Sustainability at Vopak

For Vopak, sustainability is about meeting the needs of the present while safeguarding the ability of future generations to meet their own requirements. Guided by our purpose - we help the world flow forward - we actively work towards fostering a more sustainable economy and ecology by delivering the safe, reliable, and efficient storage of essential products for everyday life. At the same time, we strive to be a responsible member of society and the communities in which we operate — a company that our employees and contractors are proud to work for. 

We are mindful of the potential impact of our business activities on people's safety, health, and well-being, as well as on the environment. Through our care for people, and planet and effective governance that creates a culture of social responsibility, we aim to create value for all our stakeholders, including customers, investors, employees, authorities, local communities, and society. Our choices today should thus contribute to our long-term relevance to society and the well-being and development of current and future generations.

Purpose of the report

In embracing transparency, Vopak believes it is important to foster trust and accountability because this allows our stakeholders to gain insight into our actions and commitments. This commitment to openness is evident in our sustainability notes, reinforcing our dedication to responsible practices while acknowledging that we may face dilemmas and challenges in creating value and delivering on our commitments.

The purpose of the sustainability information in our Annual Report is to:

• Systematically evaluate and monitor our ongoing initiatives aimed at enhancing Vopak's sustainability performance

• Identify, address, and respond to key sustainability topics and expectations from our stakeholders, including relevant issues and challenges impacting our business

• Ensure compliance with relevant and applicable disclosure laws and reporting regulations

• Facilitate a dialogue with stakeholders and the communities in which Vopak operates

• Recognize and respond to key sustainability topics and expectations from our stakeholders

Structure of the report

The sustainability section of the report is based on notes that cover the governance, reporting policies and key performance indicators of the topics included in our double materiality matrix, as outlined in the Our responsible business conduct chapter. These topics are categorized as environmental, societal, and governance, and are used as the basis for the structure and information in this section:

• Environment: Care for the environment and climate

• Society: Care for societal impact

• Governance: Behaviors, processes, and practices that guide interactions with key stakeholders such as shareholders, regulators, and employees

Our sustainability notes thoroughly examine our impact on society and the environment, as well as the reciprocal influence of these factors on our business. Beyond this, various sections in our annual report provide valuable insights into our commitment to ESG. For instance, the Remuneration section outlines how our incentive programs rewards employees and management for actively contributing to GHG reduction and safety initiatives.

Note 1. General disclosures

Governance

The governance structure at Vopak ensures the effective implementation of our Sustainability Policy, with the Executive Board (EB) holding formal responsibility for key aspects. The EB defines Vopak’s purpose, strategy, business conduct, and sustainability goals. This responsibility cascades through the organization, with Business Unit (BU) management and terminals entrusted to carry out these directives.

The Executive Board (EB), jointly, ensures the integration of sustainability into the company's financial reporting processes. Supported by the Executive Vice President Finance and Procurement, the EB oversees the accounting, reporting, and assurance of ESG metrics, goals, and performance indicators. Delegated responsibilities extend to BU and terminal finance teams for accurate ESG-related financial disclosure. Executive Vice President Global Operations & Customer Care, leads the overall implementation of sustainability, with delegated responsibilities extending to BU and terminal operations management for a coordinated approach.

At all levels, from the EB to every Vopak employee, accountability for sustainability is enshrined in the Vopak Code of Conduct and Sustainability Policy. Shared responsibility is emphasized through the Vopak Values, Code of Conduct, and our sustainability policy, roadmap, and targets.

Sustainability strategy and roadmap

Vopak's sustainability approach is ambitious and performance-driven, embodying a balanced roadmap that prioritizes care for people, the planet, and profit. The integration of sustainability into business decision-making underscores our commitment to long-term value creation.

In 2023, we continued to implement Vopak’s sustainability roadmap. The roadmap, as explained in the Our Performance section, provides an overview of the prioritized sustainability topics with clear objectives and focus areas. It specifies our actions and integrates sustainability into global processes and investment decisions.

Targets linked to Vopak’s strategic framework and sustainability roadmap have been translated into remuneration incentives associated with key areas of sustainability performance. 

Performance measurement and oversight

Targets on our key sustainability topics are set at the group, BU and operating company levels. Progress is monitored by the Executive Board and Supervisory Board as part of regular business monitoring and systematically reviewed on a quarterly basis.

Basis of preparation

In adhering to the principles of integrated reporting, we include our sustainability statement and notes within our Annual Report. Our Sustainability Report is prepared in accordance with the Global Reporting Initiative's Universal Standards (2021), enhancing global comparability and transparency. Throughout the report, we demonstrate our adherence to GRI reporting principles including materiality, stakeholder inclusiveness, and reliability. In cases where needed, our sustainability notes incorporate sectoral, industrial, and internally developed standards and guidelines.

Vopak believes in clear and concise corporate reporting that tells an integrated story about how our resources create value for stakeholders. Our Annual Report subscribes to the principles of the Integrated Reporting Framework by the International Integrated Reporting Council (IIRC).

Disclosures on the potential impact(s) of climate change on Vopak including a description of our governance, strategy, and risk management in line with the requirements of TCFD are reported in the Governance section. 

Financial KPIs are reported based on information included in the company’s Financial Statements, prepared in accordance with IFRS as adopted by the European Union.

The reporting period for the sustainability information in this Annual Report is the 2023 financial year, covering Vopak’s activities from 1 January 2023 to 31 December 2023. This report builds on the previous Annual Reports.

Reporting process and assurance 

As in previous years, Vopak has voluntarily requested its external auditor to provide limited assurance on its sustainability reporting. The outcome of the audit and report is included in the External auditor’s report.

For the 2023 assurance report, please refer to the External auditor’s reports.

The ESG data used in this report is obtained from Tagetik, our global financial consolidation and reporting system, and additionally from the HR management, compliance management, operational and event management reporting systems and other management reporting systems. Reported data is consolidated by our Global Operations and Customer Care and reviewed by the Global Finance and Control departments. Responsibility for reporting on sustainability is shared by the two aforementioned functions. 

We have a continuous focus to further embed our material topics into the responsibilities of relevant departments, strengthening our non-financial data collection process and proceeding with further integration into our reporting processes.

Quarterly, key sustainability topics are reported to the Strategic Committee and Executive Board. Once a year, we organize a review of our strategy and a thematic day on climate change. For more information, please refer to the Supervisory Board report.

For further details on the governance and control framework, please refer to the Governance, risk & compliance section.

Basis of consolidation, scope, and boundaries

For sustainability reporting purposes, Vopak consolidates data from its headquarters, BU offices, and terminals under its operational control as well as entities that are not under our operational control but report voluntarily.

Unless otherwise stated, the sustainability information in this report includes all information for Vopak’s principal subsidiaries, joint ventures, and associates, as noted in Note 9.11 Principal subsidiaries, joint ventures, associates, and investments of the Consolidated Financial Statements.

An entity under operational control implies:

• Application of Vopak´s operational standards

• Adoption of Vopak´s Code of Conduct

• Being part of the three-year cycle of Vopak´s Terminal Health Assessments (THA) or equivalent

In consolidating data, we apply the following principles:

• Greenfield: Undeveloped land acquired to build a new terminal is deemed to be within reporting scope from the day of acquisition;

• Brownfield: When an existing terminal is expanded, these activities are deemed to be within the reporting scope;

• Acquisition: When a terminal is acquired and operations are continued, there is a grace period of one calendar year before it is brought within the scope of sustainability reporting. During this grace year, all data must be reported and monitored in our internal reporting system;

• Divestment: When terminals are closed or sold, they are removed from reporting scope from the date of divestment, data until the date of divestment is still included.

Entities that do not meet the consolidation criteria are shown in the following table, which reconciles the storage capacity reported in the financial statements to that used for sustainability reporting purposes.

For capacity developments, please refer to the Leading locations section of the Annual Report, and notes 3.1 Acquisition and divestment of subsidiaries and 3.5 Joint ventures and associates of the Consolidated Financial Statements.

Note 2. Materiality and stakeholder engagement

Double materiality assessment

In 2023, Vopak started to align its sustainability report with the requirements of the CSRD and carried out a double materiality assessment. The concept of double materiality builds upon the longstanding practice of ‘impact-centric’ assessments and comprises two dimensions that companies should consider when disclosing their ESG impacts:  impact materiality and financial materiality. Businesses must report both on how their business (including their business relationships) is affected by sustainability issues (“outside-in”) and how their activities (including their value chain) impact society and the environment (“inside-out”).

Vopak’s 2023 double materiality assessment is an evolution of the previous assessment conducted in 2022 in alignment with the updated GRI Universal Standard standards (2021). Incorporating the requirements of ESRS 1 from CSRD, it delves into Vopak's impacts (I) on people and the environment, as well as the noteworthy sustainability-related risks (R) and opportunities (O) influencing key aspects like value drivers, competitive position, and long-term shareholder value creation.

