association, and prohibit any disadvantage from it.
  9. We comply with labor conditions determined by labor-related laws and regulations in each country and region.
  10. We provide employees and relevant staff with a safe and healthy work environment, and take proper action to prevent them from being exposed to potential safety risks.
  11. We comply with environmental laws and regulations, and recognize that environmental protection is our basic social responsibility.
  12. We strive for continuous job creation, and implement social contribution activities for the development of local communities and the national economy.
  13. We have S-OIL level or higher ethical procurement policy for our suppliers.
Direction of Supply Chain Sustainability Management
  • Enhancement of fairness and transparency in the selection of bidders by systematically improving the supplier evaluation process
  • Procurement of high quality products at reasonable price through the differentiated selection of suppliers
  • Integration of procurement processes & enhancement of interactive information sharing with the suppliers
  • Enhancement of collaboration with outstanding suppliers
  • Analysis of information for effective purchasing

O5 Environment Management

Based on its strong commitment to environmental preservation and green management, S-OIL is actively carrying out eco-friendly policies and continuous environmental investment as well as complying with environmental laws. Environmental Affair Team at the Head Office and Environment Management Team at the Refinery, which dedicated to environmental tasks, operate a systematic environment management system, aiming to minimize pollutant discharge and adverse impact on the environment. S-OIL also produces environmentally friendly products through continuous improvement of processes and environmental facilities and manages environmental pollutants at a significantly lower level than the legal threshold. In addition, S-OIL responds to various environmental laws in a proactive manner.

Environmental Management Systems

S-OIL has set the establishment of proactive green management as the top priority of its first environmental policy, and is not only producing high-quality eco-friendly products by continuously revamping production processes and introducing new technologies, but also securing environmental impact reduction facilities such as desulfurization, denitrification, wastewater treatment, and dust collection facilities. Since 1996, S-OIL has steadily implemented the highest level of environmental management by acquiring ISO 14001 environmental management system certification for all production processes. ISO 14001 has been adopted to all production processes and terminals step by step. In 2019, S-OIL has successfully achieved ISO 14001:2015 environmental management system certification for the newly established RUC/ODC process as well by thoroughly analyzing environmental aspects, identifying environmental risks, establishing and implementing environment management plans, setting effective environmental goals, and thoroughly managing environmental performance standards. In addition, S-OIL also provided environmental training for about 1,000 employees in 2019 as part of its effort to internalize environmental laws, and its environmental management strategy and system.
Environmental Policy

S-OIL has established and operates an advanced environmental management system under the principle of preventive green management that prevents environmental hazards and risk factors at every stage of business operation. In addition, the Company complies with the following environmental policies with the cooperation of stakeholders such as customers, suppliers and employees.

  1. The Company shall comply with the environmental laws and regulations of the region in which the Company operates its business, establish strict internal standards that are above legal standard, and adhere to the standards.
  2. The Company shall minimize the environmental pollutants created in the production processes or business facilities through the improvement of efficiency, etc. and prevent potential environmental accidents.
  3. The Company shall develop, manufacture and sell highly efficient products that minimize environmental impact on consumers.
  4. The Company shall minimize greenhouse gas emissions from the distribution process through efficient logistics system operation and prevent environmental accidents such as leakage.
  5. The Company shall treat wastes safely and environmentally, and improve waste reuse.
  6. The Company shall consider environmental factors when selecting suppliers and do not receive products and services from suppliers that can cause serious environmental pollution while expanding green purchasing.
  7. The Company shall improve the environmental performance of affiliated companies such as JVs and subsidiaries, and also consider environmental factors in capital investments such as mergers and acquisitions.
  8. The Company shall actively support and participate in environmental protection activities such as biodiversity conservation.

