Business Fundamentals


S-OIL's ESG management 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.

Corporate Governance

S-OIL has established top-tier transparent and sound corporate governance among listed companies in Korea and a trusting relationship with stakeholders, through organizing the Board of Directors (BOD) and sub-committees with diversity, independence and rich expertise, and ensuring checks and balances in business activities.

Balance between Diversity and Independence

S-OIL nominates director candidates with diversity including nationality, race, gender, etc. and expertise to ensure that various stakeholders' interests are duly represented and mutual complementation among directors can be maintained in accordance with internal procedures. They are officially appointed as directors at the general shareholders' meeting. Also, thoroughly vetted and carefully considered for director candidate selection are the capability and capacity to work as part of an independent and objective BOD, as well as their vision, leadership, expert knowledge, and career experiences. Further, to ensure the independence of the BOD, a candidate is also screened for factors that may be material to that his/her ability to be independent. Thus, whether he/she is working or has been working for S-OIL in the past five years, whether he/she is engaging or has been engaging in any audit or consulting service for S-OIL, and whether he/she has any material relationship or transaction with S-OIL are comprehensively taken into consideration. For outside directors, in particular, the Outside Director Candidates Recommendation Committee (ODCRC) recommends the most suitable candidates, after evaluating candidates in accordance with internal standards to confirm that they have no vested interest in S-OIL or any other reasons for disqualification. The BOD leverages the expertise and diverse experience directors bring in the various fields of oil industry, renewable energy, international trade, finance, etc. and two female directors have been serving on the board since 2019, further improving its diversity. Having served in various fields, such as the government, industry, and academia, they will significantly contribute to enhancing the diversity and independence of the BOD.
Independency Policy of Outside Directors

To help the BOD conduct independent and objective decision-making for the protection of the rights of shareholders and investors, S-OIL appoints a majority of directors as outside directors who satisfy the following independency policy (disqualification reasons). Outside directors lose their posts when they cannot meet the independency policy.

  1. Directors, executive officers and employees who are engaged in the Company, or directors, auditors, executive officers and employees who have engaged in the Company within the last five years;
  2. The principal, his/her spouse, lineal ascendants, and lineal descendants, in cases where the largest shareholder is a natural person;
  3. Directors, auditors, executive officers and employees of a corporation, in cases where the largest shareholder is the corporation;
  4. The spouses, lineal ascendants, and lineal descendants of directors, auditors, and executive officers who have engaged in the Company or a parent company and a subsidiary of the Company within the last three years;
  5. Directors, auditors, executive officers and employees who are engaged in a parent company and a subsidiary of the Company within the last five years;
  6. Directors, auditors, executive officers and employees of a corporation in an important interest such as a business relationship with the Company as follows;
    1. The Company's important customers, suppliers and related persons;
    2. A corporation that concludes an advisory agreement such as legal advice, management consultation, etc. with the Company or top management of the Company;
    3. A corporate that contracts a private service agreement with the Company or top management of the Company;
    4. An accounting firm that has been the auditor of the Company within the last three years;
    5. A non-profit organization and related persons that receives important donations from the Company, etc.
  7. Directors, auditors, executive officers and employees of another company for which directors, executive officers and employees of the Company serve as directors and executive officers; and
  8. A person who is determined to undermine the independence of the BOD due to other interests with the Company or who is otherwise unable to faithfully perform his/her duties as an outside director

Balance between Checks and Cooperation

S-OIL establishes sound and transparent corporate governance led by the BOD and sub-committees (Board of Audit Committee (BAC), Compensation Committee (CC), and ODCRC), ensuring the balance between checks and cooperation. A majority of directors are appointed as outside directors who have been vetted for independence according to S-OIL's internal principle. An independent outside director has been serving the role of BOD Chairman since 2015, and all members except for the CEO who is an inside director are non-standing directors. This ensures decisions are made in a way that maximizes the value of stakeholders based on objective and independent operation of the BOD to oversee and check the management activities and performances of the CEO and the Company. S-OIL makes sure that the BOD meeting participation rate of each director stays over 75% annually barring exceptional circumstances so that checks and cooperation can be achieved through active participation of directors. In addition, the BAC, which is comprised entirely of outside directors, evaluates general matters relating to management activities and the operational status of the Internal Accounting Management System, and receives reports on internal audit performance. S-OIL prohibits its outside directors from serving as directors of two or more companies in addition to the Company, and all outside directors fulfil this requirement.

