Case study: European refinery
Step 1: assessing materiality.
Most material issues for the refining & marketing industry are climate strategy, supply chain management and innovation management.
Step 2: analyze the company's management of these material ESG issues
Climate strategy: Transportation is ~55% of oil demand. As the transition to EVs doesn’t happen overnight, especially not within heavy transportation, the role of alternative fuels or next generation biofuels are crucial to keep a lid on carbon emissions. In addition, the potential for aviation fuel, bio-based plastics and chemicals is significant and teh company's global market share of ~50% in biofuel refinery gives it a significant competitive advantage. This is positive for sales growth.
Supply chain management: very flexible base of raw material feedstock, so company is able to process the widest range of vegetable oils and waste residues into renewable fuels in the industry. However, palm oil sourcing is always risky and not as ‘clean’ as the company suggests in its reporting. Moreover, its conventional oil products business is ~80% reliant on Russian crudes. The impact of these risks are unclear.
Innovation management: pioneer in renewable fuels. Patented technology. Flexible use of raw material. High innovation effectivity. Positive for margins.