Expanding upon the outcome of previous year's assessment, Vopak referred to AR 16 - ESRS 1, and populated an extensive list of topics that underwent refinement through internal discussions. Vopak explored the actual or perceived short-, medium-, and long-term material impacts on its own operations as well as the value chain. Scores from the 2022 materiality assessment were adjusted to a 5-point scale for a more unified evaluation of shortlisted 'impact material' topics.

The financial materiality assessment leveraged the outcomes of the impact materiality as a key start point. With input from key internal stakeholders, a rigorous assessment of risks and opportunities was carried out. The scoring, similar to risk management approach, was based on the likelihood of occurrence and potential financial effects, with the highest score for each topic influencing the positioning on the y-axis of the double materiality matrix.

Internal stakeholders played a crucial role in the identification and scoring of risks and opportunities. The Internal Audit team focused on risks, while those involved in business development and various individuals of the Strategic Committee contributed to identifying opportunities. This collaborative effort ensured a thorough examination, including discussions on identifying additional material risks and opportunities beyond the originally recognized impacts.

Following this identification process, an overall score for each topic was determined from both a financial risk and financial opportunity perspective. The highest score, whether it pertained to financial opportunity or risk, was utilized in plotting the topic on the y-axis of the preliminary double materiality matrix. This approach was chosen deliberately to avoid dilution of the scoring accuracy. Using an average might obscure the true impact of a topic, especially when it predominantly represents either a risk or an opportunity. Employing the highest score ensures a more precise reflection of the topic's significance in the matrix.

The preliminary double materiality matrix underwent thorough discussion and review with Vopak's Executive Board (EB). This input not only challenged some of the preliminary assessments but also contributed to refining the outcome and strengthening the underlying rationale. Changes were implemented, and thresholds were established, resulting in three distinct categories: essential, relevant, and enabler. Furthermore, each topic was categorized into environmental, social, or governance domains based on its inherent nature.

Following this, the finalized version of the double materiality matrix received formal endorsement in September 2023 and has since been prominently featured in our Responsible Business section.

The 18 topics based on the outcome of the assessments are listed below, categorized as environmental (E), social (S) and governance (G), with 6 essential topics highlighted in bold. Recognizing their importance to society, environment and our stakeholders as well as the success of our business, Vopak will focus on the governance, management approach, and disclosure requirements (DRs) of these critical six topics (bolded in the list) for reporting under the CSRD in the financial year 2024, to be disclosed in 2025.

All other topics will continue to be reported based on compliance with regulatory requirements, industry standards, best practices, and corporate responsibility. While these may not be the most material ones, they can have a potential impact on our stakeholders including communities and employees.

Vopak will review the European Financial Reporting Advisory Group implementation guidance once final and take the necessary steps to ensure the double materiality assessment will comply with ESRS in our 2024 annual report.

Our governance concerning sustainability-related risks and opportunities is integrated into our double materiality assessment, governance and risk management processes. For more information, please see Our responsible business chapter, Sustainability Note 1 - General disclosures and Governance, risk & compliance chapter on this report. Topic-related KPIs are included in Sustainability Note 3 - Consolidated Sustainability Performance and corresponding sustainability notes.

Stakeholder engagement

The table below summarizes the expectations and interests of our stakeholders and topics they deem material for society, the environment, and our business. It reflects the outcome per stakeholder group from our most recent engagements in 2022. 

Expectations, interests and key topics vary for each stakeholder. Vopak’s commitments, policies, and actions in response to the key topics and stakeholders' concerns are included in the notes in this section. 

Vopak is a member of and participates in numerous forums, industry associations, think tanks, research institutes, technical working groups, and public-private partnerships. In 2023, Vopak did a thorough internal review of all its corporate memberships, both at the Global and BU levels. Please see Notes 18 and 19 for further details about community engagement, memberships, and lobbying.

Note 3. Consolidated sustainability performance

Note 4. Emissions to air

Reporting policies

As a field measurement to obtain total VOC emissions is not yet feasible, we make use of globally acknowledged calculation programs (TANKS 4.0 and CARUSO Model) to assess our Volatile Organic Compound (VOC) emissions. These emissions occur during the storage and handling of products and result from our operations. 

The Nitrogen Oxides (NOx), Sulfur Oxides (SOx), and fine Particulate Matter (PM2.5) emissions are calculated based on our energy consumption. We have applied the following conversion factors:

• NOx emissions: IPCC Good Practice Guidance and Uncertainty Management in National Greenhouse Gas Inventories

• SOx emissions: 2015 Specific emission factors per energy source stream

• PM2.5 emissions: Database for particulate matters from Dutch National Institute for Public Health and the Environment.

Boundaries

Data in this note includes information for all in-scope entities as noted in Note 1. General Disclosures.

VOC reduction program

In 2017, we analyzed our VOC emissions based on 2016 data for our 17 largest terminals. This was aimed to guide possible reduction measures and their societal impact (according to the True Value method). We estimated that these represent roughly 75% of our emissions globally. For this assessment, we applied the emission calculation model used by the authorities in the Netherlands (CARUSO Model). Approximately 10-15% of the emissions at these terminals relate to standing emissions from storage. The remaining 85-90% is due to product handling (loading, unloading, roof landings).

Until 2023, 90 projects were completed at 31 locations with a total spend of over EUR 117 million, resulting in a societal impact reduction of 34% compared to 2016.

In 2023, Vopak introduced an advanced calculation tool for measuring VOC emissions, piloting it at the CARUSO Model and the Tanks model. This customized tool underwent further testing and validation at our terminals in Asia and Singapore. Vopak will continue to test and improve the methodology in the future and based on the outcomes, we may consider rolling out this model across additional terminals.

This initiative aims to establish a new baseline for our emissions, providing an improved assessment of the societal impact associated with our emissions.

Approximately 85% of our NOx emissions originate from the combustion of natural gas and 70% of all our fine Particulate Matter(PM2.5) emissions originate from the combustion of diesel and fuel oil.

A decrease in natural gas usage has resulted in a 5% decrease in our 2023 NOx and SOx emissions.

Note 5. GHG reduction and climate change mitigation

Vopak follows the Greenhouse Gas (GHG) Protocol, a globally recognized standard for measuring and managing greenhouse gas emissions. The protocol categorizes greenhouse gasses into Scope 1, 2 and 3 based on the source. The standard is used by 92% of Fortune 500 companies responding to the Climate Disclosure Project (CDP) and is the most prevalent emission reporting standard globally. 

To calculate GHG emissions from energy use, following the GHG Protocol, we have applied the following conversion factors:

• Direct energy conversion to carbon emissions: Dutch list of fuels and standard CO₂ emission factors, version January 2022 (from the Netherlands Enterprise Agency)

• Conversion of electricity to carbon emissions: the International Energy Agency (IEA)

• Conversion of Methane emissions (CH₄) and Nitrous oxide (N₂O) to CO₂ equivalents: Global Warming Potential Value from IPCC Fifth Assessment Report (AR5). Under AR5, we also account for methane slip in our combustion processes in addition to the venting of methane in our LNG activities

• Scope 1 and 2 emissions, calculated using applicable location based conversion factors.

GHG emissions targets

As part of our sustainability journey, in 2019 Vopak set the ambition to become net-‍zero­ by 2050 (Scope 1 and 2).

In 2022, Vopak committed itself to the intermediary target of reducing our GHG emissions by 30% by 2030 (vs 2021 baseline, Scope 1 and 2 emissions), including future growth of our business. Our target implies a GHG reduction of 45% - 60% of our existing business in 2030.

In pursuit of our targets, Vopak has adopted a forward-thinking approach, firmly rooted in our commitment to environmental responsibility. We actively challenge the design of operational processes and the construction methodologies applied in our upcoming 'growth' projects, striving to minimize their emission footprint.

During 2023, Vopak worked with the Science Based Target Initiative (SBTi) on the validation of our GHG emission reduction targets. In response to our submission, SBTi suggested including the use phase emissions of the natural gas we store and regasify. We acknowledge the initiatives standpoint, however, maintain a different position. Our engagement with SBTi is currently ongoing.

Vopak is not the owner of natural gas we store and gasify, and does not own, manage, or operate the pipelines for the distribution of natural gas. Hence, the direct use phase emissions of the stored products including LNG occur outside of organizational boundary and operational control, and can’t be included in our GHG emissions reduction targets.   

Vopak will stay involved in the development of a sector-specific pathway and new target-setting methods for companies engaged in our specific value chain. We reaffirm our ambition to be net-zero by 2050 and continue to be ambitious on all our emission scopes.

