Environmental

Environmental performance 2021

2021 targets2021 performance
GHG Strategy Measurement and Reporting
Implement a Vitol GHG Measurement and Reporting Standard across all Vitol investments, based on the WBCSD GHG Protocol and the IPIECA reporting guidelinesAchieved Achieved | The Standard was rolled out to all relevant companies in which Vitol is invested
Implement a calculation tool to allow Vitol to measure the GHG footprints of its investments based on the WBCSD GHG Protocol and IPIECA reporting guidelinesAchieved Achieved | The tool was rolled out to all relevant companies in which Vitol is invested
Ensure all investments are measuring and reporting emissions to Vitol by 31.12.2021Achieved Achieved 1
Report all material scope 3 categories in the 2021 ESG reportAchieved Achieved | See Vitolʼs response to the energy transition
Further formalise the Vitol GHG strategy and publish this in the 2021 ESG reportAchieved Achieved | See Vitolʼs response to the energy transition
Environmental reporting
Ensure all Vitol investments are reporting freshwater extraction data by 31.12.2021Achieved Achieved | All relevant companies in which Vitol is invested are reporting this
All relevant investments to be reporting SOx (sulphur oxides) and NOx (nitrogen oxides) data by 31.12.2021Achieved Achieved | All relevant companies in which Vitol is invested are reporting this
Ensure all Vitol investments are reporting waste figures by 31.12.2021Achieved Achieved | All relevant companies in which Vitol is invested are reporting this
All investments to report quantity and type of substance spilledAchieved Achieved | All companies in which Vitol is invested are reporting quantity and type of substance spilled
Performance
Implement ISO50001:2018 Energy Management standard onboard ships under LSC management by 31.12.2021Partially achieved Partially Achieved by year end | Full certification was delayed due to Covid and not achieved at year end, but achieved in January 2022
A 10% reduction in environmental exceedances in 2021, with a longer-term aim of zeroAchieved Achieved | There was a 10% reduction in environmental exceedances in 2021 compared with 2020
Zero prosecutions or enforcement actions by environmental regulatory authorities in relation to Vitol investmentsNot achieved Not Achieved | Companies in which Vitol is invested experienced one repeat enforcement action that arose in 2020 and four additional actions in 2021

1 Investments reporting emissions data in line with Vitol carbon accounting methodology and restatement policy.

2022 targets

A 10% reduction

in the total volume of substances arising from large spills in 2022 compared with 2021

A 10% reduction

in the total number of large spills in 2022 compared with 2021

A 10% reduction

in environmental exceedances in 2022 compared with 2021, with a longer-term aim of zero

Zero prosecutions

or enforcement actions by environmental regulatory authorities in relation to Vitol investments

Vitol’s response to the energy transition

The speed and effectiveness of the energy transition will shape the context in which our business operates.

As societies, economies and the climate adjust to new and evolving circumstances our business will face significant risks, as well as opportunities.

As a major participant in energy markets worldwide Vitol is mindful both of the need to realign its business and of the important role it can play as part of this change, whilst meeting the energy needs of our customers. Our expertise and global presence should enable us to identify and develop opportunities, and to continue to develop a long-term and sustainable business for our shareholders, customers and society.

Vitol recognises the recommendations of the Financial Stability Board’s TCFD which enables our stakeholders to understand the potential impacts of climate- related risks and opportunities on our business.

We appreciate that stakeholders expect transparency and disclosure, but the complexity and uncertainty associated with climate change makes it difficult to pinpoint exactly where and when specific items could affect Vitol. The TCFD acknowledges that implementation of its recommendations will take time. Our TCFD roadmap sets out our own pathway whilst recognising that this is an ongoing process where we will build upon each element of governance, strategy and risk management in addition to metrics and targets over the years to come.

Vitol TCFD Roadmap

1. Governance

Disclosure a) 21 Board’s oversight of climate-related risks and opportunities
  • Strategy & business plans
  • Processes around climate-risk
  • Frequency of discussion
  • Performance objectives
  • CapEx, M&A, divestures
  • Monitoring performance
Disclosure b) 21 Management’s role in managing & assessing climate risk & opportunities
  • Climate-related responsibilities
  • Reporting lines of individuals
  • Committees created
  • Organisational structure
  • Process description
  • Monitoring

2. Strategy

Disclosure a) 21 Describe climate-related risks & opportunities identified over the short-, medium-, long-term
  • Description by sector and geography
Disclosure b) 23 Describe impact on business, strategy & financial planning
  • Products, trading, demand
  • Macrotrends, investment decisions, access to capital, CapEx
Supplemental disclosure b) 24 Climate risk integration into:
  • Decision making & strategy
  • Legacy assets
Disclosure c) 24 Resilience of strategy in context of 2°C or lower scenario:
  • Impact on strategy of climate risk
  • Possible adaptions
Supplemental disclosure c) 24 Robust scenario analysis:
  • 2°C or lower scenario
  • Assessing physical climate risk
  • Policy, energy pathways, regulation

3. Risk Management

Disclosure a) 21 Process to identify & assess climate risk
  • Describe process
  • Assess materiality & include emerging risks
Disclosure b) 23 Describe risk management processes
  • Mitigation, transfer, accept, control
  • Policy, technology, market,
  • Reputation (acute and chronic)
Disclosure c) 22 Describe how climate risk identification, assessment and management is integrated into company processes

4. Metrics and Targets

Disclosure a) 23 Key metrics to measure & manage CR & ops.
  • Trend analysis
  • Internal carbon pricing
Supplemental disclosure b) 23 Key metrics to measure & manage climate risks & opportunities
  • Provide business segment splits
Supplemental b)22 for energy group
  • Physical & transition impacts
  • Energy group specific metrics
Supplemental b)22 for transportation groups
  • Split for shipping, rail, trucks
  • Operational, technical, dual fuels
  • Regulation / reporting
Disclosure b) 21 Emissions disclosure
  • Scope 1,2,3 inline with GHG protocol
  • Historical data to allow for trend analysis
Disclosure c) 22 Describe targets
  • Absolute or intensity metrics
  • Other relevant KPIs
  • Timeframes and baseline year
KEY
To be completed 2021| Completed 2021 To be completed 2022| To be completed 2022 To be completed 2023| To be completed 2023 To be completed post 2024| To be completed post 2024
Guidance for all sectors| Guidance for all sectors Guidance for non-financial group | Guidance for non-financial groups Guidance for energy groups | Guidance for energy groups Guidance for transportation groups | Guidance for transportation groups

Climate risk governance

Vitol has a solid climate risk governance framework with effective and robust controls commensurate to the nature, scale and complexity of the risks we face through our investments and as part of our operations and trading activities.

This section details the board’s oversight and management’s role in managing and assessing climate-related risks and opportunities as well as describing Vitol’s Energy Transition Initiative (VETI).

The remit and role of the key committees and working groups that comprise Vitol’s governance in relation to climate change are explained below.

