SK Innovation to adopt internal carbon pricing system

SK Innovation Co. on Sunday announced its adoption this year of an "internal carbon pricing system" recently approved by its board of directors.

The gist of this system is to calculate the expected carbon emissions from a new project into an amount and reflect it as cost. Investment that reduces such emissions are considered to create new value and the global prices of carbon credits will serve as criteria to gauge value and cost.

A company source said, "We adopted an internal carbon pricing system to decide the priority of new business projects from an environmental, social and governance (ESG) perspective," adding, "The review process will naturally rule out new businesses that emit a lot of carbon."

SK Innovation sets internal carbon prices based on related scenarios issued by global experts. For example, the price is set at $40-$95 per ton in 2025 and $60-$105 in 2027, with the mid- to long-term figure being $120 in 2030 and $200 in 2040. The company's carbon emissions last year reached 129.5 million tons

The company will manage the global prices of carbon credits, which affect internal carbon prices, by reflecting them in key indicators that greatly affect business performance like oil prices and foreign exchange rates.

Kim Tae-jin, SK Innovation director and chair of its ESG Committee, said, "The adoption of internal carbon prices match the expectations of external stakeholders of reflecting future carbon prices as costs in business decisions and announcing whether the adoption is made," adding, "Our board will do its best to continue efforts toward carbon reduction and overall results in ESG."

Write to Jae-Fu Kim at hu@hankyung.com