Enhancement of BOD Expertise

To enhance the expertise of the BOD, S-OIL regularly conducts a briefing session to support the BOD's decision-making, including the overall content such as changes in the business environment, business strategies, risk factors, and risk management measures. S-OIL also submits a monthly report to directors on economic, social, and environmental issues that may affect its sustainability. The BOD operates three sub-committees in support of the BOD's independence and efficient decision-making. The Management Committee, which supports the CEO, contributes to enhancing S-OIL's sustainable growth by analyzing critical issues on social, economic, and environmental fronts in advance to ensure the BOD's reasonable decision-making in all areas including business plans, budget, and labor policy. In addition, S-OIL evaluates the BOD and outside directors by the self-evaluation every year.

Accountability of Officers

S-OIL grants compensation to all officers according to the degree of the achievement of short- and long-term targets, which have been set objectively, so that they, including the CEO, can exert their utmost effort to protect shareholder value and to fulfil the Company's role as a corporate citizen. The CC, which is comprised of non-inside directors to ensure the independence and fairness of compensation decisions, determines each officer's compensation level considering achievement of short-term management targets consisting of ROACE, EBITDA, etc. and the mid- to long-term targets consisting of financial indicators such as 3-year Total Shareholder Return (TSR), etc. Directors' remuneration criteria and amount are disclosed for individual directors in S-OIL's business reports in a transparent manner, and so are the remuneration for key officers as well. S-OIL also makes it clear that any director, including the CEO, who deliberately or negligently causes damage to the Company should compensate it directly to the Company, thereby promoting responsible management for directors. The scope of the liability extends not only to violation of laws or the Article of Incorporation, but also broadly to damages caused by negligence. In such a case, directors are liable to repay the entire amount of the damages in principle. Having said that, the amount of the damages recoverable can be capped at 6 times their annual income (3 times for outside directors) through a resolution at the general shareholders' meeting.

Charter of Corporate Governance

Download Charter of Corporate Governance
PDF Download

Compliance Management / Ethics Management

In its journey to becoming a clean energy and chemical company built on integrity, which is one of the core values, S-OIL makes compliance management and ethics management its top priority and incorporates them in the day-to-day business of all employees. S-OIL also makes sure all of its employees are well informed of and adhere to its policies, as well as laws, ethic standard and internal regulations, at all times.