  • The board: has oversight of climate risk management and makes all material decisions in relation to the energy transition. During 2021, four formal board meetings were held. ESG and energy transition topics were presented at each board meeting. Topics discussed included: a status update of VETI workstream deliverables, as well as reviewing the Vitol investment portfolio. Two additional bespoke meetings were also held. First, to discuss and understand carbon accounting methodologies, Vitol’s footprint and work undertaken in relation to GHG measurement and target setting. Secondly, to discuss Vitol’s inaugural ESG report.
  • ESG committee: has defined terms of reference. Its mandate is to assist the board in defining and reviewing Vitol’s strategy relating to ESG matters and to evaluate the effectiveness of Vitol ESG practices and systems for identifying and mitigating ESG risks, ensuring they remain effective, up-to-date and consistent with good industry practice. Climate change topics form part of this. The members of the committee are included in the governance section. The committee meets every 5-6 weeks.
  • GHG working group: oversees the output from the VETI, including the alternative energy working group, the GHG trading group and the GHG shipping group and makes recommendations to the board. The group is comprised of 1 board member and 12 senior managers from different departments (power trading, E&S, research, origination, Humber Zero, environmental products trading, shipping and treasury) across Europe, the Americas and Asia. The group meets virtually as needed.
  • Alternative energy working group: discusses the project pipeline for sustainable investments such as solar farms or wind assets and shares knowledge and best practice across different regions. It also discusses market opportunities and trends. It is comprised of 40 employees across different offices and functions such as investment, origination and trading. The board member for utilities leads this group, which meets monthly.
  • GHG trading group: the purpose of this group is to review our core trading activities. This consists of crude oil and products, transitional and sustainable energy. The group looks to understand where Vitol can decarbonise energy markets, enter into new regions to generate additional P&L, diversify its trading activities and position Vitol for a low-carbon future. Output from this group is included in quarterly VETI board updates. This group is comprised of approximately 20 commercial employees. The board member for utilities leads this group, which meets monthly.
  • Vitol Green Solutions: focuses primarily on Vitol’s crude oil and products and transition-related trading activities. This group looks to provide new services and products that contribute to decarbonising or offsetting/removing emissions associated with the products that Vitol supplies to our customers, whilst generating additional benefits. Output from this group is included in quarterly VETI board updates. The group is comprised of 10 front office personnel and meets monthly.
  • GHG shipping group: the group reviews the operational performance and carbon-intensity of Vitol’s owned and chartered vessels, keeps abreast of carbon-related activities in the market and oversees the results from operational, technical and fuel-based trials across our fleet, as well as the results from joint studies such as the use of ammonia as a marine fuel. Recommendations from this group are included in quarterly VETI board updates. This group is comprised of five technical and commercial shipping experts and meets approximately every three months.

Vitol's Climate Change Management

Climate Change Management Organogram

The structure outlined in this section allows ESG and climate-related information to flow across the organisation and between teams involved in making business decisions. This includes trading and investments teams. Cross department collaboration supports the integration of climate change issues into governance and risk management processes. On the ground and strategic consequences of climate-related risks and opportunities are therefore integrated into company-wide decision making. Functions involved in this decision making include: business process improvement, communications, E&S, finance, investments, IT, origination, research and the trading teams.

Director climate roles and responsibilities
The Vitol CEO is accountable for strategy development and execution, including that relating to ESG and the energy transition, in consultation and collaboration with the board.

The chairman of the ESG committee is a member of the board and is responsible for ensuring that the ESG committee terms of reference are followed. The remit of the committee also includes climate change-related topics.

The head of E&S is responsible for ensuring processes are in place to manage and mitigate risks relating to health, safety, environment, human rights & communities, including climate-related topics. This role reports to the board.

Climate-related training
In 2021 we continued developing the skills of the board and our people with respect to climate considerations. We delivered tailored training around ESG, the energy transition, carbon accounting methodologies and our carbon footprint to Vitol front office personnel, the EMEA origination team, the US crude team, Vitol Carbon Solutions group and the VARO Energy extended leadership team, amongst others.

Vitol Energy Transition Initiative (VETI)
During 2020 the GHG working group developed a Vitol Energy Transition Initiative (VETI) to facilitate our ambition to decarbonise energy markets and our business. Our approach is centred on four core objectives, with 11 associated workstreams. The deliverables from the workstreams have been built into our approach to strategy, risk management, metrics and targets in the following sections.

Vitol’s strategic approach to the energy transition

Vitol is a substantial trader of energy. Our business is built on an in-depth understanding of energy markets, complemented by a global network of energy infrastructure.

Crude oil and products are the foundation of our business but the breadth of energy products we trade has expanded and in the last few years we have invested significantly in building transitional and renewable businesses. Climate change poses a financial risk to a large part of our business in the medium to long-term, but the transition also provides opportunities. Our ambition is to play an active role in delivering the energy transition, alongside our participation in crude oil and product markets. This is based on our view of the evolution of energy demand, including the growing uptake of EVs, projected increase in air travel, and other macroeconomic trends and scenarios detailed in our energy outlook.

Our overarching business strategy is underpinned by the 11 workstreams contained within the VETI. Three key workstreams relate to:

  1. Decarbonising our investments
  2. Addressing sustainability across our business
  3. Environmental products trading

Decarbonising our investments
Decarbonisation focuses on reducing our absolute GHG emissions across our investments, transport and offices.

Vitol investments
We use our influence as an investor and a shareholder to integrate low-carbon thinking into decision making processes. During 2021, Vitol engaged with all its investments either through board participation or via peer-to-peer knowledge sessions and meetings. The primary focus for 2021 was to support investments to enable them to measure their GHG emissions accurately by providing them with appropriate tools to do this. GHG measurement maturity across Vitol’s investment companies varies from company to company. Some have been measuring their GHG footprints for many years and reporting under regulatory regimes such as the EU ETS (Emissions Trading Scheme) or similar. For those that were not, Vitol created and rolled out a GHG measurement and reporting standard and a GHG footprint calculation tool based on the WBCSD GHG Protocol and IPIECA reporting guidelines. At the end of 2021 all relevant investments were reporting emissions data to Vitol.

We engaged the investment companies contributing most to Vitol’s scope 1, 2 and 3 emissions via our board participation. Vitol held structured discussions with seven major investment companies using a tailored questionnaire covering energy transition topics including stakeholder expectations, strategy, measurement, target setting, decarbonisation projects, regulatory regimes, offsetting and reporting. The aim of this process was to stimulate debate, understand thinking around energy transition and ensure that important topics were tabled at board meetings. Tangible achievements have been made at a number of our investments, for example VTTI, VPI Immingham and VPR.

Transportation
Our strongest focus continues to be on shipping, since this is the largest contributor to Vitol’s direct emissions and a sizeable contributor to our indirect emissions. Our scope 1 shipping emissions for 2021 are 1,015 KtCO2e and our scope 3 shipping emissions are 8,807 KtCO2e. At a global level shipping contributes approximately 3% to global GHG emissions each year.

In this section we set out the regulatory and reporting frameworks that we adhere to, the performance of our owned vessels and our achievements, as well as our approach to managing and optimising our owned vessels. We also explain how we perform against a number of internationally recognised benchmarks.

We engaged DNV Maritime Advisory to verify our scope 1 CO2 shipping emissions data for 2021 and all of the calculations underpinning this which support the conclusions described in this report.