Boundaries

Vopak’s reporting on GHG emissions encompasses Scope 1 (direct energy use and emissions from the combustion of fossil fuels), Scope 2 emissions (indirect energy use and emissions from electricity and steam purchased for our own use) and Scope 3 emissions (material indirect emissions upstream and downstream in the supply chain). Our reporting on GHG emissions includes carbon dioxide (CO₂), methane (CH₄) and Nitrous oxide (N₂O).

We don’t store or handle products such as hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF₆). Therefore, we don’t have any related emissions.

At Vopak, we want to contribute to the dual objective of limiting climate change in line with the Paris Agreement and SDGs 12 and 13, while at the same time increasing the security of supply by providing access to affordable, acceptable and sustainable energy and feedstocks for all, in line with SDGs 7, 8, 9 and 12.

To achieve the above, we proactively work on minimizing our carbon footprint while simultaneously investing in the infrastructure necessary for a future powered by
zero- and low-carbon energy. By doing so, we contribute to building a resilient future for both our company and the communities we serve.

Our journey toward net-zero emissions

The following lines of action support our journey towards net-zero:

1. Reduce GHG emissions through energy efficiency

2. Use residual energy from neighboring companies

3. Switch to renewable electricity where possible

4. Electrify our operations

5. Use cleaner fuels and new energies in our own operations

Action line 1: Reduce GHG emissions through energy efficiency

Energy efficiency is an important driver to reduce our carbon footprint. Our terminal teams strive to reduce energy consumption through various initiatives. Utilizing smart meters, additional sensors, and digital innovations, we map the energy flows within the terminals. Through the application of data analytics, specific focus areas are pinpointed, enabling the optimization of energy consumption.

The energy-efficiency program in the Netherlands which resulted in the reduction of energy consumption by more than 8% in 2017 - 2020 serves as a blueprint to increase our energy efficiency around the globe. Similarly, with the implementation of the EEED (European Energy Efficiency Directive) in 2021, Vopak continued working on its energy efficiency by further reducing energy consumption. Between 2021 and 2023, we have decreased our total energy consumption by 12.6%.

• In Vlaardingen, we are in the process of transitioning from a gas-fired boiler to an electric alternative. This initiative will not only reduce our gas consumption but will also play a crucial role in balancing the electricity grid

• Our near real-time energy monitoring tool, initially piloted and now successfully operational at Vlaardingen (the Netherlands), Europoort (the Netherlands) and Deer Park (USA), has demonstrated its effectiveness. Encouraged by this success, we're gearing up for implementation in additional terminals across our operations in 2024

• Other emission reduction initiatives include ongoing programs for tank insulation, optimization of our rotatory and combustion equipment, and replacement of conventional industrial lighting with LED lighting

Please refer to Note 22 in the sustainability section of this report, where we have disclosed additional details, as well as the EU Taxonomy eligible OpEx and CapEx attributed to Vopak's energy efficiency initiatives during 2023.

Action line 2: Use residual energy from neighboring companies

In several locations, Vopak is making use of residual energy from neighboring companies. In our Gate terminal in Rotterdam for example we use the heat from a neighboring facility to regasify LNG before it is sent into the Natural Gas grid. In other locations, we purchase steam from neighboring plants that is considered a by-product in their manufacturing process.

Action line 3: Switch to renewable electricity where possible

Many of our locations including the Netherlands, Spain, Panama, Singapore, Brazil and USA  have successfully switched to green electricity to lower their Scope 2 emissions and Vopak continues to explore possibilities in other countries. Unfortunately, renewable electricity is not yet available in all countries and therefore we are also looking into possibilities to generate our own renewable energy. An example of this is Vopak Solar Park Eemshaven, a joint venture with Groningen Seaports with a yearly capacity of around 25 megawatts, completed in 2021, also included as one of our EU Taxonomy eligible activities (CCM 4.10) in Note 22 in the sustainability section in this report.  

At our LNG Terminals in Altamira (Mexico), Elengy (Pakistan) and SPEC (Colombia) we use regular unprocessed seawater to extract the heat to regasify LNG. In 2023, 66% of our total energy consumption was through renewable energy sources. More and more locations including our LNG operations are switching to renewable energy and will continue to expand this in 2024 and beyond. During 2023, multiple terminals in Mexico, China, and the Netherlands switched to purchasing renewable electricity to lower their Scope 2 GHG emissions. As these are often short-term contracts, we aim to decrease contract renewal risks by locking in a long-term purchasing agreement where possible. 

Furthermore, in 2023, we increased the share of green electricity versus grey to 60%. In the case of Vopak, the purchased Renewable Energy Certificates (RECs) represent wind and solar sources and were certified by the European Energy Certification Scheme (EECS). EECS adheres to structures and procedures to ensure the reliable operation of energy certificate schemes in Europe. These schemes satisfy the criteria of objectivity, non-discrimination, transparency and cost-effectiveness to facilitate the international exchange of guarantees of origin.

RECs are market-based instruments to promote and support the production of renewable energy. The primary purpose of RECs is to provide a way for individuals and businesses to financially support and incentivize the generation of clean and renewable energy sources. At the same time, purchasers of RECs can retire the certificates to claim the use of renewable energy equivalent.

Action line 4: Electrify our operations

In addition to curbing energy consumption, the reduction of Scope 1 emissions can be accomplished through the implementation of electrification. Heating of customers’ products is currently primarily done using gas-fired boilers. In several locations, Vopak is exploring the possibility of changing to an electrical type of heating such as e-‍boilers. Another important source of Vopak's Scope 1 emissions is coming from the combustion of natural gas to treat the volatile organic compounds (VOCs) that are released during the transportation and storage of customer’s products. These VOCs are captured and treated to reduce their environmental impact. Current technology is primarily using natural gas to combust the vapors. Vopak is exploring options to convert to electrical vapor treatment technology for new projects as well as existing facilities and is currently implementing a number of these initiatives. In general, we have adopted the strategy to replace gas-fired assets at the end of their lifecycle with an electric-powered alternative when possible.

Action line 5: Use cleaner fuels and new energies in our own operations

In assets or processes where electrification or using residual energy is not a feasible solution, Vopak is exploring whether it can convert to cleaner fuels in its own operations. We are currently exploring the use of biofuels to reduce emissions from the consumption of diesel.

We are actively involved in the development of infrastructure solutions within ports, facilitating the seamless export, import, transportation, and storage of zero- and low-‍carbon liquid hydrogen. Our ongoing projects in Houston, Singapore, Rotterdam, Antwerp, and Eemshaven, along with the establishment of LOHC supply chains, position us to potentially incorporate zero-carbon fuels into vapor treatment units in the future.

Governance of net-zero emissions

We are continuously improving and rewriting protocols and strategies to support the reduction of our greenhouse gas emissions. Some examples of this are:

• We have established remuneration policies that are designed to support us in achieving our climate targets. Our GHG emissions reduction metric is part of the Executive Board's long-term incentive program. In 2024, it will also be a metric in the Executive Board's short-term incentives.

• In the business cases for investment proposals, an internal price/ tax for greenhouse gas is adopted to make investments in a low-carbon solution favorable economically.

• As part of our strategy towards net-zero, we will not use offsetting of GHG emissions to achieve our short- or medium-term targets. Offsetting emissions is a theoretical option for small amounts of residual emissions that can not be eliminated before 2050. In alignment with the Corporate Net Zero Standard, this would only be used as an unavoidable last resort.

• We collaborate with our joint venture partners to take responsibility for our joint emission footprint together. An example of this is that we are investigating the option to limit LNG emissions further, together with our joint venture partners, by compressing boil-off gas back to liquid.

GHG reduction in 2023

The majority of our Scope 1 and 2 GHG emissions are generated through operational processes. These include the production of steam for heating purposes, vapor treatment, the operation of our Floating Storage Regasification Unit (FSRU) for LNG (gas consumption), electricity consumption for powering our pumps and - on a lower level - for vapor treatment, heating, cooling and mixing of products. Methane emissions are mainly caused by venting in our LNG operations as a result of cleaning activities.

In 2023, our GHG emissions (Scope 1 and 2) were reduced by 24% compared to our baseline 2021. This was largely due to the switch to renewable electricity in several countries and energy efficiency measures taken across our network.

As a result of the switch to renewable electricity and improved energy efficiency, we have been able to reduce our GHG emissions both in absolute numbers as well as relative to our storage capacity and revenues.

Our dilemmas

Reducing emissions, produces emissions

Our greenhouse gas reduction target considers emissions from both existing and future planned projects within our business. We are actively involved in accelerating the energy transition by investing in battery solutions, and infrastructure for hydrogen carriers and liquid carbon storage. These investments are crucial to facilitate the energy transition and have a significant impact in the reduction of carbon emissions worldwide. 