Environmental Pollutant Emissions Control (SDGs #14, #15)

S-OIL has in place stricter in-house emissions standards than legally required in order to improve the atmospheric environment. S-OIL replaces boiler fuel with LNG to minimize emissions of fine dust and SOx in the air. S-OIL operates environmental protection facilities efficiently, makes steady investment in environmental facilities such as Ultra Low NOx Burner (ULNB) and Selective Catalytic Reduction (SCR). In addition, Leak Detection & Repair (LDAR) is in operation to systemically control the fugitive emission of hazardous air pollutants (HAPs), which may be produced during product storage, shipment, and processing, into the air without being filtered by vents. In 2019, thanks to the continued strict leakage control by production teams, the leakage rate remained only at 0.03% (when S-OIL's internal leakage standard of 500 ppm is applied). Meanwhile, S-OIL has completed the improvement of related facilities in response to the Clean Air Conservation Act, which was amended for tightened fugitive emissions of HAPs. S-OIL has consistently reduced environmental pollutants with the efficient operation of pollution prevention facilities, environmental investments including renovation of facilities for improved energy efficiency and transition into eco-friendly fuel to cut pollutant emissions. S-OIL has also signed a voluntary environment management agreement with the government to reduce its emissions of air pollutants, including fine dust, by 40 percent from the 2014 levels by 2022, and established detailed targets and action plans.
S-OIL operates a wastewater treatment plant in a stable manner in order to minimize the impact of its business operation on the nearby sea. The plant treats wastewater using physical, chemical, and biological methods to ensure pollutants are effectively removed. Tele-Metering System (TMS) transmits data on water quality to administrative agencies in real time in preparation of an emergency. S-OIL also expanded rainfall storage tank capacity for the heavy rainy season and strengthened monitoring of 32 kinds of specific substances harmful to water quality such as Cu, Pb, and As, contributing to improving water quality.
S-OIL periodically carries out self-checks as well as legally mandatory inspections to prevent soil pollution in the Refinery and terminal, including oil storage facilities. S-OIL also continues to improve facilities in a systematic manner by laying pipes on the ground instead of underground. Signing the Voluntary Agreement on Soil Environmental Protection with the Ministry of Environment, S-OIL conducts not only self-inspections for soil pollution on its terminals and service stations (S/Ss) but also voluntarily initiates soil restoration activities upon discovering soil pollution. To fulfill the agreement, S-OIL conducts legal inspections as necessary to monitor soil pollution while carrying out self-inspections every three years to prevent soil pollution. Moreover, S-OIL's new and remodeled S/Ss are built with the concept of Clean S/S. Clean S/Ss are environmentally-friendly facilities as they prevent leakage of pollutants with double-layered tanks and pipelines. Even if pollutants are leaked, leakage sensors and alarms go off instantly, stopping spread of pollution in a swift manner.
S-OIL complies with the standards for hazardous chemicals handling and associated facilities in accordance with the Chemicals Control Act, and improves its response capability in the event of an accident involving chemical substances through regular emergency drills. In addition, S-OIL prepares accident scenarios for hazardous chemicals the Company handles, estimates the scope of impact, and develops a summary of chemical accident risk and emergency response information, through the over-the-counter impact assessment and risk management planning. The summary is then notified to local communities once a year to ensure thorough accident prevention and response activities.
To create a virtuous circle of eco-friendly resources, S-OIL has steadily reduced waste discharge and increased waste recycling by strictly practicing separate waste collection. In order to preclude any possible fire accidents and contamination in the waste storage process, S-OIL also installed fire detectors and water spray sprinklers in the waste and waste catalyst storage facilities. In 2018, the 2nd waste storage facility was augmented to efficiently store and manage the increasing volume of waste.
S-OIL has systematic response procedures to prevent leakage of oil and hazardous chemicals in the Refinery and systematically respond to accidents. S-OIL regularly inspects facilities and conducts emergency response training to enhance its emergency preparedness. S-OIL has installed 32 oil detectors in major areas of the Refinery to further strengthen its capability to carry out first response and contain an oil spill. In addition, S-OIL conducts regular emergency drills based on hazardous chemicals and oil leakage scenarios every year.
To prevent marine pollution accidents, S-OIL has in place work standards and procedures and is strengthening on-site monitoring and conducting emergency response drills and training on a regular basis. In particular, S-OIL places its focus on enabling timely response to any crisis or emergency by offering accident prevention training on a quarterly basis based on various marine pollution scenarios. In order to prevent marine oil spills, S-OIL operates the vetting system that fundamentally blocks vessels that fall short of strict safety standards from entering and leaving port facilities, by proactively assessing the risks of all vessels beforehand. In addition, for Single Point Mooring (SPM), an onshore logistics facility for very large crude oil carriers that can cause significant damage from marine pollution in the event of an accident, S-OIL also has a protection system consisting of radar, tidal current measurement, and mooring tension measurement systems, as well as the Automatic Identification System (AIS) that prevents dock crashes. S-OIL has installed oil spill detectors to the final discharge outlet on the seafront to enhance the monitoring of the risk of marine pollution accidents.