Vitol-owned and operationally controlled vessels
The IMO GHG strategy 2050 includes a goal to reduce carbon intensity (CI) of shipping by 40% and 70% by 2030 and 2050 respectively and to reduce absolute emissions by 50% by 2050 compared with a 2008 baseline. Short, mid and long-term measures have been identified by the IMO to achieve these targets.

As a sizeable owner, with 64 vessels of varying sizes and types deemed operationally controlled (scope 1 emissions), we must ensure that we comply with all legal requirements as a minimum.

Energy Efficiency Design Index (EEDI)
The EEDI provides a newbuild standard that ensures a ship design achieves a certain level of efficiency and carbon emission performance. The EEDI is mandatory for newbuilds above 400 GT and shipbuilders are responsible for the calculation of the EEDI, which is then verified by classification societies.

Vitol will continue to ensure full compliance with EEDI when procuring relevant newbuilds.

The following IMO short-term measures cover both technical and operational parameters and are due to come into force on 1 November 2022.

Energy Efficiency Existing Ship Index (EEXI)
During Marine Environment Protection Committee (MEPC) 76, the IMO adopted an EEXI for existing ships, which covers all vessels above 400 GT. The EEXI is a one off certification targeting design parameters, not an operational index. The EEXI determines the standardised CO2 emissions related to installed engine power, transport capacity and ship speed (i.e. measures the CO2 emissions per deadweight ton and mile).

Vitol will ensure full compliance with the EEXI and we are planning to implement engine power limitations (EPL) on part of our fleet before 1 November 2022.

Vitol’s Energy Transition initiative (VETI) 2021 Achievements

Core objectivesWorkstreamsAchievements
Measure GHG footprint & devise incentives
GHG measurement systemsAll material scope 3 categories measured or reliably estimated. GHG engine developed within Vitol trading systems, which provides a robust and accurate calculation of scope 1, 2 and 3 emissions
Internal carbon incentive mechanismsCarbon incentive proposals being investigated for certain business segments, to be considered further in 2022 and beyond
Reduce current footprint
Current investmentsEngagement with boards of the larger companies in which Vitol is invested to support and drive change. Improved emissions reporting by providing measurement tools to smaller companies in which we are invested
TransportationAchieved ISO50001 (Energy Management) certification for LSC fleet, participation in joint studies into alternative fuels, DNV maritime advisory verified our scope 1 CO2 emissions. Vitol 2021 own fleet AER1 and EEOI2 performance on average already exceeds the Poseidon Principles and Sea Cargo Charter 2030 targets
Offices25 green champions appointed, energy audits rolled out across largest offices with associated efficiency gains, focus on waste management practices and single-use plastic removed in most offices
Grow low-carbon opportunities
Acquisitions & venture capital$1.3 bn committed to sustainable solutions. 105% year-on-year growth in gross3 renewables portfolio to 327 MW solar and 240 MW4 wind generation capacity. 1.2 GW renewables capacity (operational and committed pipeline)
Trading opportunitiesDeveloped Vitol Green Solutions group to develop innovative solutions for our customers. Transitional share of traded volumes reached 26% in 2021
Offsetting & removalsIncreased volumes of carbon traded versus previous years, developing a range of carbon offset and removal projects with a range of co-benefits for local communities to help businesses achieve their climate ambitions
Report & communicate
Market context & decarbonisation planThe output from the VETI workstreams has enabled Vitol to further formalise our energy transition plan in the context of our energy outlook
Internal reporting & communicationsGHG report and GHG shipping report are in place. Quarterly reporting process to the board now includes the balance sheet organised by business segment and workstream deliverable updates
External communicationsESG report 2021 published including a more formal strategy around the energy transition

1 Annual Efficiency Ratio.

2 Energy Efficient Operational Indicator.

3 Capacity of assets/projects shown ‘gross’ basis, irrespective of Vitol ownership.

4 MW is operational capacity, all in AC delivered into the grid.

Case Study

VTTI targets net-zero operations by 2050

VTTI targets net-zero operations by 2050

In 2021 our investment VTTI set itself the objective of planning its path to sustainability. It carried out a thorough assessment of GHG emissions to better understand the sources of emissions and which could be addressed most effectively.

Typically, terminals use electricity for base operations, occasionally supplemented by fuel consumption (natural gas or diesel). However VTTI has two assets with significant refining capacity which consistently consume fuel and contribute to the proportionally higher scope 1 emissions as seen in the graph below.

Based on collated footprint information, a 45% reduction target in operational emissions by 2030 (from a 2019 baseline) was agreed with the VTTI board, with the aim of becoming net-zero by 2050. This has lead to the development of energy management and GHG reduction plans for each terminal.

Achieving this target will require a more efficient use of energy, as well as sourcing decarbonised power and fuel. This project was carried out collaboratively with the terminals. Key priorities that arose during the consultation process were:

  • Growing our business sustainably
  • Ensuring a future-proof license to operate
  • Being a trustworthy business partner
  • Being an inclusive corporate citizen

More specifically, VTTI will deploy its net-zero strategy to new acquisitions and new business opportunities, whilst constantly reviewing its skillset to ensure it can meet these targets successfully.

VTTI SCOPE 1 AND 2 EMISSIONS
KT

Key

Carbon Intensity Indicator (CII)
The CII requirements cover all vessels above 5,000 GT. The indicator measures how efficiently a vessel transports goods in grams of CO2 emitted per deadweight capacity and nautical mile, i.e. considering the actual fuel consumption and distance travelled for each individual vessel. Each vessel would receive an annual rating from A to E, based on its operational performance. Vessels need to achieve a C rating or better, otherwise bespoke plans must be developed and implemented to get to that level. The thresholds to achieve these ratings become increasingly stringent towards 2030 in line with the IMO target of 40% reduction in carbon intensity. The Annual Efficiency Ratio (AER) underpins the calculations.

The CII ratings will likely be issued for the first time by May 2024 based on performance in 2023 and every year thereafter based on the performance in the preceding year. If we review our 2021 performance in the context of the 2023 CII requirements, due to specific trade patterns of vessels, exacerbated by the Covid pandemic, six of our vessels do not meet the required C rating. Our target is to ensure that all vessels maintain a C rating or better.

Achievements and performance – owned vessels
In addition to the above, there are also a range of mandatory and voluntary emissions reporting frameworks in place, as well as those specific to financial institutions and charterers.

EU Monitoring, Reporting and Verification (EU MRV) and IMO Data Collection System (DCS)
Both the EU MRV, a regional requirement, and IMO DCS, a global requirement, have been mandatory since 2017 and 2018 respectively, and are the first step in a larger process to collect and analyse shipping emissions data. Both provide the underpinning data needed to decarbonise the shipping industry.

Vitol has complied and continues to fully comply with these reporting requirements since their inception.

Poseidon Principles (PP)
The Poseidon Principles are specific to financial institutions and banks. They are intended to decarbonise shipping finance by aligning vessel portfolio performance with the IMO 2050 absolute target. The AER underpins the calculation.