However, we recognize the paradox that our own greenhouse gas emissions may temporarily go up as a result of these investments. We make an effort to design these projects to be as close to carbon-neutral as possible but some emissions are unavoidable during the construction and operations.

It is important to note that the emissions associated with building and running the essential infrastructure for the energy transition represent only a fraction compared to the significant emissions they ultimately save. Please refer to Note 6 in the sustainability section of this report for more details on our acceleration towards new energies and sustainable feedstock.

Vapor Treatment versus GHG reduction

At several locations, we are installing Vapor Treatment Units (VTUs) in order to reduce the emissions of harmful VOCs. Using these units often results in a significant increase in carbon emissions as a support gas is required to ensure the complete combustion of the hazardous vapors.

As our efforts and business demands progressively require more treatment of volatile gases, the use of VTUs will increase in the future. We acknowledge this as a challenge and will continuously seek opportunities to handle vapors more sustainably (i.e. using treatment systems without the use of support gas). Please refer to Note 4 in the sustainability section of this report for more details on VOC emissions.

Liquefied natural gas versus energy consumption

Over the past couple of years, our emissions increased mainly due to our portfolio transformation towards cleaner fuels and gases. LNG in particular significantly contributes to lowering air pollution but leads to increased use of energy in our operations and therefore higher emissions. Additionally, the storage and handling of gases like ammonia and hydrogen in the future will require cryogenic storage and vapor treatment. Though important in reducing overall environmental impact, these treatments are energy-intensive and may result in higher emissions.

Therefore, our strategy of investing in cleaner fuel solutions and security of supply for our customers and society makes it challenging for us to reduce our GHG footprint, as storing and handling products like LNG lead to an increase in our GHG emissions, even though it can contribute to the climate goals, for instance in countries where LNG replaces coal for power generation.

These dilemmas offer valuable insights into the challenges we face on our journey towards achieving net-zero, all while considering our broader societal responsibilities. We strive to make informed trade-offs, prioritizing areas where we can have the most significant impact and developing infrastructure that accelerates the energy transition in a responsible manner. These dilemmas don't hinder our ambition to reach net-zero by 2050; we remain committed and continue to set ambitious goals across all emission scopes.

Scope 3 emissions 

After developing our first Scope 3 inventory in 2022, in 2023 we have further enhanced the reporting of our Scope 3 emissions, in accordance with the GHG Protocol. Our inventory constitutes all applicable and material upstream and downstream Scope 3 categories. 

The iterative improvement of our Scope 3 emissions calculation approach is crucial for several reasons. It plays a crucial role in establishing accurate baseline data, also needed for setting meaningful reduction targets. An exact and robust inventory is crucial to effectively assess the progress achieved through various ongoing and planned reduction measures. Vopak is committed to the iterative improvement of our practices to strive for increased accuracy in the coming years.

Our Scope 3 accounting and reporting boundary is consistent with Scope 1 and 2.

Calculation methodology

Despite the preference for activity-based emission factors, their limited availability in some cases has led us to employ spend-based carbon accounting in certain Scope 3 categories. In this method, the economic value of purchased goods or services (activity data) is multiplied by corresponding emission factors to calculate emissions.

The calculation methodologies and selection of specific conversion factors have an impact on our reported emissions. The outcome of our emissions calculations can vary significantly based on the chosen methodology. This underscores the inherent complexity and variability within the current landscape of Scope 3 assessments.

Our goal is to account for and report, as closely as possible, an accurate and complete inventory of our emissions using the best methods available today. Our current inventory serves as a snapshot, capturing the emissions landscape as accurately as technology and methodology allows. This snapshot, while reflective of our current state, embodies the essence of adaptability—our commitment to refining our understanding and accountability year after year. 

In 2023, Vopak undertook several enhancements in inventory calculations, resulting in a notable revision of our Scope 3 emissions. Among others, the following key improvements were made:

• Refinement of Capital Goods and Purchased Goods and Services Category: A thorough review of conversion factors was conducted, leading to improvement in the accuracy of our assessments within the Scope 3 emissions categories of Capital Goods and Purchased Goods and Services.

• Elevated Precision in Waste Reporting: Improvements were made to our waste reporting mechanisms, resulting in increased precision in the quantification of tonnes of waste generated. This contributed to a more nuanced understanding of emissions within this Scope 3 emissions category.

• Technologically informed emission calculations for the Waste Generated in the Operations Category: Emissions from waste were calculated based on the waste treatment methods per terminal. Acknowledging the technological differences in the treatment of hazardous waste, a distinction was drawn between high-tech combustion and controlled combustion. This nuanced approach ensures a more accurate representation of the environmental impact of the Scope 3 category of Waste Generated in Operations.

• Integration of Purchasing Power Factor: An additional adjustment was introduced to our spend-based calculations through the application of a purchasing power factor. Recognizing the variability in the result of converting one euro to a specific carbon output across diverse global landscapes. This supports us in factoring in geographical- and economic nuances in Vopak’s Scope 3 assessment.

Our assessment proves that a significant part of our value chain emissions still result from steel and concrete used in the construction and maintenance of our terminal network. Other significant contributors include purchased goods and services used to operate and maintain Vopak’s facilities.

Data for Scope 3 currently being finalized

Category 4 Upstream transport & distribution is included in Categories 1 and 2. Categories 8 to 14 are deemed irrelevant and immaterial for Vopak due to their negligible or immaterial environmental impact and business specificity and hence do not apply to us.

In the coming years, Vopak will strive to improve the consistency, accuracy, and completeness of its Scope 3 emissions. We will engage with our supply chain to improve data quality for high-impact categories to progressively improve our measurement and progress tracking. This deeper understanding of our current inventory and reduction potential will make it possible to determine target options for Scope 3. Among these aspirations are:

• We will continue to refine our reporting by looking closely at different spending categories, aiming for more accuracy and moving away from spend-based methods when the availability of the data allows. As data availability permits, we will estimate emissions more precisely for major subcategories, such as concrete and steel, in our growth projects.

• In assessing the anticipated emissions for three significant growth projects, we will use tailored methods for suppliers and contractors. Collaborating closely, we aim to assist them in minimizing their environmental impact, thereby contributing to the mitigation of our Scope 3 emissions.

• In projects where feasible, we will explore the use of low-carbon cement, such as blast furnace cement, as an alternative to traditional Portland cement for our construction initiatives.

• In our supplier bidding process (Request For Quotation), we will ask suppliers to suggest alternatives with lower emissions for their products or services.

• Piping solutions that have low carbon emissions will be explored as an option to lower emissions from the production of our piping infrastructure.

• We will increase our use of biodiesel for our diesel-fired assets, such as backup generators employed during power grid outages.

• We will consistently reduce the generation of hazardous waste and will encourage all terminals to investigate alternative waste treatments for unavoidable waste, exploring avenues to further minimize landfill waste.

• Non-fossil based fuel company cars will be made mandatory in all geographies where the charging infrastructure supports this requirement.

• As a shareholder of entities in the investment category, we will actively encourage management to reduce the Scope 1 and 2 emissions of their operation.

Note 6. Innovation and acceleration towards new energies and sustainable feedstock

Vopak embraces the energy and feedstock transitions. We are developing partnerships and exploring ways to facilitate the introduction of new technologies, processes, and products to advance a sustainable, low-carbon future. Vopak is actively involved in accelerating the energy transition by investing in the following innovative solutions:

• New battery solutions, including a hydrogen bromine flow battery, in partnership with Elestor, and compressed CO₂ batteries, in partnership with EnergyDome

• Innovative Hydrogen carriers, such as Liquid Organic Hydrogen Carriers (LOHC), through investments in Hydrogeneous and HSL Technologies. With Hydrogeneous, Vopak is developing the first large-scale LOHC supply chain with storage and release plants in Dormagen, Germany, and Rotterdam

• Developing Liquid CO₂ import and export facilities to enable liquid CO₂ flows resulting from carbon capture in industrial areas that are located at further distances from the CO₂ underground storage facilities. This includes the development of an open-access terminal at the Port of Rotterdam to receive and deliver liquid CO₂. The terminal is feeding into the Aramis underground storage

• 29 of Vopak terminals globally ISCC-certified to store sustainable products like sustainable aviation fuel and other biofuels and feedstocks

• Developing Ammonia infrastructure solutions in ports to enable exports, imports, transportation, and storage of zero- and low-carbon hydrogen, including projects in Houston, Singapore, and the ARA region (Amsterdam, Rotterdam, Antwerp)

• Recycling of plastic waste: Vopak is accelerating the development of recycled feedstock for the chemical industry by co-investing in Xycle, an innovative solution in catalytic conversion of plastic waste into Naphtha/pyrolysis oil

By innovating and bringing in new technologies, our aim is to accelerate the energy transition and improve our services to our customers.