Environmental Impact Evaluation and Response to Environmental Regulations

S-OIL has been recognized as an eco-friendly company that faithfully complies with the Environmental Impact Assessment Act and fully considers possible environmental impact on neighboring areas. In case of new projects or large-scale construction, S-OIL evaluates the impact on the environment, reflects the pollution reduction plan in the project design, and executes periodic measurements of air, water, the ecosystem, and soil quality. The results of environmental impact evaluation are submitted to administrative agencies before the project, and follow-up environmental impact assessment is carried out legitimately during and after the project to minimize any environmental impact.
S-OIL proactively responds to environmental policies and regulations in accordance with its environmental policy of Proactive Green Management. From the initial stage of plant construction, S-OIL took into account environmental management by introducing optimized pollution prevention facilities, and has made efforts to minimize environmental impact through strict compliance with regulations and in-house standards. S-OIL conducts daily self-inspection and remedy any unsatisfactory areas immediately to further solidify the autonomous environment management system. S-OIL also copes with the government's environmental policy in a positive manner by reviewing changes in environmental regulations and reflecting them in its management strategies. Particularly, relevant teams convene a monthly meeting to review environmental regulations, report the results to the management, and share those with production teams. Legal Compliance System (LCS) enables information sharing on revisions to environmental regulations and self-assessments on a periodic basis against the environmental regulation compliance checklist. Compliance status is also checked during internal audits for the purpose of practicing compliances management. Through this effort, S-OIL was selected for an award of excellence by the Minister of Environment as an exemplary case in the refining industry for the pilot project on the Act on the Integration of Environmental Pollution Management.
S-OIL has established a set of rigorous standards, based on which eco-friendly management is pursued. S-OIL gathers and analyzes global environmental management trends and changes in relevant regulations at home and abroad through continued communication with various stakeholders including local communities, the government, the media and academia, and reflects those data in the company-wide environmental management system. S-OIL shares its environmental management information with local communities, relevant institutions, and other stakeholders, and reflects their opinions to improve its environmental management activities. S-OIL actively participates in diverse environmental events in local communities to practice environmental protection and forms close ties with those communities, and contributes to the improvement of the environment of local communities by supporting environmental training materials for business partners and providing environmental management consulting for small businesses in local areas.

O6 Response to Climate Change

S-OIL recognizes the issue of climate change as an immediate challenge and takes into account the internal and external uncertainties associated with climate change in investment and facility operations, while developing a mid- to long-term response strategy. The establishment of the company-wide carbon management system enabled S-OIL to implement cost-effective solutions to its GHG reduction obligations and making rational investment decisions considering carbon costs. S-OIL is also actively participating in global efforts to reduce GHG emissions through fuel switch on a large scale and in the government's policy on climate change.

Advancement of Carbon Management System (SDGs #13)

S-OIL operates an IT-based carbon inventory system to identify, record, calculate and report GHG emitted by its business activities for systematic GHG management. New and revised regulations of the government are frequently reflected in the system to maintain the accuracy and reliability of data through internal verification and independent external assessment. S-OIL also regularly maintains and calibrates the measurement and analysis equipment to maintain the highest level of GHG monitoring in the industry. Management Committee is held to revamp internal procedures on carbon management and expand GHG cost estimation scope to small-medium-sized process upgrades and energy savings in all business areas and investment projects, as well as large-scale new investments, thereby reinforcing the rationality of investment decision making. S-OIL is incentivizing employees to actively participate in energy and GHG reduction efforts by returning some of the economic benefits from excellent proposals to them. In the meantime, S-OIL is in the process of establishing a comprehensive emission allowances management plan in line with its mid- to long-term operational plans and national emissions reduction roadmaps by predicting future emissions and emission allowances allocations. In 2019, S-OIL traded 112,000 tons of GHG emissions allowance as planned.