Compliance Management as Corporate Culture

Led by the top management's strong commitment to compliance management and employees' active engagement to practice it in their daily work, S-OIL has embedded compliance management into its corporate culture. All employees incorporate compliance standards into their daily work and give it the foremost consideration before undertaking their jobs. S-OIL periodically reports major activities on this front to top management thereby calling attention to the importance of compliance management. Furthermore, S-OIL enhances employees' awareness of compliance by distributing compliance newsletters, sending out compliance trends led by global corporations, and providing various compliance programs such as compliance campaigns. S-OIL strives to further reinforce compliance management by analyzing laws and regulations in depth, setting guidelines, and providing customized education.
10 Compliance Activities
  1. Regular Inspection
  2. Priority Management
  3. Ad-hoc/Special Monitoring
  4. Legal Update
  5. Legal Information Meeting
  6. CEO Legal Update
  7. Management Report
  8. Profile Update
  9. Compliance Training
  10. Compliance Campaign
S-OIL takes a systematic approach to compliance management, utilizing practical tools such as profiles and checklists on relevant laws. S-OIL also provides real-time updates on the latest legislation and revisions through IT-based S-OIL Compliance System, making it convenient for employees to search or inquire legal information relevant to their work. Furthermore, monthly-based regular and ad-hoc compliance inspections are conducted on the compliance status in a continued effort to encourage employees' voluntary compliance activities. Employees access the S-OIL Compliance System at any time to perform compliance activities easily and conveniently.
In May 2021, S-OIL was certified against ISO 37301, an international standard in the field of Compliance Management System, becoming the first-ever case not only in Korea, but also in the world. ISO 37301 is an international standard for compliance management adopted by the International Organization for Standardization in 2021 and is applicable to all organizations regardless of the type and size, combining ISO standards with international agencies' guidelines, including the rules of the International Chamber of Commerce, the OECD's best practice guidelines for ethics and compliance, and the UN Convention against Corruption. ISO 37301 certification means S-OIL's compliance system is operated effectively and successfully. S-OIL also operates an advanced compliance system, designating a compliance officer, to contribute to its Vision 2030.
S-OIL introduced the compliance monitoring system on internal regulations in 2011 to help employees understand corporate regulations and abide by them in their daily work, thereby minimizing any confusion and risks associated with non-adherence. Currently, S-OIL conducts a compliance monitoring against 120 checklists on 37 regulations at two times a year. The results are reflected in the performance assessment of all officers and team leaders to encourage employees' voluntary compliance with in-house regulations. In 2020, zero violations were identified through compliance monitoring.
In a strict adherence to all relevant laws at home and abroad, S-OIL is focusing its efforts on preventing potential legal disputes, by mandating pre-checks on major legal issues through its compliance system, and also by conducting thorough reviews of current legal issues, contracts and agreements by a team of legal experts. These two preventive measures enable S-OIL to make optimized responses in case of actual occurrences of disputes, thus maintaining trusts with its stakeholders. S-OIL will continue to build healthy, trusting relationships with its stakeholders and to protect stakeholder interests, by ensuring compliance management and effective prevention of potential disputes.

Systematic Ethics Management System

S-OIL pursues systematic ethics management with the society based on three organically connected pillars: Ethics Code, Ethics Committee, and Ethics Management training. S-OIL closely monitors domestic and international trends and preemptively reflects in its Ethics Code considering any changes in major regulations such as the Anti-Graft Act and the Workplace Harassment Prevention Act in the Workplace. All employees have to submit a pledge to comply with the Ethics Code regularly. S-OIL's suppliers, subsidiaries and joint ventures are required to abide by the Ethics Code. Suppliers, in particular, must sign and submit the Ethics Acknowledgement Statement to register as venders. If S-OIL's contractors are found to be involved in legal violations or unethical acts, they shall either be excluded from the vendors' list or face disadvantage. In order to encourage employees to report ethics management violation cases, S-OIL has also strengthened the whistleblower protection system, opened an anonymous reporting channel, and introduced a leniency program for confessors. In 2020, there were 4 Ethics Code violations that involved procurement regulations violation, etc. S-OIL took disciplinary measures against 5 employees in accordance with relevant regulations and procedures. Violation cases were also shared across S-OIL and covered in training for recurrence prevention purposes.
S-OIL operates the Ethics Committee consisting of Legal & Compliance HQ Head, Corporate Planning Div. Head, HR Div. Head and Controller. They are appointed by the CEO after being screened by the BAC for eligibility. The committee is responsible for supervising ethics management activities, establishing ethics policies and programs, and elevating ethics awareness in the organization. In particular, for cases where stakeholders of employees with high chances of conflict of interests transact with S-OIL, the committee must review it to prevent any violation of Ethics Code. The committee reports activities to the CEO and the BAC on a regular basis, while disclosing its activities to stakeholders through Ethics Management website. From 2018, S-OIL conducts ethical management evaluations from stakeholders including employees, service stations, LPG filling stations, corporate customers, and suppliers. The evaluation covers the overall ethics management of S-OIL that encompass abuse of dominant position, fairness in business dealings, and any experience with corruption, and further suggestions to strengthen ethics management practices by reflecting the results of the assessment in its policies every year.
S-OIL offers ethics management training tailored for different job grade and job functions to raise employees' ethical awareness in their day-to-day work while inviting outside experts for special lectures. In 2020, the result of stakeholder evaluation on S-OIL's ethics management was factored in, and 5 courses on ethics management training were offered. S-OIL offered case-based marketer training for sales offices that have a high chance of committing an ethics violation due to frequent encounters with business partners. Also, S-OIL holds ethics management trainings for suppliers and affiliated companies to help them understand the basic principles of Ethics Code, thereby raising the quality of ethics management across the supply chain. In addition, S-OIL conducts ethics management self-assessments from 2015 as a way to raise awareness on ethics management and relevant policies among employees.
Ethics Management Help Desk