Next to new energy solutions, Vopak (through its Ventures fund) invests in digital and technological innovations that improve operational efficiency and sustainability in our own processes and across the logistics value chain.

• Digital innovations are focused on creating efficiencies in the maritime liquid bulk supply chain by providing data insights across all relevant stakeholders. An example of these investments is NxtPort International which allows for faster, more cost effective as well as efficient transfer of data between different market players.

• Operational innovations are achieved by investing in companies that have a direct impact on improving our operations. Technologies developed by for example TWTG (LoRa sensors) and Falcker (maintenance platforms) are being rolled out throughout the organization next to the scaling of these companies with other customers and other markets. Next to these operational-focused technologies we invest in companies having a sustainability impact. Through Aeromon the way airborne emissions are monitored and reported is revolutionized. The technology enables effective and real-time measurement of Methane and other harmful fugitive and airborne emissions. With Aquacycl we have a technology in reach that can significantly reduce the impact of heavily polluted wastewater flows through efficient treatment. Aquacycl is recognized as a runner-up in the Earth Shot Prize.

The previously reported MOVES digital transformation program is running successfully with 31 terminals operating with the new software. The remaining terminals will follow during the coming 2 to 3 years to progressively develop the software to meet the market requirements to differentiate our services.

Note 7. Waste and circularity 

Circularity 

Circularity for Vopak follows the ‘Cradle to Cradle’ principles and advocates reducing waste and the reuse of waste during the construction, operation, and demolition of our assets.

• Design for the future: We are incorporating (new) digital technologies in our design process. Moreover, our commitment to select the right materials and design for longevity and extended future use is included in the Vopak standards. This is embedded in the Vopak way standards and is our tried and tested formula, where we define the building blocks for our assets. As an example, a Vopak Ventures initiative has recognized the importance of plastic circularity, aiming to achieve it through a catalytic conversion process that transforms plastic waste into Naphtha, serving as a feedstock for new plastics in the innovative Xycle project: plans are underway for a pilot plant in the Rotterdam area, designed to handle 21,000 metric tons of plastic annually

• Supply: We work together throughout the supply chain; within our own organizations, suppliers, regulators, and with the public sector to increase transparency and create joint values, as laid down in our supplier policy

• Use of assets: While assets are in use, we will maintain, repair, and upgrade our assets to maximize their lifetime

• Demolition of assets: We have established a regime to repurpose the primary materials from our assets undergoing demolition or replacement, with a primary focus on recycling steel and concrete

Waste

In addition to the wastewater, as described in Note 10, there are several types of waste:

• Hazardous waste: This includes residues like slops and residual products from tanks, pipelines, and other assets. The majority of this residue is returned to the product owner for recycling. The remaining portion is carefully managed as chemical waste through specialized waste treatment companies located outside our terminals

• Industrial waste arises from maintenance and/or demolition activities. The contractor ensures direct recycling of demolition waste, such as steel from tanks, while other demolition by-products undergo treatment outside the terminal. The specific treatment method, whether it involves landfill, incineration, or reuse, is documented for each terminal

• Soil remediation waste: Contaminated soil, transported out of the Vopak site for treatment and replaced by clean soil, explained in more detail in Note 15

• Household waste: Normal garbage waste generated by offices

The corresponding Scope 3 emissions of waste are reported under Note 5.

All waste is treated according to the Vopak Way Standard on Waste Management, and the soil and groundwater management standard, even when the terminal’s host country requires a lower standard.

For every source of waste, Vopak has currently specific standards/procedures:

• Spills to soil: Every spill that occurs at a terminal must be cleaned immediately and the contaminated soil disposed of

• Residual waste management: When tanks change service to another product, small amounts of product may remain in the tanks and pipelines. This is currently treated as chemical waste and treated by specialized companies. However, in some instances, we make use of companies that can upgrade residual waste into a product with value

• Slops management: Slops generated during tank cleaning for inspection, consist of residual waste that must be extracted and processed off-site. Our objective is to recover as much product as feasible, with approximately one-third returned to our customers and the remaining two-thirds processed elsewhere, primarily through incineration

• Steel and concrete use: During the demolition of out-of-service assets, we consider ways to maximize the reuse of materials from the dismantled assets, with a primary focus on steel and concrete

• Sludge management: A part of the sludge, produced in our wastewater treatment plants, undergoes offsite treatment where it is transformed into fertilizer or subjected to incineration

Note 8. Climate change adaptation

Introduction

We acknowledge the Intergovernmental Panel on Climate Change (IPCC) assessment that human influence is clear and physical impacts are already being felt. There is a growing need for governments, businesses, and citizens to adapt to and mitigate the impacts and risks of climate change. 

In this note, we aim to provide transparency about the potential impact of climate change on both Vopak’s physical assets and our business activities, by disclosing the information on our efforts in line with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosure (TCFD).

Governance, strategy, and risk management

The determination of threats and opportunities driven by climate change forms an integral part of the company’s strategic planning cycle. Our governance concerning climate-related risks and opportunities is integrated into our governance and risk management processes. For more information, please refer to the Governance, risk & compliance chapter of this report.

Our journey on addressing climate-related risks and opportunities for Vopak

Since 2014, our sustainability program has evaluated risks and opportunities associated with climate change, with comprehensive reporting feature in Vopak’s Annual Reports. Beginning in 2017, we adopted the TCFD framework for our reporting practices. In 2023, we have further enhanced our risk assessment by aligning it to the requirements of CSRD.

From 2018 onward, we have annually convened a Climate Day, serving as a rigorous stress test for our strategy, growth plans, and asset portfolio. This evaluation is conducted against both the transitional scenarios outlined by the International Energy Agency (IEA) and the physical scenarios outlined by the Intergovernmental Panel on Climate Change (IPCC).

In 2023, our Climate Day brought together our Strategic Committee, comprising the Executive Board, Executive Vice Presidents and BU Presidents alongside external guest speakers. The session included an update on the physical risks associated with climate change, as detailed below.

Transitional risks and opportunities

The international commitment to combat climate change and lower CO₂ emissions is having a profound impact on energy markets and industries. This development represents risks for Vopak, as a part of our current business relates to fossil-based products. Another significant financial consideration arises from carbon taxation and carbon trading, with approximately 60% of the countries where Vopak operates either already implementing or planning to implement such schemes in the near future. This may increase the costs of our operations, as we are still using fossil-based fuels.

At the same time, we see tremendous opportunities, given the fact that seasonal fluctuations in wind and solar energy are likely to increase the need for storage of low-‍carbon and clean energy sources like hydrogen, as well as CO₂ storage solutions, pipeline infrastructure and new technologies.

Physical risks and opportunities

To assess the physical climate-related risks, in 2023, we re-assessed the 2022 outcome of the potential impact of three IPCC scenarios for 2050 (RCP 2.6, 4.5, 6.0 and 8.5), which are based on global warming of respectively 1.5 degrees, 2 degrees, 3 degrees and 4.5 degrees Celsius. According to the latest IPCC report issued in February 2022, the temperature will most likely rise by 3 degrees Celsius. 

Our sensitivity analyses have demonstrated the following potential acute and chronic climate impacts with the highest risk on our current assets by 2050:

• Heavy rainfall causing river flooding:

• • This is a threat to the terminals in the Netherlands (Gate, Vlaardingen and Europoort)

  • Other terminals that are often impacted by this are in Pakistan, Vietnam (Mekong River) and Louisiana (Mississippi River).

• Increasing intensity of tropical storms and hurricanes:

• • In general, it is predicted that tropical storms will increase in severity. This is caused by higher seawater temperatures and will result in higher wind force and much more rainfall

  • Locations that may be impacted include the US Gulf, Western India, Mexico, Panama, and China.

• Excessive heat:

• • The normal average temperature rise is expected to be around 2-3 degrees Celsius. Moreover, days with extreme temperatures are likely to increase

  • Locations affected include the US, India, Pakistan, Singapore, Australia, Malaysia, Mexico, UAE and Saudi Arabia.

• Increasing wind force in normal weather conditions:

• • There has been an increase in the wind force and all regions may be impacted

  • In the recent past, we have experienced this in Belgium and the Netherlands. As a consequence, in 2022, 55% of the total asset damages were caused by one storm in the Netherlands.

The consequence of these potential developments could be an increase in preventive and maintenance investments and in insurance costs for these areas. This concerns not only Vopak but also other actors in affected port areas. Therefore, we will engage with these stakeholders and strive to stay ahead with the developments.

Vopak's response to potential climate risks

Based on the stress test and subsequent analysis in 2022 and 2023, we are confident that our strategy sufficiently addresses both the risks and opportunities arising from the physical effects of climate change, as well as those related to the transition to a low-carbon economy. We are constantly reviewing our construction standards and adhere to the latest building codes.

