Owners & Other Stakeholders


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 investments based on a stable financial structure. The Company 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. The Company 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. The Company's social contribution is in line with its management strategies in order to pursue co-prosperity with local communities.

Investment in New Projects

In order to attain Vision 2025 and realize sustainable growth even amid greater uncertainties in the energy industry, S-OIL is making consistent efforts to discover future growth engines by reinforcing fuel business, expanding chemical business and venturing into new energy business areas, based on its investment roadmap. By strengthening fuel business, which is the Company's main area of business, and securing the industry's top competitiveness, the Company is stably generating revenue, which in turn is used for the development of future growth engines. In parallel, the Company will accelerate the integration of the fuel and chemical businesses and expand into olefin downstream business in order to acquire momentum for the next generation growth engine. In addition, the Company plans to nurture long-term new growth businesses by advancing into new energy sectors such as gas or renewables based on its competence.

RUC/ODC Project

S-OIL successfully delivered the Residue Upgrading Complex & Olefin Downstream Complex Project (RUC/ODC Project) in 2018. The KRW 4.8 trillion mega project, which was the largest scale investment in its history, marks a major milestone in the Company's endeavor to boost its profitability and build a firm foundation for business diversification, by utilizing the cost-competitive production capacity for propylene and olefin and converting residue into high value-added petrochemicals such as propylene oxide (PO) and polypropylene (PP). The RUC/ODC Project also provides a proactive response at a time when the International Maritime Organization (IMO) intends to significantly strengthen global sulfur content regulation on marine fuel starting 2020. The Company also signed a long-term LNG supply contract with Malaysia's Petronas for cost reduction and stable supply of LNG to be used for its plant operations and as feedstock for hydrogen production. The project marks a major milestone in the Company's endeavor to secure new future growth engines and build a balanced business portfolio across fuel, lube and petrochemical areas, bringing the Company a step closer to attaining Vision 2025.

SC&D Project

To increase profitability and diversify its business, S-OIL plans to continue investing in the petrochemical business even after the successful completion of the RUC/ODC Project. The Company is pushing for the Steam Cracker & Downstream Project (SC&D Project), which invests a total of more than KRW 5 trillion to build a steam cracker that produces ethylene using naphtha and blast furnace gas as raw materials and olefin downstream facilities that produces polyethylene (PE) and PP. In 2018, the Company reviewed potential technology partners and their technology and conducted a financial feasibility review, and in 2019, the Company plans to select final technology partners for olefin downstream products and carry out conceptual design. If the SC&D Project is implemented as planned with the final endorsement from the BOD, the Company is expected to further strengthen the foundation for sustainable growth by diversifying its business portfolio, enhancing competitiveness and creating a stable profit structure.

Augmenting Technical Service Capabilities for Petrochemical Downstream Business

Given the wide spectrum of products available in the petrochemical downstream business area that S-OIL has made serious inroads into, reinforcing R&D capabilities and enhancing technical service capabilities for customers are keys to success. As such, in 2017, the Company established the Technical Service & Development Center (TS&D Center) in Magok Industrial Complex, Seoul. In addition, the Company introduced the Electronic Laboratory Notebooks and the Laboratory Information Management System (LIMS) for more efficient product development, core technology research, and systematic technical support, and built a database of products and various technical documents. In parallel, the Company is conducting various joint researches with the country's leading universities with the aim of cultivating excellent research personnel and securing technological competitiveness, and has developed training programs jointly with major technology partners. Thanks to the continued efforts, in 2018, the Company applied for four domestic patents and registered two domestic patents.

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 where synergy can be created with the existing businesses in fuel, lube and petrochemicals, or other areas offering great potential to become a new growth engine for the Company. The Company actively communicates with various players in the industry for successful venture investments and continues studies in potential investment areas. Starting in 2018, the Company is focusing on areas where production competitiveness can be enhanced, such as smart factory, and areas that can become new growth engines, such as material business, while gradually increasing direct investment as well as indirect investment through venture funds.

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. The Company is also constantly striving to sharpen its competitive edge and creating new values by tapping into big data, a key technology in the 4th Industrial Revolution.