Human Rights Protection

S-OIL remains committed to protecting human rights of stakeholders, including employees, suppliers, and local residents, based on its human rights policies that are in line with global standards that prohibits discrimination based on race, color, religion, gender, national origin, age, disability, etc.

Systematic Human Rights Protection

S-OIL takes a systematic approach to human rights protection. S-OIL shares its human rights policy with stakeholders including customers, employees, suppliers, and local residents as per the internal process while identifying potential risk groups and issues by conducting assessment on a regular basis. Risk factors identified in the assessment are addressed and followed up with monitoring to prevent the recurrence of similar cases. The assessment result of suppliers, in particular, is considered when evaluating supplier qualifications.
In 2020, S-OIL conducted human rights inspection on 44 sites including the Head Office affected by its business activities and implemented remedial measures against all identified 37 sites. In particular, S-OIL intensively reviewed major human rights issues related to COVID-19. On the side of S-OIL, subsidiaries, and JVs, the Company identified risks such as employees' health problems resulting from the spread of COVID-19, working conditions of employees in charge of health care, and violations of the education right of employees' children. As such, S-OIL established and revised virus-related emergency guidelines and provided face masks to employees of the Company and contractors entering its premises, thereby supporting their individual prevention activity. In addition, S-OIL fully funds COVID-19 screening tests for employees as well. In parallel, S-OIL improved the working conditions of employees in charge of health care such as temperature checking by installing transparent installers and remote thermal imaging cameras in front of the building in order to protect their health so that their face-to-face contact with other people will be minimized. In addition, S-OIL made it obligatory for employees with young children to telecommute to ensure that their children's education right and the socialization process will not be infringed upon. In the supply chain, S-OIL detected poor working conditions of 33 contractors and a shortage of infrastructure to promptly treat seriously injured patients due to life-threatening accidents at small suppliers. To support contractors, S-OIL implemented 1,267 fixes to improve their working conditions and run the Doctor Car program to give emergency medical treatment to workers with serious illness in partnership with Ulsan University Hospital and Ulsan City, which is home to many contractors. Specific to local communities, S-OIL encountered risks such as female migrants' difficulty in jobs amid the pandemic, disabled people's inconvenience in using self-service stations, and a shortage of learning infrastructure for disabled children from low-income families. For female migrants, S-OIL supported migrant women with interpretation activities to help them stand on their feet again while conducting the Star Oil campaign whereby service station workers help disabled people with difficulty in fueling their car. In addition, S-OIL sponsored customized learning aids for disabled children.
S-OIL prevents any form of discrimination and harassment pursuant to relevant regulations, including its human rights policy, Ethics Code, sexual harassment prevention regulation, workplace harassment prevention regulation, etc. When discrimination or harassment occurs, S-OIL conducts a thorough in-depth investigation according to internal procedures by being aware of the seriousness of each reported case. S-OIL thoroughly guarantees confidentiality for all reporting and investigation processes and, when handing each case, gives sufficient consideration to the circumstances where people involved, including whistleblowers, are in. Grievance support staff for each worksite should provide counselling to victims and conduct an exhaustive investigation after receiving cases and report the investigation results to the Personnel Admin. Committee (PAC). The PAC takes appropriate measures, such as disciplinary actions, including dismissal, suspension, and salary reduction as well as the protection of victims according to the criticality of the issues through ample deliberation. In addition, S-OIL informs all employees of results on the imposition of disciplinary action and conducts education to prevent a recurrence of similar incidents.
Human Rights Policies