We welcome and support the new initiatives to improve and drive the convergence of standards and practices in business disclosures related to climate risks, such as the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosure (TCFD). We will continue to engage with investors and other stakeholders to further improve our disclosures of material climate-related risks and opportunities, taking into consideration the recommendations of the TCFD and other relevant developments.

For the impact of Vopak on climate change, please refer to notes 4 and 5 in the sustainability section of this report.

Note 9. Energy use

Vopak’s reporting on energy use includes direct energy use from the combustion of fossil fuels (Scope 1) and indirect energy use from electricity and steam purchased for our own use (Scope 2). To calculate energy, we have applied the following conversion factors:

• Conversion of consumption to energy in terajoules based on Dutch list of fuels and standard CO₂ emission factors, version January 2022, published by the Netherlands Enterprise Agency

• Conversion of natural gas consumption to energy in terajoules based on location-‍specific conversion factors as per Energy Information Administration (EIA)

• Conversion for the imported steam - reported as metric cube - based on internationally available steam tables

The energy consumption for our conventional liquid bulk storage and handling operations is used for the production of steam for heating purposes, vapor treatment and the operation of our FSRU’s for LNG (gas consumption) or through electricity consumption for powering our pumps and, to a lesser extent, heating, cooling and mixing of products. The amount depends on (1) the product mix we store for our customers, (2) the weather conditions and (3) the amount of product transferred (electricity consumption).

The increased energy consumption over the past years is mainly due to the increased activities at our LNG operations. Energy consumption for our LNG operations and other cryogenic gasses is significantly more intensive than our conventional liquid bulk storage and handling operations.

In 2023, as detailed in note 5, Vopak’s total energy consumption decreased by almost 7%, largely attributed to the decrease in the use of natural gas, electricity, and steam. 

Looking ahead to 2024, we will further expand the implementation of our near real-‍time energy monitoring tool in our terminals to monitor usage of energy and identify further reduction possibilities.

See Note 5 for more details on the environmental impact of our LNG operations.

Energy efficiency is an important driver to achieve a continual reduction of our carbon footprint at Vopak terminals.

For more details on the steps that we have taken in improving energy efficiency, please refer to Note 5 in the sustainability section of this report.

Note 10. Water use

Water management is an important responsibility, especially the quality and quantity of discharge to surface water. We are committed to responsible water-care systems at our terminals. The objective is to make a clear distinction between flows of good quality water (i.e. clean rainwater) and contaminated water. 

In order to minimize the energy used to clean water it is crucial to separate flows of clean and contaminated water where possible. Water used in our processes that can contain product remnants is cleaned and recycled through a water treatment plant (at or outside Vopak) before it is released into surface water or sewers.

​​​​​​​Vopak has developed an engineering tool to optimize the design of wastewater treatment plants. This tool is based on local legislation, the amount and composition of the wastewater that needs to be cleaned. Next to this engineering tool, we are supporting the development of new innovative wastewater cleaning techniques through amongst others our venture Aquacycle.

In total, Vopak used 1 million cubic meters of tap water and 60 thousand cubic meters of groundwater were extracted (2022: 50 thousand ). Our water management involved the treatment of over 5 million cubic meters of water in wastewater treatment plants. This included water sourced from cleaning processes, pumped-up contaminated groundwater, and collected rainwater, with the majority (75%) being rainwater, a large portion of which is not separately collected.

Note 11. Biodiversity

We acknowledge that the preservation and restoration of biodiversity is fundamental for a sustainable and healthy planet. Healthy ecosystems are fundamental for sustaining the production of energy, food, and manufactured goods for society in the long term. They also enable us to treat and dissipate waste, maintain soil and water quality, and help control pollution. Moreover, scientists established that reaching the Paris climate goals requires simultaneously curbing CO₂ emissions and restoring the carbon adsorption potential of nature.

Vopak started its biodiversity in 2011 when, at the onset of the United Nations decade of biodiversity, it initiated an assessment of areas with high biodiversity surrounding its terminals. To accomplish this, Vopak engaged the University of Wageningen to conduct a comprehensive study on the potential impacts terminals could have on the local environment.

The study proved that the impact could be significant (NOx depositions, sound and light disturbances) at a distance of 5 miles from the terminal. Based on these conclusions, Vopak has identified the following areas of special concern:

• Natura 2000 sites (Europe)

• Areas falling under the UNESCO MaWn and the Biosphere Program

• Areas defined by BirdLife International

• Wetlands as defined by the Ramsar Convention.

• Areas with a high variety of species

In our assessment, we follow a general 'rule of thumb': terminals within 8 miles (12.5 km) of areas rich in biodiversity may significantly influence the local ecosystem. As approximately 80% of Vopak terminals fall within this range, we acknowledge a shared responsibility to proactively preserve biodiversity.

Applying this guideline, it becomes evident that without mitigation efforts, these terminals could potentially impact biodiversity in ecologically sensitive areas. Vopak has also drawn up a comprehensive list of areas that can be affected, including the species of birds, mammals, amphibians, plants and other living organisms.

Vopak Approach

At Vopak, we are dedicated to safeguarding ecosystems and actively contributing to the restoration and preservation of biodiversity. Our commitment to biodiversity preservation is underscored by our focus on areas that are particularly vulnerable due to our operations. In order to assess the effects of our operations on biodiversity and prescribe adequate mitigating actions, we have  identified 4 phases in the life cycle of a terminal:

1. Identification, selection and definition of location

2. Execution and commissioning (Construction)

3. Operation

4. Demolition

We acknowledge that these phases may have an impact on areas of high biodiversity. Therefore in each project, the specific effects on biodiversity are addressed to minimize and mitigate the impact by looking for alternative locations (e.g. location of jetties) or environmental compensation. Environmental compensation is deemed a viable option only if all other alternatives do not lead to the required reduction. If terminals are located in the direct vicinity of areas of ecological diversity, extra care is taken to prevent any damage to the neighboring area through air, soil, groundwater and surface water contamination.

Measures taken include, for example, installing groundwater protection to prevent contaminated groundwater from flowing towards these areas and adapting the lighting of our terminals to minimize the disturbances for bird migrations. For new terminals, biodiversity matters are taken into account in the design phase of every new terminal through our global standard on Environmental Impact Assessment. For example, the jetty at the terminal in Panama was designed to prevent the disturbance of a (small) coral reef.

Vopak will continue its approach to biodiversity. We remain committed to reducing our impact on the identified areas of special concern where the protection of ecological diversity is most urgent. In 2023, we updated our Global Environmental Impact Assessment (EIA) standard including more detailed aspects of biodiversity to be addressed during the EIA.

During the Identification, selection, and definition phase, the impact is set against areas of concern, for both brownfield and greenfield developments/projects. In these initial phases, an inventory is made of the potential impacts, responsibilities, and mitigation potential:

   

Note 12. Process safety and prevention of spills

Process safety management

Vopak Global Standards prioritize preventing process safety incidents, with a focus on Major Hazard Risk Assessment and its associated practices. A clear method for risk assessment based on the Vopak Risk Matrix is prescribed to ensure acceptable risk is defined for all our processes in operation:

• • Projects are subject to the 'Hazop' (hazard study) and pre start-up safety review. 

  • Changes to our existing installations are subject to the Management of Change process, which includes risk assessment and Hazop when applicable.

  • Existing installations are subject to periodic review of their Hazop studies.

This approach provides a structured method for early identification of high risk to reduce the risk to an acceptable level, for instance by adding effective safeguards in the design stage.

Vopak has a well-defined method for Hazop and risk assessment, and provides training to the teams at the terminals on how to conduct these studies effectively.

Process safety is managed and reported according to the API standard RP 754, an international standard on process safety event classification. Events are measured based on the significance of the incident, with Tier 1 as the most significant. Major process incidents are those Tier 1 events with the highest severity and catastrophic impact.

Both terms – ‘spills’ and ‘LOPCs’ – are used to refer to the same definition: an unplanned or uncontrolled release of material from primary containment, including non-toxic and non-flammable materials.

A product contamination is any situation where a customer’s product is out of contract specification and cannot be used as intended or is reduced in value, or requires a planned after-treatment (e.g. mixing, blending, sparging) due to the action of another substance on that product.

Contaminations and damages could be both process and non-process-related. Both types of incidents are reported in this note. Examples of non-process contaminations are products damaged by overheating due to tank or line heating systems or due to lack or failure of nitrogen-inert atmosphere.

Boundaries

This note covers the reporting of all Tier 1 and Tier 2 process safety events, with Tier 3 and lower events reported internally. It encompasses incidents causing personal injuries to employees, contractors, and third parties.

