‘SK Innovation’s green transformation has high potential for success’

SK Innovation’s green transformation strategy, announced a year ago, has “a very high potential for eventual success,” said one US scholar who cited its “clarity of purpose of vision,” “well-reasoned plan of execution” and an “intangible advantage of culture and management systems.”

In a column published in SK Innovation’s SKinno News on Friday, Kannan Ramaswamy, chair professor of global strategy at Arizona State University’s Thunderbird School of Management, wrote that while many leading oil and gas companies worldwide are either spectators or cautious defenders of fossil fuels, leaving the transition to renewable energy for another era, the South Korean company clearly acknowledges that climate change concerns will continue to radically reshape the petrochemicals business in the near future, and has set a specific timeline for change.

Global leaders such as Neste, Valero Energy and TotalEnergies are among the few that had well defined transition strategies similar to SK Innovation, according to Ramaswamy, who has advised top management teams of large petrochemical companies around the world and has worked with SK Group for over two decades.

“(SK Innovation’s) resource deployment shows that plans are underway to leverage carbon capture, utilization, and sequestration (CCUS) at the prospecting and production end while testing multiple alternatives such as pyrolysis and depolymerization at the downstream and chemicals end of the value chain,” he wrote, adding that many of the constituent actions have already been underway for a year now and have helped cut carbon emissions.

Ramaswamy also appreciated SK Innovation’s willingness to partner in game-changing technologies such as pyrolysis and depolymerization, which are not common among large peer firms in the petrochemicals industry.

Pointing to the company’s younger top leadership, diverse team of leaders, greater levels of managerial autonomy and a more approachable leadership style, the professor wrote that the budding shoots for meaningful change are already visible.

He also mentioned SK Innovation’s new board-level ESG committee, which links environmental, social and governance values to the CEO’s performance evaluation, as an important factor for success of the green transformation strategy.

“Contrary to accusations of greenwashing that has plagued other oil and gas companies in the past, SK seems to have embarked on clearly visible, deep and lasting changes that suggest that it is addressing the concerns of climate change in a more fundamental manner compared to some of its peers,” he wrote.

“Now, it is time to deliver results.”

By Kim So-hyun (sophie@heraldcorp.com)