S-OIL shall respect human rights norms described in the Universal Declaration of Human Rights, the UN Guiding Principles on Business and Human Rights, the UN Global Compact's principles of human rights and labor, the UN Convention on the Rights of the Child, the ILO Declaration on Fundamental Principles and Rights at Work, and the laws and regulations of the country in which the Company has entered, etc. Therefore, the Company shall seek to protect the human rights of all communities affected by its business activities, as well as its business sites, and contribute to substantial improvements. To this end, the Company shall adhere to the following 8 human rights principles. In addition, suppliers of products or services, direct invested companies, and business partners should also share the Company's human rights policy and participate in the protection and improvement of the human rights of the community in accordance with the 8 principles.

  1. (Working condition) We shall respect and treat its employees with dignity, and provide over legal standards working conditions such as wages, working hours, and breaks. We shall grant the right to freedom of association and collective bargaining, and not take unfair treatment for this reason.
  2. (Safety & health) We shall provide workers with a safe working environment and continuously enhances the safety and health management system. We shall minimize the safety and health impacts of production processes or products and services provided by us.
  3. (Harassment) We shall protect all stakeholders, including employees, business partners, and local residents, from exposure to any kind of harassment (sexual, non-sexual) that violates human dignity.
  4. (Forced and child labor) We shall not engage in forced labor against the will of employees and not receive any labor in connection with employees' liability. We shall not directly employ children under compulsory education age or under the age of 15. Also, we shall respect and protect all basic rights such as education, rest, health, nutrition, hygiene, freedom from violence and exploitation of children.
  5. (Discrimination) We shall prohibit discrimination based on race, color, religion, sex, national origin, age, disability, and provides equal opportunity and treatment.
  6. (Personal information protection) We shall use personal information only for the purpose of obtaining. We shall continuously check to prevent leakage of personal information to the outside and strengthen management system.
  7. (Human rights of local communities) We shall prevent negative impacts on the human rights of local communities based on respect for the culture of them. We shall contribute to improving the quality of life of local residents by supporting economic, social and cultural development.
  8. (Human rights survey) We shall systematically monitor potential human rights risk groups and issues. If risks are found, we shall take immediate remedial actions and prevent similar cases from recurring. We shall continuously upgrade its human rights management system to prevent human rights issues from occurring throughout the supply chain.
Through the Ethics Code, S-OIL strictly bans employees to use its organization, manpower, and assets for the purpose of providing political funds or for political purposes. In addition, S-OIL aims to create environmental and social values as a corporate citizen through its CSR activities and stringently prohibits any activity of a political nature that goes astray from their inherent purpose or activity that could cause any negative effect on society. To this end, S-OIL organized an independent and objective Donation Committee comprised of officers from various organizations. The committee reviews an overall CSR activity plan every year, and monitors whether it has been implemented appropriately. Also, S-OIL strictly controls the occurrence of unethical acts that could arise in the process of planning and executing CSR activities. There has been no donation to non-profit foundations nor procurement for political purposes and S-OIL will continue to ensure that money will be spent on only procurement and CSR activities related to their intrinsic nature and that additional expenses will not be spent to exercise any political pressure.

Risk Management

S-OIL has established and implemented an efficient risk management system to proactively respond to potential risks that may compromise its economic, environmental, and social values and grow together with stakeholders. What's more, S-OIL's rigorous internal auditing promotes transparency in its business and rectifies any improper practices and inefficient cost structures.