The process safety event rate (PSER) is calculated as the total number of Tier 1 and Tier 2 incidents per 200,000 hours worked. Concerning damages, we have only included those greater than EUR 50,000 per event. 

All tier 1 and tier 2 process incidents are reported to the EB within 24 hours.

Process safety performance per Business Unit

In 2023, we sustained our good process safety performance with a PSER of 0.09 which is well below the target of 0.14, also below the three-year rolling average target of 0.15. The total number of Tier 1 and Tier 2 LOPCs observed a decrease to 11 from 14 in 2022. 

Process safety events per type

Product contaminations 

In 2023, we experienced a total of 15 product contaminations and damages. Although this is three more than 2022, the number shows a declining trend since 2018. The majority of events were related to shipping activities.

Damages (>50k EUR)

We had a total of 10 property and 1 product damages. A majority of the damages were related to internal floating roofs, identified post-operation or during routine maintenance inspection, and abnormal weather events.

Water pollution

All spills to water are reported.

Boundaries

Data in this note includes information for all in-scope entities as noted in Note 1. Basis of preparation.

Vopak had 4 reportable uncontained spills into surface and sewage water in 2023 (2022: 2), with a total of almost 2 metric tons (2022: 1 metric tons) of products being spilled. This included 0.2 tons of methanol at Vopak TTR, 0.8 tons of contaminated wastewater at VIIA Freeport, 1.0 tons fuel oil at Singapore Sebarok and 0.2 tons of biodiesel at Vlaardingen.

All product that was spilled into the water has been removed.

Soil and groundwater pollution

All Tier 1 and Tier 2 spills are recorded and included in the calculation for the Process Safety Event Rate (PSER). Tier 3 spills of more than 200 kg are reported separately.

The identification and remediation of emissions to soil and groundwater are guided by local legislation and the requirements stated in our Vopak Way Standards ‘Spill control’ and ‘Soil and groundwater management’.

As the owner and/or user of approximately 1,750 hectares of land with almost 6,000 tanks, Vopak has the responsibility for taking care of this land. The majority of our tanks are equipped with a secondary protection system to prevent spills and other contaminants from entering the soil and groundwater.

Vopak Principles on soil contamination

The principles of our Environmental Management System (EMS), set out in our Vopak standards, based on international laws and regulations, are:

• Prevention: for soil contamination, mandatory secondary containment should also be implemented at our older terminals to be implemented simultaneously with our ongoing maintenance schedule

• A spill response program to act in case a spill occurs, applicable to both soil and water

Locations with a high risk of spillages, such as pumping pits, truck loading stations and jetty manifolds, are already equipped with secondary containment to prevent damage to the environment. Led by a risk-based approach, we continue to improve the coverage of secondary containment to ensure the protection of the subsoil and groundwater at our terminals.

In this risk-based approach, we took into account that almost 80% of our terminals are in the vicinity of areas of high biodiversity. Extra precautions (e.g. vertical barrier that isolates the Vopak location from external areas) are taken to prevent contamination of these areas. If a spill or any unwanted discharge takes place, emergency mitigation procedures (e.g. excavating contaminated soil) are in place at all our terminals. 

Performance

All uncontained and contained reportable spills were remediated immediately according to the requirements stated in our Vopak Way standards ‘Spill control’ and ‘Soil and groundwater management’; however, we aim to have no uncontained spills.

We work to prevent spills; our goal is zero uncontained spills. In 2023, there were 34 metric tons of uncontained spills to soil and groundwater (compared to 5 metric tons in 2022). Regrettably, a significant portion — 32 tons — of ethylene glycol was involved in a single spill incident at our terminal in Barcelona.

Besides prevention, Vopak is also engaged in a process of remediation at 9 terminals. Please refer to environmental provisions in Note 9.5 - Provisions of the Consolidated Financial Statements of this report. 

The cost of remediation is reported as part of environmental, safety and cleaning expenses under Note 2.6 - Other operating expenses of the Consolidated Financial Statements.

  

Note 13. Occupational health and safety

Definition, reporting policies and boundaries

Occupational health and safety are managed and reported based on OSHA 1904, an international standard to ensure safe and healthful working conditions for workers by setting and enforcing standards. ​​​​​​​The safety rates (Total Injury Rate (TIR) and Lost Time Injury Rate (LTIR)) are calculated as the number of incidents per 200,000 hours worked.

Boundaries

Safety relates not only to Vopak employees, but also to the employees of our contractors and third parties when they are working on our sites. Occupational illness and sickness are only reported for our own employees.

Occupational safety

Safety is our first and foremost priority. We adhere to the highest health and safety standards and aim to ensure that our employees and contractors return home safely after each working day. To do so, we assess, maintain, revisit and diligently implement policies, systems and hardware to build a safety culture necessary to keep our employees and contractors safe and secure.

In 2023, we experienced no fatalities, however one tragic life changing injury in quarter one where a contractor lost his left index finger and the tip of the middle finger in maintenance work during sawing of wood pieces at one of our sites in the Netherlands. This incident has been thoroughly investigated to define the root causes and learnings have been implemented across our network of terminals to avoid the recurrence of a similar event.

Occupational safety performance

In 2023, we achieved a significant milestone by reducing our Total Injury Rate (TIR) to 0.16, down from 0.25 in 2022, the lowest since the initiation of reporting in 2007. Notably, hands and finger injuries were the most prevalent among reportable incidents, primarily occurring during manual handling or contact with tools/machinery. This underscores our ongoing commitment to enhancing workplace safety and the need for targeted measures to address specific injury types.

In 2023, we conducted a  review on safety-critical processes within our Trust & Verify (T&V) program. The program is being maintained well at terminals, and shortened checklists have been created to support the lifecycle of the program, with implementation planned in 2024. Leadership reviews have been incorporated into the leadership hierarchy, with the completion of the 2022-23 BU leadership reviews with the EB. This program plays a pivotal role in enhancing safety awareness, fostering a culture of personal accountability, and promoting safety leadership company-wide, contributing significantly to incident prevention and maintaining a secure working environment. 

We continue the implementation of our global “permit to work process and system’’ across locations worldwide. With over 20 terminals equipped with electronic systems and more planned in 2024, the system reinforces safe on-site working practices at all the locations. It achieves this by utilizing standardized sets of control measures linked to the activity and workplace hazards as well as a stage gate process of review and authorization.

We also reviewed, updated and relaunched many of our safety standards, including our new Waterfront Safety standard.

Occupational health

Sickness rate per Business Unit

In 2023, 49% (2022: 47%) of Vopak staff worked in areas of higher accident risk (mainly operational and maintenance staff at our terminals). There are no reported cases of employees suffering from occupational diseases in 2023.

Note 14. Human capital development and talent attraction

Attracting, developing, and retaining talent stands as a cornerstone of Vopak's success. As we foster a mindset and workforce primed for our future, capable of propelling the energy transition and maintaining our competitive edge, we acknowledge the need for diverse skills and backgrounds.

This is why we pay special attention to articulating a compelling narrative to potential new hires. Key to our success are engaging career sites and online communities—such as reaching 100,000 followers on LinkedIn in 2023—where our enthusiastic colleagues share their compelling experiences of working at Vopak.

Following a personalized onboarding process, our primary approach to talent management emphasizes a developmental focus and encourages learning on the job. Additional success factors include:

• 1. Management Trainee Program (Pool Z): In 2023, we welcomed 20 new Management Trainees to this two-year initiative, involving one to three assignments. One day each week is dedicated to multidisciplinary projects aligned with our sustainability goals.

• 2. Operational Trainee Programs Expansion: In 2023, we broadened our trainee programs by introducing Operational Trainee programs in various locations worldwide.

• 3. Leadership Programs: Our leadership development initiatives span various levels, commencing with Emerging Leaders (Talent Pool Y), advancing to Leaders of Teams (Talent Pool 1: LEAD), further progressing to Leaders of Business (Talent Pool 2: Accelerate2 LEAD), and culminating in Leaders of Enterprise (Talent Pool 3).

   

As part of our Employee Value Proposition, we grow careers and promote career development within the company. This allows us to rejuvenate our workforce and ensure that critical skills and experience can be passed from one generation to the next. In 2023, 600 employees changed jobs.

This is also why we recruit, as much as possible, from within the company to fill open and new vacancies:

• Throughout the year 2023,  we had an average of 173 open, internally published vacancies

• 39% of all published vacancies were filled by internal candidates.

People development

Our people development efforts are geared towards having the right people with the right skills in the right place at the right time in order to strengthen our organization and enable further growth. Opportunities for personal growth and development are therefore - as mentioned above - key components for the retention of our staff.