Due to specific trading anomalies in 2021, a small number of our vessels were not in compliance with the individual PP targets for 2021. However, from a fleet alignment perspective the average performance was 22.8% below the PP target. This is a strong performance. By extrapolating forward our 2021 fleet AER performance, we already exceed the PP target for 2030.

Sea Cargo Charter (SCC)
The Sea Cargo Charter is intended to decarbonise chartering activities by aligning chartering activity performance with the IMO 2050 absolute target. It is also aligned with the PP, but the Energy Efficiency Operational Indicator (EEOI) methodology feeds the calculation.

Although Vitol is not a signatory to the SCC we have undertaken the analysis in-house to ascertain how we performed against the SCC trajectory. Due to specific trading anomalies in 2021, a small number of vessels do not comply with the SCC targets on an individual basis for 2021. However, when applying the fleet alignment calculations, our owned vessels are on average 26.6% below the SCC target for 2021. The fleet alignment calculation for 2030 shows an average of 6.2% below this level, which indicates that if the entire fleet carries on business as usual, we would remain in compliance with SCC target to 2030 (although some vessels would not comply individually). Based on the 2021 EEOI calculation the Vitol fleet complies with the SCC 2030 target. It is our clear intention to continue to improve on these targets.

Performance against IMO targets
We have assessed our fleet performance against the 2030 IMO 40% CI reduction target trajectory. In doing so we have assumed the most ambitious scenario of 21.5% reduction required (supply-based measurement) from the 2019 reference line to 2030 (although IMO has not yet finalised the trajectory beyond 2026). We have developed a methodology that does not take an average fleet deadweight (dwt) since our fleet comprises different categories of vessels such as gas carriers and tankers. Our methodology treats each vessel dwt independently and weighted with the CO2 performance of each. In applying this methodology (which is more stringent than the average dwt method) to our owned fleet, we conclude that the Vitol fleet is already complying with the 2027 target at the end of 2021. Our ambition for the owned fleet is to comply with the 2030 IMO 40% CI reduction by the end of 2024.

A summary of our achievements:

  • Poseidon Principles: Vitol 2021 own fleet AER performance on average already exceeds the 2030 PP target
  • Sea Cargo Charter: Vitol 2021 own fleet EEOI performance on average already exceeds the 2030 SCC target
  • IMO 40% CI reduction target: Vitol fleet is on average already complying with the IMO CI 2027 target

Optimising our fleet
The vast majority of Vitol-owned vessels are managed by our technical manager, LSC, which brings a number of benefits from an ESG perspective.

LSC successfully received ISO50001 certification for energy management across our owned vessels in January 2022. This supplements the ISO9001 (quality), ISO14001 (environment) and ISO45001 (health and safety) certifications already in place. LSC is likely to be the only technical manager to have achieved this in Europe.

Vitol continues to actively engage and review solutions to improve the carbon intensity of our existing fleet. We have identified and continue to assess a number of technical measures to mitigate emissions across our owned fleet including energy efficiency upgrades, specialist paints, sail technology, battery technology and biofuels. LSC and Vitol are actively studying future fuels including e-methanol, ammonia and hydrogen.

We are also assessing some operational options such as general reductions of speed and better management of chartering & operational activities. As a last resort we could also consider divesting some of our less efficient vessels. Any new vessels procured will be of eco-vessel standards.

More significant reductions over time will require changes to fuel usage and type, investments into new and emerging technologies and supportive policies to drive change. To that end we became a member of the ITOCHU Joint Study Framework on Ammonia as an Alternative Marine Fuel and are also investigating a range of other solutions.

Third party vessels – spot and time charter Capturing all emissions relating to third party shipping is key to understanding and developing our approach to managing scope 3 emissions. We engaged a third party to support us with this and implemented a robust process at the start of 2021. We have included all of this data in our GHG footprint. Going forward we will analyse this data to provide information on our scope 3 carbon intensity.

Offices
The scope 2 emissions from our offices are not material in the context of our overall GHG footprint, but we recognise efforts, however small, contribute to an improved environmental footprint. We have appointed approximately 25 ‘green champions’ and have rolled out our environmental policy across our main offices. Other achievements include:

  • Energy audits: energy audits were undertaken in our largest offices. Singapore received an Eco-Office Certification. Energy audits in Geneva resulted in moving to 100% sustainable energy supply and an average of 15% energy saving per month compared with 2020 due to the changes implemented.
  • Waste management: we measure waste generated in our main offices. Most offices have recycling systems in place and some have made huge improvements. For example, our Bahrain office went from 0% recycled waste to approximately 35% per week.
  • Plastic: we are removing single-use plastic (such as water bottles and plastic cups) and replacing with long-term solutions such as water coolers and crockery or biodegradable items in most offices.

Case Study

Vitol Bunkers: Decarbonising shipping

Vitol Bunkers: decarbonising shipping

‘Decarbonising the shipping industry will be key to achieving global net zero targets. Vitol Bunkers recognises the need to explore multiple decarbonisation pathways and seeks to offer a growing range of low-carbon options. This strategy is underpinned by a commitment to invest in emissions-reducing technology and associated infrastructure’ Mike Muller, head of Vitol Asia.

The IMO has laid out targets to reduce total emissions by 50% and carbon intensity by 70% by 2050, and entirely eliminate emissions by the end of this century. The EU has also set its own targets of a 55% reduction in emissions by 2030 and carbon neutrality by 2050. In support of these targets and in response to increasing interest from shipowners, Vitol Bunkers will provide a choice of low-carbon options to help our customers reduce their emissions. These offerings can include carbon offsetting whereby VERs from Vitol’s portfolio of high-quality carbon offset projects are retired.

Vitol Bunkers has also started delivering bio-fuel blended VLSFO to customers in Singapore. These bespoke blended bunker deliveries contain a material portion of renewable energy. Vitol Bunkers is also in dialogue with maritime stakeholders to explore methanol, ammonia and hydrogen-based decarbonisation solutions.

Our Singaporean bunkers operations company, V-Bunkers, has been recognised for its sustainability, with 5 of its 20-strong fleet of bunker barges receiving green ship awards from the Maritime Port Authority. V-Bunkers is building electric-hybrid notation bunker barges for deployment in Singapore next year. These will have significantly lower emissions compared to conventional bunker barges.

Addressing sustainability across our business
We already have a significant low-carbon asset platform and have committed to spending $1.3 billion in this space. We are cognisant of the sustainability (and resulting financial) risks inherent in traditional carbon-heavy energy infrastructure. However we also believe that the world will use conventional energy sources for some time. We will continue to selectively invest in certain hydrocarbon or transitional asset classes such as our upstream investment in the US and our UK gas-fired power generation investment. Vitol believes that a flexible and pragmatic strategy, is the optimal way to manage the changing realities of the energy transition.

Our approach to energy trading and investing can be split into three core pillars: (1) crude oil and products, (2) transitional energy solutions (3) sustainable energy solutions.