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, the Company 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, the Company responded to the risk and created new revenue through the RUC/ODC Project by reducing the production of high-sulfur bunker-C and increasing that of light oil products, for which demand is expected to increase. Without complacency, the Company will focus on delivering the residue hydro-desulfurization unit (RHDS) revamping, the first task of the SUPER-II Project, to convert surplus high-sulfur bunker-C generated during T&A into high value-added low sulfur vessel 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 the enterprise suggestion system are in operation in order to promote profit improvement activities and encourage voluntary employee participation. In addition, the S-RICH Program was established in 2018 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 113.8 billion in 2018 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 2018, the Company exceeded its Energy Intensity Index (EII) goal by 0.086 saving against its plan with its own energy saving projects alone, and in 2019, it plans to review ideas for energy efficiency and profitability through energy consulting on the new RUC/ODC process. In addition, the Company receives low-cost steam from LS-Nikko Copper and Korea Zinc, adjacent to Onsan 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, a key technology of the 4th Industrial Revolution, as a strategic task to achieve Vision 2025, and is developing innovative action items to drive digital transformation, to achieve greater work efficiency, cost reduction, operational optimization and business capabilities enhancement. In 2018, the Company con¬ducted 6 big data Proof of Concepts (PoC) and executed 2 projects. As a result, the Company deployed the Robotics Process Automation (RPA) solution to allow the software to automatically process standardized tasks, increasing efficiency for repetitive tasks and rechanneling work focus and capability to value-added ones. The Company continues to look for areas that require digital transformation across the board, especially in relation to the plant and marketing. Onsan Refinery, in particular, systematically pursues digital transformation by organizing a dedicated the Smart Transformation for Advanced Refinery Taskforce (STAR TF) and finding and prioritizing innovation tasks to improve productivity, reliability and safety.

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 2018, the Company introduced the Electronic Laboratory Notebooks and the Laboratory Information Management System (LIMS) for the TS&D Center and also launched the S-Rich Program. At the same time, the Company is actively pushing for RPA Phase 1 to improve efficiency through automation of manual tasks. The Company has also made efforts to implement a variety of work-smart solutions, such as upgrading Enterprise Application Integration (EAI) and replacing obsolete IT infrastructure.

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. The Company 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 maintains the highest credit rating in the industry and seeks to maintain a stable financial structure by tracking key financial soundness indicators at all times. The Company is securing sufficient financial flexibility in preparation for rapid changes in the business environment, by reducing unnecessary borrowing based on its periodic estimation of future cash flows and systemically managing risks associated with the redemption of principal and interest by dispersing payment dues.

Optimized Financing

In order to ensure a smooth undertaking of the RUC/ODC Project, S-OIL successfully financed approximately KRW 3 trillion under competitive terms from 2015 to 2018 by issuing corporate bonds and borrowing from banks, based on its excellent credit rating, sound financial structure and enhanced profitability. In the future, the Company will maintain its highest level of financial capability to fund new investments from capital market and financial institutions under optimal conditions.

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, the Company uses the Zero Base Budgeting (ZBB) approach and have budget items undergo a thorough review by the relevant department before execution. In 2018, the Company curbed unnecessary budget execution in the existing business segments to the fullest extent in an effort to minimize the cost increase following the completion of the RUC/ODC Project.

Balanced Performance Sharing

S-OIL pursues a reasonable dividend policy that balances internal reserves for investment and the return of shareholders profits, by taking into account the profits earned, cash flows, capital structure and credit rating for a given year. The Company will continue its strategic investment activities to generate revenue and secure future growth engines, and will return profits created to shareholders so that the Company and its shareholders can grow together.

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. The Company observes the regulations, maintains an honest and transparent relationship with the taxation authorities, and dutifully pays taxes, in accordance with its own tax policy. In addition, the Company's 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 in disclosure. To this end, the Company distributes a reference material that classifies new and revised regulations and important matters to all employees. By complying with these stringent disclosure rules, the Company announced its management information transparently to shareholders and investors by submitting a total of 47 disclosures, including autonomous disclosures, with no disclosure breach in 2018.

IR Activities to Enhance Corporate Value

S-OIL engages in various IR activities to provide shareholders and investors with management information in a transparent manner and enhance corporate value. Every year, the Company surveys analysts about their satisfaction on its IR activities and then incorporates their feedback to better the quality of IR activities. In 2018, the Company conducted a wide range of IR activities with a focus on delivering accurate information to shareholders and investors about favorable market conditions, positive business prospects, and the Company's growth engines based on the RUC/ODC Project. It held four performance presentation conference calls and 11 corporate presentations to domestic and foreign investors, and delivered management information transparently through active IR activities, including attendance at 11 large investor conferences.