Enhancement of Risk Management System

Since 2008, S-OIL has been utilizing a highly-advanced risk management system so as to respond to all risk factors that could arise in the course of its business in a more efficient and timely manner. Employees at S-OIL conduct optimized risk response activities through company-wide risk management systems including Enterprise Risk Management (ERM) for company-wide risk management, Emergency Control Program (ECP) for swift and efficient response to emergencies, Early Warning System (EWS) for enhanced risk monitoring and prevention, and Internal Accounting Management System (IAMS) for securing the reliability of financial information.
S-OIL has in place an integrated risk management governance system where all employees from top management to staffs are tasked with risk management responsibilities to ensure such activities are performed organically at the corporate level through various risk management programs. Aimed at ensuring that risk management activities are fully aligned with S-OIL's management principle, the ERM Committee composed of top management including the CEO sets general directions for risk management and supervises enterprise risk management status on a regular basis. Matters requiring attention and priority, such as internal control evaluation, are reported to the BOD and reflected in S-OIL's strategic risk management policies.
S-OIL systematically manages the process of identifying, assessing, monitoring and responding to risks through designating risk owners, thus ensuring that risks do not be materialized and developed into real crisis that stand in the way of achieving management goals. Since 2020, S-OIL has actively been operating ERM Sub-committees for Production, Market and Strategy/Finance & IT. ERM Sub-committees not only support risk owners with reviewing risk assessment result and response, but also make recommendation to the ERM Committee for effective risk management. In every quarter, the ERM Committee reviews risk management activities of risk owners, gives instructions on response, and determines matters related to ERM policies. Furthermore, the ERM Committee has reviewed major risk issues to focus on and tracked their status closely as a key risk since 2015.
S-OIL has implemented the ECP aimed at taking a swift, well-coordinated response to minimize personnel and property damage in an emergency. Under the ECP, S-OIL has installed the Emergency Control Center in all major business sites and conducted emergency drills periodically, improving its risk response capability. In 2020, S-OIL conducted company-wide emergency drills for responding to a fire in production facilities and undesirable outcomes including casualties. Through the drill, S-OIL checked the enterprise emergency readiness and reinforced emergency response processes.
S-OIL operates the EWS to monitor massive volume of data handled as part of its business operations and perform preventive response to a variety of risks. The EWS monitors abnormal signals against around 67 predefined scenarios and sends alerts to the relevant teams in a swift manner, allowing for early detection and proactive review and response, thereby contributing to effective risk mitigation and risk control.
In order to secure the reliability of financial information, S-OIL has established the IAMS to check the internal control process in accordance with the Act on External Audit of Stock Companies and best standards of the internal accounting management. S-OIL evaluates the effectiveness of internal control designs and operation on a regular basis. Also, S-OIL provided training to employees every year to help enhance the IAMS operational capabilities.