Our performance review not only focuses on measuring employees’ past performance but also on steering long-term development. All Vopak employees participate in this process. The Vopak performance management process has a strong focus on performance delivery, (360 degrees) feedback and the Vopak Values. In 2023, we updated our performance review by adding 1 extra individual target. This makes personal efforts more visible and encourages people to make use of their talents. Development needs are identified and translated into plans based on a yearly cycle.

We believe that leadership behavior is crucial in embedding and sustaining the Vopak Values in the organization. In 2023, we started our cooperation with the Rotterdam School of Management to implement our brand new Accelerate 2 Lead program for 25 potential senior leaders globally. This extended 12 months program focuses on (1) future leadership challenges and (2) strategic as well as personal leadership development.

Equipping our people - Vopak fundamentals and processes

Vopak expects all employees and contractors working at its terminals to care for safety, health and the environment. It is part of our company values. My Learning Operation (MLO) has been one of our most effective tools in training and assessing proficiency in the Vopak Fundamentals on Safety.

• In 2023, 94% (2022: 90%) of our employees completed compulsory annual training on the Vopak Fundamentals.

The percentage is just below 100% due to employees who are absent and due to joiners who are within their 2 month period to successfully complete a mandatory training. In addition to our Vopak Fundamentals on Safety, we have 14 other safety-critical modules available within MLO including personal protective equipment (PPE), pumps, lines, and valves.

MLO is also the basis to train and assess operational employees on our core operational processes, such as ship and truck handling. These training programs are administered and monitored through our global HR system.

Furthermore, we have a series of mandatory comprehensive online global trainings for all Vopak employees.

• Code of Conduct

• Inclusive behavior

• Cybersecurity

• Antitrust Awareness

• Information Security

In 2023, 95% of invited employees completed these trainings on time. We monitor this on a quarterly basis:

Furthermore, we offer online trainings tailored for specific functional domains. In 2023, we introduced a revamped series of trainings for Asset Management and Global IT. To continue advancing the professional growth of our employees and provide them with state-of-the-art knowledge in their roles, we plan to expand our online learning platform with appealing e-learning options in 2024 and beyond.

Training hours per employee

Note 15. Nuisance

We strive to increase our positive impact and reduce the negative impact on the communities where we operate.

During 2023, in total we received 12 total complaints (2022: 9) that originated from 5 individual incidents at 4 locations. In 2023, all reported complaints pertained to stench, with no instances of noise complaints documented throughout the year.

Note 16. Human rights and decent work

Our workforce

Approximately 37% (2022: 39%) of our employees are employed under a Collective Labor Agreement (CLA). Most of these employees work in the operations and maintenance departments at our terminals. We strive for long-lasting and healthy relationships with unions and works councils all over the world in the best interest of our employees and the Company.

Number of contractors

During 2023, Vopak hired contractors for in total more than 10,000 person-years. The majority of our contractors are working on construction and maintenance projects.

Human rights

Vopak respects human rights as described in the United Nations (UN) Universal Declaration of Human Rights, the UN Guiding Principles on Business and Human Rights, and the OECD Guidelines for Multinational Enterprises, and is striving to ensure that all our entities respect human rights when conducting business.

The risks of potential human rights issues lay in the area of construction and maintenance activities, which are often performed by contractors under our supervision. Driven by the many greenfield projects, as well as maintenance activities at our existing terminals, our contractors’ exposure hours equal and mostly exceed that of our own employees, making contractor management equally important to that of Vopak employees.

In 2022, Vopak initiated a screening process to evaluate and determine the corporate responsibility credentials of both current and potential suppliers and contractors. This comprehensive screening process includes a focused examination of aspects such as human rights and working conditions. The objective is to extend the implementation of this procedure throughout the entire organization. Vopak anticipates that all partners, contractors, and suppliers will uphold the standards outlined in the Vopak Code of Conduct and the Supplier Code, which explicitly addresses human rights.

In line with our Speak-Up policy, we actively encourage all employees and stakeholders to voice concerns and report any instances of human rights violations or breaches of our Code of Conduct or Supplier Code. These reports can be made confidentially to designated Trusted Persons. A Trusted Person is responsible for investigating all complaints and implementing necessary remedial actions.

The cases reported in 2023 include 1 related to sexual harassment. For details, please refer to Note 19 in the sustainability section of this report.

Decent work

Labor rights

In line with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, we base our decent work objectives and commitments on the International Covenant on Civil and Political Rights, on the International Covenant on Economic, Social and Cultural Rights and on the fundamental rights set out in the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work.

We seek to uphold these rights in our operations and relationships with our suppliers, business partners, work councils and unions within the boundaries of local laws and regulations.  

Living wages

Vopak supports the ‘living wage’ principle as referred to in the UN’s Declaration on Human Rights. The goal of a living wage is to allow a worker to afford a basic, adequate standard of living through employment without government subsidies.

Our policy is to pay local Vopak staff at least the living wage norms reflecting the wage levels required to meet their basic living needs. In line with our Speak-Up policy, breaches of our living wage principle can be reported by all employees, contractors, and other stakeholders.

Since 2019, we have conducted an annual 'living wage' assessment, evaluating employee salaries (total compensation) against living wage benchmarks. This assessment allows us to estimate the cost of providing a basic yet decent life in specific regions, ensuring that the wages for our employees in the countries where we operate meet or surpass the established living wage standards.

In 2023, all of our entities were found compliant with the living wage principle and no issues were noted. Please note that the Vopak wages paid to staff in Venezuela can only be benchmarked informally. This is due to the lack of official indicators and accurate benchmarks to measure basic work and living standards.

The application of the living wage principle is not limited to Vopak employees only. It is also included in the Vopak Global Supplier Code and the Global Supplier and Contractor Performance Management Program. Periodic reporting on the contractors' and suppliers' pay practices against the living wage standards will become an integrated part of the overall screening process of our global suppliers as of 2023. 

Pay ratios

For our countries of significant operations (Netherlands, Singapore, US), we disclose the ratio between the total remuneration package of the highest-paid employee and the total average remuneration of Vopak employees, in accordance with the GRI Standards.

The calculation method of these pay ratios is consistent with the method used to calculate the CEO pay ratio as shown in the Remuneration Report.  

Employee hires and turnover

Vopak's relative staff turnover is approximately 12% in 2023. 80% of the leavers were voluntary. Vopak's turnover during 2023 has been below the external labor trends for comparable markets.

When a divestment is made, we will do our utmost to facilitate success for the divested entity and its employees. Employees working for a divested business are offered similar contractual arrangements as when they were working for Vopak.

Improved governance of human rights & decent work

Our suppliers vary from globally qualified vendors used for equipment and IT automation to local service and construction suppliers. Correspondingly, our supply chain also varies for different suppliers, vendors, and locations. To improve our governance of human rights and decent work we are making following improvements:

• Standardized supplier qualification on human rights and decent work criteria: The qualification process for suppliers to become part of the Approved Vendor list is being further expanded with sustainability criteria on human rights and decent work. 

• Governance of human rights & decent work in large growth projects (> 20M Euro): In order to manage the risks related to human rights and decent work with our contractors we are developing a list of requirements linked to ILO/UN which will be followed during the contracting and execution phase of large projects. This will mean that during the Request for Interest, and Request for Proposal stages, as well as execution, we will monitor, check and verify the application of our sustainability requirements as determined by Vopak. 

Note 17. Inclusion and diversity

Vopak is a multicultural company with operations around the globe. Our workforce is diverse and reflects  many different cultures, nationalities and beliefs. We value this diversity and nurture the many different approaches and perspectives each culture brings to our business. Whatever their backgrounds, our people share our company’s passion for service and want to perform to the best of their ability.

We believe that each individual has the right to be treated with respect and dignity, and work in a professional atmosphere that promotes equal opportunities and prohibits discrimination or harassment on the basis of race, color, national origin, religion, sex, sexual orientation, age, political orientation or trade union membership, allowing everyone at Vopak to develop their full potential.

We have started on a journey to become a more diverse company. Until 2023, our diversity policy prioritizes increasing diversity in senior management (Hay 19+) in terms of gender, regional origin and competences. To reach that goal, we are taking a step by step approach, starting with clear targets for 2023. 

Senior management composition (salary scales at or above 19)

Management composition (salary scales at or above 15)

Senior management composition (salary scales at or above 19)

Women in Senior Management Positions

We are convinced that diversity in its broad sense contributes to the long-term success of our company. Our focus is on diversity in terms of gender, regional origin and competences. Related to gender, in the past years, Vopak doubled the number of senior female leaders. Following this success we have upgraded our target, aiming now to increase the proportion of women in senior roles to 25% by 2025. In 2023, we completed our first Vopak Women’s Mentorship Program in the Netherlands, with the objective of empowering women in their careers. The program consists of mentor conversations, training and workshops and will be rolled out internationally over the coming years.