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 the Company selects contractors through Blind-Bidding, where the e-Procurement system automatically carries out the quotation process. Through the new purchase process, the Company improves the process of selecting contractors more transparently and fairly, and upgrades its procurement process through continuous communication with suppliers.
Critical Supplier : 30 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. The Company 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.

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. The Company 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., the Company conducts in-depth evaluations through the SGDC consisting of professionals in the fields of compliance, technology, and management. In 2018, a total of 236 suppliers were evaluated by the SGDC. In addition, in 2018, the Company visited business sites of 34 suppliers for sustainability risk assessment, and supported improvement activities to all 34 companies that were found to have risks. Moreover, suppliers of the Company are required to submit and practice a pledge on complying with its Ethics Code. The Company has invited suppliers for training on its procurement system and Ethics Code and checking their compliance every year since 2013. In 2018, a total of 368 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

Environment Management

Based on management's 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. The Company has formed a dedicated Environmental Affair Team and Environment Management Team both at the Head Office and Onsan Refinery and operates a systematic environment management system, aiming to minimize pollutant discharge and adverse impact on the environment through active and preemptive environmental management. The Company 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. The Company also responds to various environmental laws in a proactive manner.

Environmental Management Systems

Environmental Management Strategy and System
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, the Company has steadily implemented the highest level of environmental management by acquiring ISO 14001 environmental management system certification for all production processes. (ISO 14001 certification for new plants will be acquired in 2019.) ISO 14001 has been adopted to all production processes and terminals step by step. In 2017, the Company successfully migrated its environmental management system to ISO 14001:2015 that specifies far more stringent requirements to identify environmental aspects and risks, establish and implement management plans, set and track effective environmental goals, and qualify personnel. The Company provided environmental education to 2,185 employees in 2018 alone as part of its effort to internalize its environmental management strategy and system.
Environmental Performance Evaluation System (ISO 14031)
S-OIL is operating ISO 14031 environmental performance evaluation system to ensure environmental investment and performance are objectively evaluated and then the evaluation results are proactively incorporated in its environmental management activities. The evaluation system includes selecting environmental indices, gathering and analyzing environmental data, assessing environmental performance, conducting regular reviews and making improvements to help stakeholders and the management makes decisions. The evaluation results show the Company performed slightly better in 2018 compared to the previous year, especially with zero violation of environmental regulation, reduction in air pollutant emissions, and growing environmental investment cost, etc. despite the overall increase in pollutant emission resulting from new plant expansion.
Environmental Accounting (EA) System
In order to systematically analyze environmental costs, make informed decisions on environmental investment and operational performance objectively, and implement its environmental management policy more actively, S-OIL operates its own environmental accounting system according to the guidelines of the Ministry of Environment. In 2018, the Company's environmental investment focused on reducing pollutant emissions and preventing environmental accidents, such as reducing the odor of site boundary line tanks, improving boiler F/G firing facilities for reducing air pollutants emissions, installing hazardous chemical detection and warning devices, and replacing aged hume pipes for preventing soil contamination.
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)