Crude oil and products

This includes crude oil, gasoline, naphtha, distillates, fuel oil and bitumen. This business line will continue to grow modestly until the early 2030s and will still be part of the energy mix in the long term. We aim to achieve the following:

  • Minimise emissions related to trading activity e.g. shipping and support infrastructure
  • Review the performance of our investments in traditional energy infrastructure
  • Invest to maximise efficiency and minimise emissions
  • Remain opportunistic and deploy capital to fill near-term supply gaps e.g. our upstream investment via Vencer Energy

Transitional energy solutions

Covering a range of energy solutions from those required in the early stages of the transition to those which have a place in the long-term energy mix. Transitioning to more sustainable forms of energy will take time due to challenges in advancing and deploying new technologies and infrastructure at scale.

We anticipate that traditional forms of energy and technologies will combine with new developments over the short, medium and long-term. We aim to achieve the following:

  • Gas, LNG and LPG: grow our presence in natural gas, LNG and LPG, both as a displacement for solid fuels and as a near/medium-term complement to renewables
  • Power: continue to build on our expertise and understanding of power markets to support electrification of energy demand
  • Biofuels: leverage understanding of biofuels market to expand capabilities, repurposing existing infrastructure where appropriate
  • Circular economy solutions: invest in established and development-stage circular economy solutions to facilitate creation of new technologies and scaling-up of existing technologies

Sustainable energy solutions

This includes environmental products and renewable technologies. Vitol’s portfolio of trading products and energy investments is evolving. We have hired additional headcount to focus on our sustainable energy solutions business. This includes hydrogen, biogas, carbon capture and storage, renewable generation, EVs, and environmental products. Sustainable energy solutions will continue to grow from today beyond 2050. We aim to achieve the following:

  • Leverage market expertise and Vitol’s leading position to support the development of new energy markets
  • Invest in infrastructure
  • Explore innovative technology solutions
  • Participating in hydrogen and carbon capture storage projects with a view to exploring future deployment
  • Deploy expertise and financial strength to develop end-to-end sustainable energy solutions which facilitate the transition
  • Consolidate our market-leading position in environmental products. Focus on high-quality offset and removal projects aligned with the United Nations Sustainable Development Goals (UN SDGs)
  • In biogas, invest along the value chain to support development of biogas for transport

Areas of particular focus include:

Hydrogen

We are working on deploying hydrogen for generation in our UK power portfolio, as well as investing in green hydrogen production. We anticipate hydrogen being a key fuel for both the domestic and transport sectors and are building our expertise and capabilities accordingly.

Renewable power

With a total of 1.2 GW of renewable generation and approved pipeline, our renewable power portfolio comprises wind and solar in Europe, India, Pakistan and the US. We look for projects where our capital, expertise and market understanding can add value and are continuing to look for new opportunities.

Electrified transport

Transport has historically accounted for 60% of oil demand, giving us a specialist insight into the transport sector. We are leveraging this expertise and our physical footprint to explore a range of opportunities including:

  • Municipal transport e-solutions
  • EV fleet solutions in developed markets
  • Battery swapping for two and three-wheeler vehicles in developing markets

Case Study

Invested in community projects in New York

Community solar project in New York

Solar in the US

Invested in community projects in New York

Vitol is invested in 49 MW of community solar projects in Hudson Valley, New York state. There are 11 projects representing a total investment of $82 million. In total, the panels consist of 126,629 solar modules and the projects produce enough to power 5,500 homes annually.

The projects were built under the NY Community Solar programme, a statewide initiative to provide more affordable, low-carbon energy to residents. The solar farms are installed at an offsite location and consumers are able to subscribe to the community solar project. Consumers then receive discounted credits on their regular electricity bill for the low-carbon energy produced. This allows consumers to save money through both their enrolment in the scheme and their access to low-carbon energy produced by these solar farms.

Environmental products

Decarbonisation requires effective market-based mechanisms to determine the price of carbon. We believe both compliance and voluntary markets, with solid governance in place, have an important role to play.

The number of compliance carbon markets continues to increase with the largest new addition being the start of the Chinese national trading scheme. To ensure adequate liquidity, we anticipate the evolution of regional links between many of the fragmented domestic markets globally. Vitol will have an active role in balancing these markets by transferring surpluses to deficit markets in the most efficient way.

Our global carbon team is based in six core locations to enable participation in the various regional and national carbon markets. The team covers markets such as the Chinese, European, UK, US, Australian and New Zealand Emissions Trading Schemes.

The voluntary carbon market comprises carbon offset transactions outside compliance markets. Voluntary carbon markets provide a key mechanism to address hard-to-abate emissions, and have the potential to reach more than 2 GT of CO2 per year by 2030.

As an active participant in the carbon markets and project development over 15 years we now oversee projects or have committed capital to projects that either offset or remove more than 15 million tCO2e.

Voluntary carbon market trading activities increased significantly in 2021. Prices and volumes were driven up by a combination of corporate net-zero ambitions and the introduction of standardised exchanged traded contracts such as the Chicago Mercantile Exchanges (CME) CBL Global Emissions Offset futures. The outcomes around the Paris Agreement Article 6 rulebook at the UN Climate Summit in Glasgow have also added further momentum to this, with countries able to partially meet their climate ambitions through the use of offsets, specifically Internationally Transferred Mitigation Outcomes (ITMOs).

In both compliance and voluntary carbon markets, Vitol’s trading activities have also followed this upward trend.1 The graph below shows how our carbon volumes have increased between 2019 and 2021.

In the Americas we have a strong presence across a range of environmental products which enable our customers to manage their greenhouse gas emissions and renewable energy obligations. Often developed on a regional basis, these include, but are not limited to the Regional Greenhouse Gas Initiative (RGGI), California Cap-and-Trade Program (CCA & CCO), Low Carbon Fuel Standard (LCFS), Voluntary Carbon Offsets, RPS Compliance & Voluntary Renewable Energy Certificates (RECs) and International RECs (IRECs).

CARBON SALES
m MT

1 Carbon trading volumes, based on delivered volumes including voluntary and compliance markets, but excluding Renewable Energy Certificates (RECs), International Renewable Energy Certificates (IRECs), Renewable Identification Numbers (RINs) and other types of renewable traded certificates.



Our understanding of carbon markets and our global network enables us to bring together partners and innovative finance solutions to the development of voluntary carbon avoidance or removal projects. Vitol is an active member of the Taskforce on Scaling Voluntary Carbon Markets, led by UN Special Envoy for Climate Action & Finance, Mark Carney. The creation of credible, high integrity carbon credits that are internationally recognised and audited under approved standards is key to its success.

We are developing our own carbon reduction and removal projects across most continents, with a particular focus on Africa. We deliver high-quality carbon abatement projects with tangible co-benefits for local communities, e.g. tackling poverty, improving education, gender equality, or health and welfare in line with the UN SDGs.

Vitol participates in the design and implementation of carbon projects, which are registered and certified by leading voluntary offset standards such as Gold Standard and VERRA. We also undertake in-house ESG due diligence on each of our projects prior to the project design phase and are embedding ongoing ESG assessments across our portfolio to ensure, for example, risks around health, safety and human rights are well managed. We are working with Wentworth Resources plc, in which we are invested, to create bespoke offset projects in Tanzania, which are aligned with Wentworth’s UN SDG ambitions.