Mid- to Long-term Risk Management

S-OIL takes a systematic approach to analyze and forecast the business environment, both inside and outside the organization, that may bring about significant changes to its business in the mid- to long-term.
First, S-OIL recognizes a carbon border tax as a serious mid- to long-term strategic risk. The EU and the US are pushing ahead with a carbon border tax, and Korea is also striving to internalize carbon costs through the Korea Emission Trading System (K-ETS). However, the carbon-based energy industry that S-OIL falls under is inevitably exposed to enormous carbon cost risk. Therefore, the adoption of a carbon border tax is expected to have a grave long-term impact on S-OIL's cost structure, depending on whether or not its carbon cost internalization is recognized or not. S-OIL, which emitted 9,117,000 tons of CO2eq (Scope I+II) in 2020, plans to achieve net zero emissions by 2050. To this end, S-OIL will introduce Thermal Crude to Chemical (TC2C) technology for the first time in the world, thereby minimizing carbon emissions that arise in the production process. In addition, S-OIL is exploring ways to reduce carbon emissions through investment in fuel cell maker FCI and create new business opportunities.
Cybersecurity is also considered a strategic mid- to long-term risk that S-OIL faces. In step with the recent digitalization trend, many manufacturers are attempting to converge traditional manufacturing with IT technology, e.g. to create 'smart factories'. Unlike existing offline-based, partly automated plants, smart factories mass-process information online in real time. Accordingly, exposure of digitalized smart factories to cybersecurity threats has further increased. In particular, in the case of the energy industry which is a backbone of the country, a cyberattack to a refinery's operating system could not only shut down production but also lead to a large-scale accident. Therefore, S-OIL has to enhance its cybersecurity systems to ensure the stable operation of its refinery in order to safeguard the security of the Company, local communities and furthermore, the nation. To this end, S-OIL is strengthening cybersecurity based on domestic and overseas security standards such as NISF-CSF, ONG-C2M2, and ISMS-P. For efficient response to Advanced Persistent Threat (APT) and unknown malware, in particular, S-OIL introduced APT attack prevention system, and monitoring solution that detects abnormal activities on user computers.
S-OIL also recognizes fine dust as a strategic mid- to long-term risk. According to the 2019 World Air Quality Report released by IQAir, the concentration of ultra-fine dust in Korea is the highest among OECD member countries and it has become a national issue. In particular, as a high level of fine dust frequently blankets Ulsan, an industrial city where S-OIL's refinery is located, due to vigorous production activity, companies are expected to face stronger calls for emission reduction. As the government established a target of cutting fine dust emissions by 36% from 2014 level by 2022 and Ulsan also set up a reduction target of 40% by 2022, tighter regulations are expected to come. Although S-OIL is emitting fine dust at a level lower than legally required, it is pushing ahead with the additional installation of an ultra-low NOx burner (ULNB) that reduces the emissions of NOx, the main culprit of fine dust, to live up to local community expectations and to preemptively respond to the tightening of regulations. In addition, S-OIL signed a voluntary agreement to reduce fine dust with the Ministry of Environment and Ulsan City.

Effective Operation of Internal Audit System

S-OIL has a dedicated audit organization that reports directly to the BAC to guarantee independence and expertise of internal audits. The BAC appoints an external auditor and assesses S-OIL's internal accounting management system, through an objective and independent review as per the relevant processes on external auditor appointment and internal accounting management system assessment. S-OIL enhances transparency and corporate value by conducting thorough internal audits over accounting and overall business activities. The audit organization, based on the auditors' extensive experience and in-depth understanding of business operations, concentrates its auditing capabilities on sustaining a sound internal control system and improving efficiency in work processes and cost structures.
In 2020, S-OIL reinforced the segregation of duties, and shared audit results from the past 10 years to prevent the similar cases from being repeated. S-OIL actively notifies its ethics management policy and the hotlines for whistle-blowing to employees, customers, and suppliers, to encourage reporting unethical behaviors and strengthen protection for whistle-blowers. In addition, reported cases are investigated thoroughly and remedial actions are taken for cases confirmed as facts to prevent recurrence. Also, S-OIL continuously refined the internal audit regulations and procedures to strengthen internal control, and conducted both regular and ad-hoc audits as per the risk-based audit plan that help raise the compliance level and self-audit mindset of employees.
S-OIL commissioned an independent audit quality assessment of its internal audit function to identify improvement areas and attain higher audit quality in 2018. The assessment was done by an independent third-party agency Artner Consulting based on the International Standards of Institute of Internal Auditors, and S-OIL's internal audit function received the highest rating of “Very Satisfied”. S-OIL actively helps auditors to improve individual competency by attending various training courses and to obtain professional certificates in internal audit. S-OIL implements the constant monitoring for detection of abnormal patterns and improvement areas through in-depth data analysis utilizing Audit Command Language, a professional audit software.
As stated above, S-OIL strives to enhance corporate value through the objective and independent operation of the BAC and the internal audit organization, an effective audit system comparable with that of leading global companies, and the execution of process improvement oriented audits.