GHG Reduction Performance (SDGs #13)

Tapping onto the Energy Conservation & Operation System (ECOS), S-OIL performs energy diagnosis activities to discover improvement areas and apply them to the process to reduce actual energy consumption and GHG emissions. In 2019, while continuously optimizing the RUC/ODC process, S-OIL pulled off a reduction of around 420,000 tons of GHG emissions from the previous year, which excludes the emissions from the RUC/ODC Project, thanks to various efforts. About 10 projects were conducted to reduce GHG emissions. In particularly, S-OIL reduced GHG emissions by about 50,000 tons per year by reducing the heat consumption through RUC/ODC process improvement. Furthermore, S-OIL is making concerted efforts to cut GHG emissions across the board such as the replacement of high-efficiency equipment, improvement of the process control system, and re-use of waste heat generated from near companies. S-OIL has also expanded the use of low-carbon LNG, which is known to be the surest and most effective solution to GHG emissions issues. S-OIL is strengthening monitoring on indirect emissions from supply chains including crude oil procurement and product distribution. In particular, Saudi Arabian crude oil, which S-OIL imports, is known to have the lowest GHG emissions in the world.

GHG Reduction Initiatives (SDGs #7)

To raise awareness and build consensus on GHG reduction among consumers, S-OIL conducts Eco Campaign every year, which captures drivers' interest with novel ideas, including No Idling and Car Diet. S-OIL obtained the Carbon Trust Standard, a global carbon management certification, in 2012 for the first time in Korea. S-OIL also joined the Carbon Disclosure Project (CDP) and has been selected as a high performer for four straight years, demonstrating its sincere efforts to take the lead in disclosing carbon information in a transparent manner. In 2015, S-OIL established an initiative to boost energy efficiency by 15 percent by 2030 in collaboration with Korea's leading companies and is making relentless efforts to meet the target. S-OIL implemented a cogeneration plant project in collaboration with KD Powertech since 2016. This is to generate 16.4 MW of electricity by recycling waste heat and to sell it to KEPCO, which contributes to reducing GHG by 61,000 tons every year. Not only reducing direct GHG emissions, S-OIL also strives to keep pace with global efforts to tackle climate change. In order to improve the quality of life for the people of Myanmar suffering from repeated droughts, floods, typhoons and severe air pollution that lead to many deaths each year, S-OIL launched a project to provide high-efficiency cookstoves for free in 2019. This project will improve human rights of women and children as well as air pollution. The project is also expected to help reduce timber use and help reduce GHG emissions by preserving forests in Myanmar.

Business Diversification to Meet Changes in Demand

Global effort to tackle climate change can have an impact on the demand for oil and petrochemical products in the mid- to long-term. Recognizing the importance of proactive response to the global phenomenon, S-OIL successfully completed the RUC/ODC Project in 2018 to convert residual oil into high value-added petrochemical products, which are eco-friendly, high-functioning materials. Furthermore, S-OIL plans to explore other opportunities to create synergy with existing businesses and foray into new business areas by carefully analyzing the impact of climate change on business environment.

O7 Social Contribution Activities

S-OIL strives to fulfill its social responsibilities and practice its core value, sharing. In order to carry out productive and strategic social contribution activities, S-OIL identifies expectations of local communities through diverse communication channels with stakeholders. Then, S-OIL implements systematic and differentiated social contribution activities through selection and concentration in accordance with its three key principles: being effective, timely, and beneficiary-centered, under the vision statement of Sunshine Sharing. S-OIL also reinforces the efforts to develop and implement CSV programs aligned with its business.

For Local Communities (SDGs #3, #4)

S-OIL carries out various social contribution activities for the development of local communities where worksites are located, such as Ulsan, Mapo and Magok, the improvement of the quality of life of local residents, and the Company's sustainable growth grounded upon local communities' strong support. Those activities include the Culture & Arts Sharing campaign, the support of local communities near to terminals and TS&D Center, the operation of GooDoil Cafes, the establishment and operation of the S-OIL Ulsan Welfare Foundation, the sponsorship of Taewharu Pavilion culture and arts events in Ulsan, the support of welfare centers in Ulsan, and the sponsorship of the Mapo Human Resources Development Foundation.