As a key participant in the energy sector, we are encouraged to see the establishment of the Global Methane Pledge, which aims to limit methane emissions by 30% compared with 2020 levels. Vitol has a key role to play in supporting our partners and customers to achieve these reductions by developing innovative solutions and projects to abate or capture methane. To this end we are partnering with the African Refiners & Distributors Association (ARDA) to collaborate on GHG reduction projects with African refineries which include energy efficiency measures, soil sequestration and landfill methane capture.

Offering climate-related solutions and products
We continue to develop innovative climate-related offers and services for customers, but recognise that some of our solutions will only be needed in the short and medium term as markets and technology evolve to meet energy transition requirements and decarbonisation activities accelerate throughout the value chain. To service the needs of the business and our customers, we established Vitol Green Solutions. This group has developed tailored offerings across the barrel and the commodities we trade for our clients. We launched an offer for LNG customers wishing to mitigate emissions associated with the production and transportation of their cargoes using different market solutions such as high integrity offsets. This can be expanded to include pipeline gas providing an offset solution for individual LNG cargoes or for the whole supply chain from wellhead to customer (including power generation) using a tool created by Wood Mackenzie. Vitol Bunkers also developed an offset bunker fuel offer in conjunction with VGS for those clients wishing to compensate for the combustion or life cycle emissions generated from the fuel oil we supply to them. We use our carbon matrix to supply high-quality carbon offsets and renewable energy credits.

Case Study

Vitol has played an integral role in our ESG journey

Wentworth

“Vitol has played an integral role in our ESG journey. Now, we are working with them to design high-quality, bespoke and impactful carbon offsetting programmes in our local community, which will reduce our environmental footprint whilst delivering transformational growth through our gas-to-power platform in Tanzania.”

Katherine Roe, CEO, Wentworth Resources

Wentworth is a Tanzania-focused natural gas producer with a core producing asset at Mnazi Bay. As one of only two domestic natural gas producers in-country, Wentworth is playing a critical role in increasing energy access for communities across Tanzania. It is also decarbonising the grid by displacing higher emitting fuels such as heavy fuel oil (HFO) and diesel with lower carbon natural gas. This work is aligned with UN Sustainable Development Goal 7, which is focused on ensuring access to affordable, reliable, sustainable and modern energy for all.

Wentworth is working with Vitol to develop community-focused carbon offsetting programmes, with the objective to offset all of the business’s scope 1 and 2 emissions and partially offset scope 3 emissions from 2022.

The programmes aim to distribute 400,000 pairs of cookstoves and water purification devices to households in rural Tanzania for free. This consists of 800,000 units in total. Cookstoves mitigate deforestation as they use 2/3 less biomass than open fire cooking facilities. Water purification devices remove the need to boil water to make it safe to drink, reducing emissions further. Over the course of five years, the project will avoid 16 million tonnes CO2 at full scale. The projects are aligned with UN Sustainable Development Goals and will be rolled out during 2022.

Climate risk management

Vitol considers climate change to be one of the most material risks to our business model in the long-term and we are adapting our strategy accordingly. Climate-related risks and opportunities are considered as part of relevant business processes. All major decisions taken by the board are in line with our business strategy and our energy outlook.

We view climate risks in two distinct categories. Those that could result in physical risks to our business and the companies in which we are invested, and those relating to the energy transition.

Physical risks

Can be sub-divided into acute, short-term, highly disruptive impacts including extreme temperatures, wildfires, hurricanes or floods. Or chronic, long-term changes such as droughts, sea level rises or impacts on population health. Acute risks to Vitol could include the potential consequences arising from material events like flooding, power outages or damage to Vitol offices or assets owned by companies in which Vitol is invested, affecting our insurance premiums. In a more extreme worst case scenario, assets could potentially become stranded with reduced book-values. Indirect physical risk effects could result in disruptions, for example, in shipping, which could have a knock-on effect across global supply chains or have impacts on resource or energy availability, which would lead to enhanced volatility.

Transition risks

include new policies, broader or more stringent laws and regulation, possible litigation and technology changes. Depending on the nature and speed of these changes, this could lead to enhanced volatility, financial and reputational risk to Vitol.

The nature and range of risks which Vitol’s business faces are broad and difficult to define. How they evolve will depend on the degree of international alignment with regulatory environments, the accuracy of scientific models as well as other factors.

Capturing, assessing and monitoring ESG risk

Vitolʼs approach to risk management is described in the governance section of this report. In terms of climate-related risk, we view this with two lenses. Firstly, the risk to Vitol directly. This includes financial, reputational, transitional and physical risk. Secondly, the risks facing controlled and non-controlled companies in which we are invested. Investment companies are responsible for managing transition and physical risk, as well as other enterprise risks.

Assessing ESG risk as part of acquisitions

Vitol undertakes due diligence on all target companies, often with the support of external advisers. As part of the due diligence process we cover topics such as legal, tax, financial, compliance and E&S. For relevant acquisitions such as upstream oil and gas, the Vitol investments team includes a carbon price for modelling purposes to support the investment decision.

Climate and energy transition risks to the business

We are cognisant of the physical and transition risks of climate change, and their potential associated financial ramifications, inherent in traditional carbon-heavy energy infrastructure. It is probable that a number of hydrocarbon focused assets will have reduced values in the longer term.

A large number of our financing banks fall under Bank of England (BoE) regulatory supervision, which now includes an expectation they will assess the physical and transition risks associated with climate-related scenarios. As a client of a number of UK banks, Vitol has been working to support them in this requirement. During our positive exchanges with Standard Chartered and their advisers, we agreed to undertake a high-level review to understand the vulnerabilities of our 43 principal operating locations (the main Vitol investments plus the largest five offices) to physical risk using S&P location data and Munich Re’s physical risk assessment. The review’s findings were that Vitol’s physical risk profile is better than the regional sector average.

Assets, both hydrocarbon and non-hydrocarbon focused, in which Vitol is invested, have varying maturities in terms of their approaches to enterprise risk management (including assessing physical risks from climate change, such as flooding). As part of our approach to embedding TCFD requirements, we have therefore committed to engaging further with our investment portfolio to ensure that physical risks from climate change have been assessed and that appropriate controls are in place to mitigate these risks. This will clearly take time given their number and geographical spread. We will report back progress in subsequent ESG reports.

Metrics and targets

In this section we provide details on Vitol’s GHG footprint, our performance, what we are monitoring, our climate action and ambitions.

Vitol’s GHG footprint

Vitol follows the WBCSD GHG Protocol and the IPIECA GHG reporting guidelines for carbon accounting. We have adopted the ‘operational control’ approach for our reporting boundary, in line with our accounting consolidation methodology. This approach most closely reflects the direct influence of Vitol over emissions levels and our approach to decarbonisation. Within the scope of GHGs we include carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O), as well as sulphur hexafluoride (SF6) where it makes sense to do so. The footprint includes our direct (scope 1) and indirect (scope 2 and 3) emission sources. Scope 1 emissions arise from sources that are controlled by Vitol. Scope 2 includes emissions from the generation of purchased or acquired electricity, steam, heat and cooling. Scope 3 includes all other material indirect emissions that occur across Vitol’s value chain, and comprise the largest part of our footprint. We have most influence over our scope 1 and 2 emissions.