Air Pollutant Control
S-OIL has in place stricter in-house emissions standards than legally required in order to improve the atmospheric environment. In 2018, the Company replaced bunker-C used in boilers with LNG, minimizing emissions of fine dust and SOx in the air. The Company has made steady investment in environmental facilities such as Ultra Low NOx Burner and Selective Catalytic Reduction, and electrical precipitator. In addition, the Leak Detection and Repair 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 2018, thanks to the continued strict leakage control by production teams, the leakage rate remained only at 0.06% (when the Company's internal leakage standard of 500 ppm is applied). Meanwhile, the Company has completed the improvement of related facilities in response to the Clean Air Conservation Act, which was amended for tightened fugitive emissions of HAPs. The Company 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. The Company 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 level by 2022, and established detailed targets and action plans.
Water Quality Control
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. The Tele-Metering System transmits data on water quality to administrative agencies in real time in preparation of an emergency. The Company also expanded rainfall storage tank capacity for the heavy rainy season and strengthened monitoring of 29 kinds of specific substances harmful to water quality such as Cu, Pb, and As, contributing to improving water quality.
Soil Environment Control
S-OIL carries out regular checks as well as legally mandatory inspections to prevent soil pollution in the Refinery and terminal areas, including oil storage facilities. The Company 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, the Company 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 follow the agreement, the Company conducts legal inspections as necessary to monitor soil pollution while carrying out self-inspections every three years to prevent soil pollution. Moreover, the Company'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.
Chemicals Management
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, the Company prepares accident scenarios for hazardous chemicals the Company handles, estimate the scope of impact, and develop 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.
Waste Control
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 2015, the Company participated in the Industrial Sectors' Declaration for Sustainable Korea 2030, affirming its strong commitment to enhancing the nation's resources circulation and resources productivity. The Company continues to discover competitive waste recycling companies and improve recycling rates. In order to preclude any possible fire accidents and contamination in the waste storage process, the Company also installed fire detectors and water spray sprinklers in the waste and waste catalyst storage facilities. In 2018, the second waste storage facility was augmented to efficiently store and manage the increasing volume of waste.
Prevention of Hazardous Substance Leakage
S-OIL has systematic response procedures to prevent leakage of oil and hazardous chemicals in the Refinery and systematically respond to accidents. The Company regularly inspects facilities and conducts emergency response training to enhance the Company's emergency preparedness. In 2018, the Company installed three additional oil detectors in major areas of the new plant, as the Company already did for the existing plants, to further strengthen its capability to carry out first-response and contain an oil spill. In addition, the Company conducts regular emergency drills based on hazardous chemicals and oil leakage scenarios every year. Going forward, the Company will further strengthen emergency response training by developing various scenarios related to leakage of oil and hazardous chemicals.
Prevention of Oil Spills
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, the Company 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, the Company operates the vetting system, which fundamentally blocks vessels that fall short of strict safety standards entering and leaving port facilities, by proactively assessing the risks of all ships beforehand. In addition, for Single Point Mooring, an onshore logistics facility for very large crude oil carriers that can cause significant damage from marine pollution in the event of an accident, the Company also has a protection system consisting of radar, tidal current measurement, and mooring tension measurement systems, as well as the Automatic Identification System that prevents dock crashes. The Company 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

Environmental Impact Evaluation
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, the Company 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 from its business.
Preemptive Response to Tightening Environmental Regulations
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, the Company 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. The Company conducts daily self-inspection and remedy any unsatisfactory areas immediately to further solidify the autonomous environment management system. The Company 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. The Legal Compliance System 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. There was zero regulation violation identified in any of the 24 external reviews and audits held in 2018.
Internal and External Communication
S-OIL has established a set of rigorous standards, based on which eco-friendly management is pursued. The Company 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. The Company shares its environmental management information with local communities, relevant institutions, and other stakeholders, and reflects their opinions to improve its environmental management activities. The Company 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.

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 carbon management system put the Company comes to implementing cost-effective solutions to its GHG reduction obligations and making rational investment decision considering carbon costs. The Company is also actively participating in global efforts to reduce GHG emissions through large-scale fuel conversion.

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. The Company 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. The Company is incentivizing employees to actively participate in energy and GHG reduction efforts by returning some of the economic benefits from excellent proposals. In the meantime, the Company is in the process of establishing a comprehensive emission allowances management plan in line with its mid- and long-term operational plans and national emissions reduction roadmaps by predicting future emissions and emission allowances allocations. In 2018, the Company conducted emission allowance trade six times as planned and expanded the use of low-carbon LNG to reduce direct GHG emissions.

GHG Reduction Performance (SDGs #13)