For the Environment (SDGs #14, #15)

S-OIL is implementing various activities in order to protect endangered natural treasures and preserve nature and ecosystem diversity for future generations. S-OIL sponsors the research and protection campaigns of professional organizations dedicated to protecting natural treasures such as otters, red-crowned cranes, spotted barbels and long-horned beetles. Also, S-OIL runs natural treasure classes for children, operates a university student natural treasure protection corps, and organizes various volunteer activities for employees and customers to participate. In addition, S-OIL regularly conducts environmental cleanup activities around Mokdo Island, which is a natural monument adjacent to the Refinery, and is expanding green procurement to further contribute to environmental protection. In particular, S-OIL is restoring part of the environmental impact caused by its business activities through environmental protection activities while at the same time vigorously communicating with stakeholders regarding its endeavors to promote environmental protection and to minimize pollutant emissions.

For Needy People (SDGs #1, #2)

S-OIL is engaged in many programs to help alienated neighbors stand on their own and contribute to society as healthy citizens amid the continuous interest and support of society. For example, S-OIL sponsors scholarships for youths living in residential facilities and the Sunshine Sharing Camp for children with rare diseases, provides learning devices tailored to youths with disabilities, and sponsors the Heart-Heart Orchestra for youths with developmental disabilities. In addition, S-OIL provides heating fuel and aides in the recovery of fire damages for low-income families, helps battered female migrants, holds the Sharing N Campaign at service stations, sponsors the participation of the disabled in overseas marathon races, and supports many other charity programs for the needy. In particular, S-OIL is communicating with its stakeholders on its efforts to fulfil social responsibilities through the support of needy neighbors. At the same time, it is handing out its fuel products for free to needy neighbors, which generated the effect of giving a warm image to its fuel products that are not well differentiated from other brands.

For Heroes (SDGs Target #3)

In order to support the righteous people in our society, S-OIL supports the Hero Firefighters who commit themselves to saving lives despite tough working conditions, Hero Maritime Police Officers who are at the forefront of maritime crime control and sea-rescue operations and Hero Neighbors who selflessly help neighbors in danger with the spirit of sacrifice. These programs are contributing to building a brighter and healthier society. Also, S-OIL provides financial aid and tuition fees to the surviving families of firefighters or maritime police officers who have passed away in the line of duty, as well as medical expense support to those who have been injured during work. Furthermore, firefighters or maritime police officers can participate in the healing camp program, and S-OIL selects and awards Hero Firefighters, Hero Maritime Police Officers and Hero Citizens every year.

Sunshine Sharing Public Service Corps

S-OIL has been executing an array of social contribution activities such as delivering Ttokguk (rice soup), Songpyeon (rice cakes), Kimchi, and coal briquettes to low-income families in local communities where the Company operates, since the launch of the Sunshine Sharing Public Service Corps in 2007. S-OIL's employees also engage in voluntary donation activities through the Sunshine Sharing Campaign, such as wage tail-cut contribution to help children suffering from biliary atresia and in the 1 person-1 donation account campaign to support children raised by grandparents.

Social Contribution Activities that Reflect Stakeholder Opinions

S-OIL is proactive in developing various social contribution programs, such as a charity program idea contest, that are based on stakeholders' engagement and relevant to its business, and can bring out a productive and positive effect on society. To this end, S-OIL conducts social contribution training every year with the aim to encourage employees to voluntarily take part in its social contribution programs. For example, incorporating stakeholder feedback, the Company grants the S-OIL Dream Scholarship to adolescents who should be discharged from residential facilities due to age restrictions, helping them continue their studies and grow into responsible members of society. S-OIL started providing scholarships to college students discharged from facilities in 2016 and expanded the scholarship program to cover high school students who live in residential facilities, helping them acquire diverse licenses and developing their self-reliance even after being discharged from the facilities. In addition, since 2019, S-OIL has supported the Regional Emergency Medical Center of Ulsan University Hospital with the operation of the Doctor Car, which was on the verge of discontinuing the operation due to lack of budget, causing much worry about a medical service vacuum in the heavily industrialized city of Ulsan with many heavy and chemical businesses that run higher risk of accidents.