To continually improve data capture, efficiency and accuracy, Vitol has built a proprietary GHG footprint calculation engine within our core trading systems to measure all emissions across all scopes on an ongoing basis. This was an 18 month project involving multiple teams. The engine pulls data from various sources and systems, and includes a significant number of data points.

The diagram on page 53 shows the order of magnitude of our scope 1, 2 and 3 GHG emissions by business segment for 2021. Below details the evolution of our GHG footprint between 2019 and 2021.

VITOL GHG FOOTPRINT 2021 (KTCO2e)

Vitol GHG Footprint 2021

1 We classify scope 1 shipping emissions as (1) vessel is part of Vitol’s owned fleet, irrespective of vessel use, e.g. vessel chartering within Vitol, spot or time chartering to 3rd parties, or use as floating storage. (2) bareboat chartered-in vessels, i.e. vessels for which Vitol can appoint the vessel’s crew and holds the ISM Code Document of Compliance, in line with IPIECA recommendations.

Scope 1 emissions

Approximately 75% of our scope 1 emissions arise from our shipping activities.1 The remainder arise due to operationally-controlled activities in the refining/processing segment and operationally-controlled activities in the upstream segment. Scope 1 emissions have increased by approximately 6% in 2021 versus 2020 where our volumes were significantly reduced by the effects of the pandemic. The 2021 increase compared with 2019 and 2020 is largely due to increased shipping activity plus start-up inefficiencies related to a new unit at one of our refineries and associated increases in throughput.

Scope 2 emissions

Our scope 2 emissions are relatively small in the context of our overall GHG footprint, representing less than 0.1% of the total. The emissions mainly arise from electricity, heat, and steam consumed by operationally-controlled activities in the refining/processing segment, at retail stations owned by operationally-controlled investments, and in Vitol offices. If we were to use location-based emission factors, our scope 2 emissions would equate to 12 KtCO2e.

Scope 3 emissions

Our scope 3 emissions equate to approximately 95% of our total GHG footprint. We have been working hard to improve the data availability, capture and quality underpinning our scope 3 emissions during 2021. We are now reporting 7 of the possible 15 scope 3 categories defined under the GHG protocol. Our emissions have therefore increased substantially between 2020 to 2021 due to the reporting of these additional categories. The principal contributors to our scope 3 emissions arise from non-controlled investments and the combustion of their products as well as third-party transport operations, primarily ships.

Scope 3 emissions from non-controlled investments represent approximately 55% of our 2021 footprint. Scope 1 and 2 emissions data from our investments (3.15a) are collected quarterly as part of our KPI reporting process. In 2021 we developed and rolled out a GHG measurement and accounting standard and a calculation spreadsheet to support our investments in producing emissions data. A number of investments use the calculation sheet to determine their emissions by inputting data such as volume of fuels burned on site, electricity consumption or use of company vehicles, which is then pulled into our proprietary GHG footprint calculation engine.

Due to its materiality we have also created an additional reporting category (3.15b). This category includes the downstream use of the fossil fuels that our non-controlled investments sell (included in their scope 3 as category 3.11 use of sold products). We take the emissions from the combustion of 100% of these products into our scope 3 in proportion to the equity that we hold in each business.

Scope 3 transport emissions represent approximately 36% of our 2021 footprint. The material part of these emissions arises from spot and time chartering activities. Vitol first amended its charter party terms to request that counterparts supply the relevant data to us. We began to collect data such as bunker fuel type, volumes consumed on ballast and laden legs, and voyage details in January 2021, with the support of a third-party provider. Our 2021 footprint therefore includes scope 3 shipping emissions based on actual fuel consumption, rather than estimates. Third-party transport data also includes emissions from non-controlled trucks, barges, railcars and pipeline movements. These represent a small part of the overall emissions, which have been estimated using recognised spend-based emission factors.

It is not representative to compare the 2020 and 2021 GHG footprints, since additional scope 3 categories have been included for this reporting year. On a normalised basis our total emissions grew by 2.2% compared with 2020. The large difference between 2019 and 2020/21 can be explained by inclusion of emissions data from the upstream assets we have invested in.

Greenhouse gas footprint by business segment (KtCO2e)

GHG ProtocolUpstreamPower generationTrading
(primary shipping)
Refining/processingMainstreamDownstreamVitol total1
ScopeDescription201920202021201920202021201920202021201920202021201920202021201920202021201920202021
Scope 1 emissionsDirect emissions27191000080195210152692843002220011,0981,2571,328
Scope 2 emissionsOwned indirect emissions (power, heat etc)000000211131413311001181616
Scope 3 emissionsIndirect emissions (categories 3.1-3.15 below)3,93110,77811,0212,1152,1732,749009,63300202729347396986976,81213,67924,154
3.1Purchased Goods and Services--0--0--0--0--229--0--229
3.2Capital Goods--19--534--44--20--8--7--632
3.3Fuel and Energy-Related Activities Not Included in Scope 1 or Scope 2--0--0--229--0--0--0--229
3.4Upstream Transportation and Distribution--3--0--9,265--0--0--0--9,265
3.6Business Travel--0--0--1--0--0--0--1
3.11Use of Sold Products181212000000000000000181212
3.15(a)Investments' (Scope 1 & 2 emissions)2106385542,1152,1732,2140000002729257396986903,0913,5383,484
3.15(b)Investments' (Use of sold products - their scope 3.11)3,70310,12910,4360000000000000003,70310,12910,436
Total emissionsTotal scope 1, 2 & 3 emissions3,95810,79711,0322,1152,1732,74980395310,64928229833331323627396986997,92914,95225,498

Trading: all assets and infrastructure that support the trading business e.g. offices and logistics, shipping, barging, railcars etc.
Refining/processing: this segment includes pureplay standalone refining or processing assets.
Midstream: this segment includes those companies whose primary business is storage and pipelines.
Downstream: this segment includes those businesses that are comprised primarily of retail stations, as well as other activities such as storage terminals, refining, lube and LPG plants.

1 Totals may differ slightly due to rounding numbers to the nearest 1 KtCO2e.

2 Antwerp ATPC closed in Q122.

Achievements and performance

Our climate action at a glance - trading

The chart below shows the percentage of transitional energy commodities1 traded as a proportion of our total physical volumes between 2019 and 2021. In 2019 the transitional share of traded volumes was 18% and this grew to 26% in 2021. This trend is set to continue.




VITOLʼS Transitional share of delivered volumes of energy products
% of TOE2




Our climate action at a glance – investments

Although crude oil and products trading remain a core activity for Vitol, we have concurrently been growing both our transitional and sustainable businesses. We have committed over $1.3 billion of capital to energy transition investments. This includes deployed capital as well as forward commitments.

During 2021 Vitol began to track the evolution of the three pillars of our business strategy. The balance sheet split by business segment is reported at each board meeting. At the end of 2021 approximately 5% of Vitol’s business was classified as sustainable and 25% as transitional.3

1 Transitional commodities are defined as biofuels, natural gas, LNG, LPG and power.

2TOE is based on IEA conversion factors (energy content of 11.63 MWh/mt of oil).