Tapping onto the Energy Conservation & Operation System the Company has already deployed, 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 2018, while continuing large-scale investments, the Company pulled off a reduction of around 140,000 tons of GHG emissions from the previous year, which excludes the emissions from the RUC/ODC Project, thanks to various efforts. About 100 projects were conducted to reduce GHG emissions. By recycling excess heat back into the process through improving processes and installing heat exchangers in No. 2 Aromatic Complex, the Company reduced GHG by about 30,000 tons per year. Furthermore, the Company 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. The Company has also expanded the use of low-carbon LNG. The Company is also strengthening monitoring on indirect emissions from supply chains including crude oil procurement and product distribution. In particular, Saudi Arabian crude oil, which the Company 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. The Company obtained the Carbon Trust Standard, a global carbon management certification, in 2012 for the first time in Korea, and renewed the certification. The Company also joined the Carbon Disclosure Project and has been selected as a high performer for four straight years, demonstrating its initiative to take the lead in disclosing carbon information in a transparent manner. Furthermore, as a member of the Korea Business Council for Sustainable Development, which was launched to promote government-industry cooperation and to achieve the government's carbon reduction goal, the Company proposes various ideas and takes part in various programs. Starting 2016, the Company implemented a cogeneration plant project in collaboration with KD Powertech. 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, the Company 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, the Company is working on a project in the country in 2019 to provide high-efficiency cookstoves for free, thus improving women's human rights as well as air pollution. The project is also expected to help reduce timber use and help reduce GHG 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 med- and 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, the Company 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.

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, the Company identifies expectations of local communities through diverse communication channels with stakeholders. Then, the Company 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. The Company also practices sharing with the underprivileged through CSV programs aligned with its business operation.

For Local Communities (SDGs #3, #4)

S-OIL carries out a variety of social contribution activities for co-prosperity with local communities in Ulsan, Mapo, and Magok where its worksites are located. Those include promoting the Culture & Arts Sharing Campaign, supporting local communities where the Company's terminals and the TS&D Center are located, operating GOODOIL Café, establishing the Ulsan Welfare Foundation, sponsoring cultural events at Taewharu in Ulsan, and supporting welfare facilities in Ulsan.

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. The Company 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, the Company 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. The Company's natural treasure protection activities are the first full-fledged conservation of endangered species at the corporate level, and contribute to enhancing social interest in the protection of natural monuments and the value of biodiversity. In addition, the Company regularly conducts environmental cleanup activities around Mokdo Island, which is a natural monument adjacent to Onsan Refinery, and is expanding green purchasing to further contribute to environmental protection.

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, the Company sponsors scholarships for youths living in residential facilities and the Sunlight Sharing Camp for children with rare diseases, provides learning devices tailored to youths with disabilities, sponsors the Heart-Heart Orchestra for youths with developmental disabilities and supports fuel for cars used by the Food Bank. In addition, the Company 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.

For Heroes (SDGs Target #3)

In order to support the righteous people who have dedicated themselves to the well-being of the country and 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, the Company 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 the Company selects and awards Hero Firefighters, Hero Maritime Police Officers and Hero Citizens every year.

Sunshine Sharing Public Service Corps

In addition to the four flagship activities, 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. The Company'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, the Company 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 requirements, helping them continue their studies and grow into responsible members of society. The Company 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.

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. The Company'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 the Company's commitment to environmental protection to stakeholders. In 2018, the Company 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.

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. The Company promotes various community support activities through the Culture & Arts Sharing campaign and the S-OIL Ulsan Welfare Foundation etc. The Company 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 motivate artists. In recognition of its wide-ranging efforts to expand cultural infrastructure for local communities, the Company was awarded the Minister of Culture, Sports and Tourism Prize in 2015.
Supporting Cultural Activities of Local Communities around Head Office
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 the Company is contributing greatly to the revitalization of local communities' culture and arts. In addition, the Company 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.
Support of Cultural Infrastructure in Ulsan
To expand the base of culture and arts in Ulsan, where the Company's plant 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, the Company has been holding the Beautiful Eyes Art Festival since 1996, an arts event that mainly invites amateur artists from the region. Furthermore, the Company 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, the Company has since supported culture and arts events held at the historic site. The Company has also sponsored the Taewharu Culture and Arts Academy where local people can take culture classes provided by renowned local artists since 2015. Other events supported by the Companys include the Cheoyong Cultural Festival, the Ulsan Whale Festival, the Byeongyeong Seonang Chigi Folk Festival, the Ulsan Onggi Expo Ulsan, 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, the Company purchases rice and pears produced in local communities around Onsan refinery and donates them as part of its social contribution activities. The Company 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, the Company has employed local talent necessary for the RUC/ODC Project, contributing to the increase of local job creation. In order to improve the educational environment for children in the local community, the Company 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, the Company has been sponsoring the Mapo Human Resources Development Foundation as well. The Company 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. The Company will continue to address the challenges of the community and strive to grow together with the community.