CSR Strategy Aligned with Business

The CSR strategy of S-OIL has been established in consideration of the nature of its business so that its CSR activities can maximize social and environmental benefits and create positive results in its business. S-OIL's CSR activities contribute to creating positive brand values that fulfill its social responsibilities while also promoting sales of products through donations of its products. It is also the result of CSR activities as a medium to form constructive and cooperative relationships with local communities and to convey S-OIL's commitment to environmental protection to stakeholders. Since 2018, S-OIL supported food trucks in connection with its service station business to help young entrepreneurs manage their businesses, and ease unemployment and create jobs for the youth. In addition, the Company has established the S-OIL Science and Culture Foundation to develop talented people in the science and technology fields.

O8 Contribution to Local Communities

S-OIL carries out various social contribution activities for co-prosperity with local communities where worksites are located, such as Ulsan, Mapo and Magok. S-OIL promotes various community support activities through the Culture & Arts Sharing campaign and the S-OIL Ulsan Welfare Foundation etc. S-OIL is committed to revitalizing the regional economy, creating jobs and solving challenges hand-in-hand with local communities based on close communication.

Expansion of Base for Local Culture and Arts (SDGs #3)

S-OIL supports local cultural events in areas where it does business as a way to build a better quality of life including cultural exposure to local communities and to patronize artists. In recognition of its wide-ranging efforts to expand cultural infrastructure for local communities, S-OIL was awarded the Minister of Culture, Sports and Tourism Prize in 2015.
Since 2011, S-OIL has been promoting the Culture & Arts Sharing campaign in Mapo, Seoul, where its Head Office is located. Diverse culture and arts events are held at the auditorium every month, inviting local residents to enjoy high-quality culture and arts performances for free. The family-oriented performances in a wide range of genres are received very well and enjoyed by more than 3,000 people every year. Local residents who enjoyed the culture and arts performances saw their participation in cultural and artistic activities increase more than twice a year, demonstrating that S-OIL is contributing greatly to the revitalization of local communities' culture and arts. In addition, S-OIL supports the Mapo Ferry Salted Shrimp Festival, which is a traditional cultural event in the Mapo area, serving the role as guardian of local culture.
To expand the base of culture and arts in Ulsan, where the Refinery is located, S-OIL carries out various activities. It established one of Korea's most prestigious literary awards, the Oh Young-soo Literary Prize, in 1993 in honor of the talented short story writer from the region. Additionally, S-OIL has been holding the Beautiful Eyes Art Festival since 1996, an arts event that mainly invites amateur artists from the region. Furthermore, S-OIL donated KRW 10 billion, the total budget required for the Taewharu restoration project, boosting the pride of Ulsan citizens while giving them access to a comfortable public rest area. This restoration project was completed in 2014 and since then, S-OIL has since supported culture and arts events held at the historic site. S-OIL has also sponsored the Taewharu Culture and Arts Academy where local people can take culture classes provided by renowned local artists since 2015. In addition, S-OIL has supported various culture events including the Cheoyong Cultural Festival, the Ulsan Whale Festival, the Byeongyeong Seonang Chigi Folk Festival, the Ulsan Onggi Expo, and the Kyungsang Ilbo Awards for Young Writers.

Efforts for Handling Grievances of Local Communities (SDGs #2, #3, #4, #8)

S-OIL has been expanding its purchases of local products and services to invigorate the local economy in the Ulsan area. Particularly, in order to help local farmers who are suffering from the opening of the agricultural market, S-OIL purchases rice and pear produced in local communities around the Refinery and donates them as part of its social contribution activities. S-OIL also supports farmers adopting the organic farming through growing snails in rice paddles so as to increase the competitiveness of local farmhouses and to protect the environment. Moreover, S-OIL has continuously employed local talent securing future growth engines, thus contributed to the increase of local job creation. In order to improve the educational environment for children in the local community, S-OIL has provided various support, including contributions to school development funds, scholarships, and donations of books to seven elementary, middle and high schools and nine local children centers in Ulsan. Since 2017, S-OIL has been sponsoring the Mapo Human Resources Development Foundation as well. S-OIL also installed a GooDoil water drinking fountain in front of the Head Office in Seoul for all citizens to enjoy free bottled water in summer and hot tea in winter.
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