3 Based on capital employed at group consolidation i.e. investments/JVs shown at net book value, net working capital and debt net of cash, lease assets/liabilities netted.

VITOL balance sheet BY business segment

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The $1.3 billion capital committed has in part resulted in a 105% year-on-year growth in our gross1 renewables portfolio to 327 MW solar and 240 MW wind generation capacity at 31 December 2021 versus the previous year.2 However, the ongoing pandemic-related challenges in the solar manufacturing supply chains have caused delays to some of our projects in India.

1 Capacity of assets/projects shown on gross basis, irrespective of Vitol ownership.

2 MW is operational capacity, all in AC as delivered into the grid.




RENEWABLE GENERATION BY TYPE
MW

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Energy transition ambitions

In addition to the aims stated under our business strategy, Vitol will work to achieve the following objectives and report back progress in subsequent ESG reports.

  • Continue to increase the proportion of investment in sustainable solutions
  • Grow renewables generating capacity (operational and approved projects) by approximately 100% versus a 2021 baseline to 1.2 GW


1 IMO ambitions are expected to be reviewed further in the years to come and we intend to revise our targets if we are not satisfied with those set by the IMO.

Environmental Performance

We recognise the importance and fragility of the environment and we commit to seeking to minimise our impact on the environment through upholding high E&S standards.

This section covers our environmental performance over the last three years and includes information on metrics such as spills, waste generation, freshwater extraction, environmental exceedances and emissions to air.

Reducing the impact of our operations on the environment promotes the following UN SDGs:

Environmental Performance

Spills and spill prevention
We define a large spill as an unplanned or uncontrolled release of more than 100 litres of hydrocarbons or chemical substances to the ground or water. The number of large spills has decreased by 11% compared with 2020, while the number of small spills has risen slightly by 4%. In 2021 we carried out an assessment of the volume and the type of substances spilled across all investment companies. While the total number of large spills decreased, the volume of these spills has increased from approximately 200m in 2020 and to 300m in 2021.1 The majority of which resulted from road transport-related shortcomings. We aim to prevent or mitigate all spills, and have set a year-on-year target of a 10% reduction in the number and the total volume of large spills.

The number of losses of primary containment (LOPCs), excluding tier 1 and tier 2 process safety events, has decreased slightly by 1% between 2021 and 2020. We maintain our approach, that all losses of primary containment must be reported to understand root causes and ultimately prevent spills from occurring. Companies in which we are invested are proactive in this respect. We continue to work with contracted hauliers to report LOPCs to us to include in our data set. LOPC numbers will therefore likely increase in the coming years as more and more companies report this data to us.

Number of spills at Controlled Investments

Controlled Investments

Number of spills at Non-Controlled Investments

Non-Controlled Investments

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1 Rounded to nearest 100 m3.

Case Study

Humber Zero bird protecting our environment

Dave Hughes carrying out migrating bird surveys as part of the preparation for Humber Zero, in the UK

Humber Zero: protecting our environment

The Humber Zero project enlisted the expertise of Lincoln-based Ecological Services Limited to carry out winter migrating bird surveys as part of the preparatory work for the major industrial decarbonisation project.

The Humber is the second-largest coastal plain estuary in the UK and is a Special Protection Area for the range of habitats and species it supports.

The work was carried out as part of the Habitat Regulations Assessment, which determines the impact of a plan or project on the wildlife of the surrounding area. The information is then provided to the local authority to help them make any planning determinations.

Humber Zero is a decarbonisation project associated with VPI Immingham, a UK power station. The project aims to remove 8 MT of CO2 per year through carbon capture storage and the deployment of hydrogen.

Waste Management

All relevant companies in which Vitol is invested are reporting waste data on a quarterly or annual basis. Five companies generated 99% of all waste in 2021. Each company has a diverse waste profile and the collection and monitoring of these streams therefore varies significantly. Investments aim to follow the waste hierarchy to prevent or minimise waste generation and reuse, recycle, recover energy from or otherwise divert materials from landfill where possible.

There has been a marked effort to reduce waste at one company in particular, which also saw a decrease in activity due to the Covid pandemic that further reduced the amount of waste generated. This reduction was offset by a large increase in waste generated from a shutdown at a refinery as well as some construction works at two refineries. The latter also explains the increase in the amount of non-hazardous waste as a proportion of total waste which increased from 4% in 2020 to 20% in 2021.

Waste Management at Controlled Investments
KT

Waste management at Controlled Investments

Waste Management at Non-Controlled Investments
KT

Waste management at Non-Controlled Investments

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Freshwater extraction
Vitol’s definition of freshwater extraction is aligned with IPIECA’s 2020 sustainability reporting guidance definition.1 Controlled investments contribute 2% of the total freshwater extracted but were not material to the overall volume of freshwater extracted across all investments. One of our controlled companies located in a water-scarce area reduced water consumption by 95% compared with 2020, as a result of project commissioning and not needing to hydrostatically test tanks, piping and the firefighting system etc. as was the case the previous year.

At non-controlled investments, freshwater extraction has increased significantly in 2021 versus 2020 due to one of the companies reporting data for one of their investments for the first time. The refining segment is responsible for the largest amount of freshwater extraction as required in, for example, the cooling part of the process. We achieved our 2020 target to ensure all relevant Vitol investments are reporting this metric. The 2021 reporting year is therefore our baseline year for this metric. Monitoring these volumes enables investment companies to effectively manage freshwater-related risks.

FRESHWATER EXTRACTION
KM3

Freshwater Extraction

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1 https://www.ipieca.org/media/5115/ipieca_sustainability-guide-2020.pdf

Environmental exceedances and emissions to air
Environmental exceedances include events where operating limits eg. those defined in permits, have been surpassed such as pH and total organic content in waste water effluent, or SOx and NOx released to the air. Vitol’s long-term aim is to have zero environmental exceedances. The number of environmental exceedances has decreased by 10% in 2021 compared with 2020. We therefore achieved our target with exceedances reduced across most investments, however the inclusion of data from a non-controlled investment that entered exceedances for the first time resulted in an increase for that investment. On a like-for-like basis, we have seen a reduction in exceedances of 30%. Vitol’s priority is to ensure all breaches are monitored by each company, and that the cause of each event is determined, rectified and prevented from recurrence. The target of a 10% reduction year-on-year will be maintained for 2022.

In 2021, companies in which we are invested and activities as a result of our operations received five minor enforcement actions. Two of these related to truck spill clean-up requirements. Actions from a repeat enforcement notice at a terminal that occurred in 2020 are still ongoing and this company continues to work to resolve all issues. At another terminal, local authorities have requested that a long-term energy efficiency plan be developed. A fifth enforcement involved a non-conformity which was lifted in 2021 as all actions were resolved. Although the number of enforcement actions increased to 5 in 2021 from 2 in 2020, all due actions were resolved by the end of the year. Vitol maintains a target of zero prosecutions or enforcement actions. We encourage all companies in which we are invested to proactively report and resolve these if they do occur.

Relevant companies are required to report SOx and NOx emissions on a quarterly basis and are defined as those with shipping, power generation, refining and/or upstream activities. Additional companies with operations not included in the above activities also report SOx and NOx.