Materiality assessment
Materiality Assessment
Stakeholder Engagement
Maintaining a good relationship with stakeholders is crucial in creating long-term business value. Thaioil Group has established an internal function to maintain continuous communication with each stakeholder group. This aims to ensure stakeholders' perspectives and expectations regarding the Company's operations, ultimately enhancing the efficiency of Thaioil Group's performance.
In this regard, Thaioil Group has identified stakeholders by analyzing their involvement throughout the value chain, from crude oil procurement to the disposal of post-utilization products, through the Company’s assessment of the mutual impact and influence, as depicted in the diagram below.
Stakeholders Identification Along the Value Chain
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Thaioil Group’s Materiality Assessment Process
Thaioil Group has analyzed material topics that significantly impact the stakeholders and the business in accordance with the Global Reporting Initiative (GRI) Standards by applying the Value Reporting Foundation’s materiality matter assessment approach to identify material topics. The process has been verified by an independent third party.
In 2023, Thaioil Group assessed materiality topics from the beginning of the year. The outcomes derived from this assessment became an integral part of consideration for the sustainability strategy during the Strategic Thinking Session (STS). This session aimed to support planning, target-setting, and resources allocation across six capitals, namely Financial Capital, Manufactured Capital, Natural Capital, Human Capital, Intellectual Capital, and Social and Relationship Capital.
Step 1: Material Topics Identification (Identification)
Thaioil Group assessed the 2023 material topics through the analysis of internal and external drivers. The internal drivers’ analysis involved a review of key issues derived from the short-term, medium-term, and long-term Business Strategic Direction. Additionally, the external drivers’ analysis was conducted, focusing on the interests of stakeholders, highlighting issues from the assessment of Dow Jones Sustainability Indices (DJSI), material topics from leading companies in oil refining industry and other petrochemical industries, the United Nations Sustainable Development Goals (SDGs), and the national and global trends from recognized institutions, such as the World Economic Forum (WEF). These findings were prominently utilized in reviewing relevant material topics associated with Thaioil Group, building upon insights gained from the previous year.
Step 2: Material Topics Prioritization (Prioritization)
Thaioil Group prioritized 2023 material topics by reviewing the results of the materiality assessment in the previous year through various external factors that could potentially impact the business and stakeholders. This prioritization was accomplished through a collaborative workshop with the executives together with the interview of stakeholders to assess their perspectives and expectations regarding sustainability issues. The materiality assessment also considered the impact on the Company’s value creation across business directions, aligning with the Double Materiality Principle. The impacts on stakeholders, both quantitatively and qualitatively, were reflected in the Company’s capacity to create value or financial repercussions, both positive and negative. The impact on the Company’s value creation was also considered from different business perspectives. The material topics were grouped into high, medium, and low levels of importance through a ranking system. This process employed criteria based on two dimensions:
- 1) Impact and importance to Thaioil Group’s ability to create value
- 2) Impact and importance to the stakeholders
Step 3: Validation of Material Topics (Validation)
The Sustainable Development function was the first in line to review the comprehensiveness of material topics. The results were reported to the Sustainable Development Steering Committee, chaired by the CEO and President, for the final review and endorsement of the material topics, considering both internal and external impacts. In parallel, the material topics were also endorsed by the subcommittee, namely the Corporate Governance and Sustainability Committee.
Moreover, an external independent verifier was invited for participation to ensure the accuracy and completeness of the materiality assessment process, stakeholder engagement, and safety and environmental performance.
Step 4: Strategic Integration for Organizational Risk Management and Strategy (Strategic Integration)
The materiality assessment, which was approved and signed, would be integrated into the Company's Enterprise Risk Management (ERM) process. This integration aimed to evaluate risks in business operations, formulate mitigation plans as needed, and support the consideration of strategic planning through the annual Strategic Thinking Session (STS) business planning process. This will serve as a pivotal foundation for sustainable organizational management by establishing policies, objectives, and strategies, both in the short, medium, and long term, as deemed appropriate.
Results of 2023 Materiality Assessment
The results of the 2023 materiality assessment revealed the contextual changes from the external drivers that potentially affected the stakeholder's expectations. There were positive and negative impacts on stakeholders and businesses in creating long-term value. In particular, there was heightened attention to climate change, urging the Company to transition towards a low-carbon society, evolving societal development and engagement with the surrounding community, and fostering physical and mental well-being activities in the workplace. Moreover, climate change accelerated the intensified global legislations, regulations, and compliance, as well as shifted consumer behavior to emphasize environmental-friendly products. The results of the 2023 materiality assessment are illustrated and detailed in the following diagram.
Impact Assessment to External Stakeholders
Thaioil Group has conducted a materiality analysis to identify and value the positive or negative impacts to the Company’s external stakeholders based on the Company’s business operations, products and services, and supply chain. The impact measurement and valuation assessment are then conducted based on the “Natural Capital Protocol” and “Social & Human Capital Protocol” principles to identify and measure both externally positive and negative impacts on environment and society to quantitatively value the external impact on society and the environment from the Company’s business operations. Based on the Company’s analysis, the two topics relevant to the Company’s external stakeholders are shown in the table below:
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Thaioil Group’s air emission pollutants (NOx, SOx, and VOCs Emissions) are controlled at standards exceeding legal requirements by the law and the environmental impact assessment (EIA). Although, the emission pollutants still contributed to net negative changes in atmospheric and climate conditions to our stakeholders, a determined preventative measures and impact assessment were initiated by the Company to minimize environmental impacts through Air Quality Management.
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