Random ESG Audit of The "Environment Factor" at the Reliance Refinery, Jamnagar And The CRISIL Failed Rating

The   "Environment Factor" of the Reliance Refinery at Jamnagar is audited here. There are two methane emission points at the Jamnagar Refinery. These two methane emission points are undetected in CRISIL ESG Rating.   How the other two different pillars of the ESG stand here is still unverified, as one can't trust the ESG Rating conducted by the CRISIL. 

* BIRENDRA  K  JHA 

Reliance Industries Limited is an important Indian multinational conglomerate. Its major business is into petrochemicals with world class refinery at Jamnagar. The Jamnagar refinery complex,  houses some of the world's largest units, such as the Fluidized Catalytic Cracker (FCC), Coker, Alkylation, Paraxylene, Polypropylene, Refinery Off-Gas Cracker (ROGC) and Petcock gasification plants. The Jamnagar refinery was commissioned in 1999. It processes an array of crude oils and produces petroleum products including liquefied petroleum gas (LPG), gasoline, propylene, naphtha, jet fuel, diesel, sulphur and petroleum coke.

In 2022 the CRISIL has done ESG rating of Reliance Industries Ltd (RIL ). The CRISIL has given  "Adequate" rating. That is the Environment; Social and Governance pillars of the RIL  are all "Adequate" and sufficient compliance for the purpose of the ESG rating. But, this was the bogus rating. This paper demonstrates why the rating is defective and poor. This also demonstrates what immediate improvement is needed in the CRISIL rating.  

The CRISIL for the purpose of rating,  has captured the published documents supplied by the RIL. Trusting such documents and adopting the defective method is extremely bad and foolish method in auditing. It appears, the CRISIL had trusted the  "ornamental language" and other reports, mentioned in the signed documents as full compliance of the Environment pillar. 

When this CRISIL  rating of ESG was going on, right at that time, at the Jamnagar refinery, heavy emissions  of methane gas had documented in the footprint of the satellite ( see  photographs ). People seating in the rating system can manipulate, cheat and beat the system!  But, the satellite which is revolving in the orbit is more honest then the ground people.  This methane emission is seen from 2021 to 2023 in two different pockets at the atmosphere of the Jamnagar refinery. In specific color band the pocket cloud looks dark blue. In B12-B11-B04, the methane emission is seen in a brown color cloud, on the atmosphere of the Jamnagar refinery.  This demonstrates,  extremely poor quality work of CRISIL in undertaking the ESG rating. The CRISIL clearly failed in rating correctly the Environment pillar of the ESG.    

When considering the various kinds of greenhouse gas emissions, then methane gas ( CH4)  is the heart of climate change.  The methane (CH4) is the most potent  gas emitted by human in industrial activities, having a global warming potential 86 times higher than carbon dioxide over a span of 20 years. This fact makes, Social Auditor to track methane emissions,  as a priority benchmark in auditing the Environment pillar carefully, while auditing the ESG.  

Most of the ESG Auditors are poor, unskilled and unqualified. They hardly have the ability to read the satellite data and calibrate it for the purpose of the Social Audit, while auditing the Environment factor. Typically, satellites identify methane by looking at subtle variations in backscattered solar radiation in the short-wave infrared (SWIR) spectral region. This detects  the methane emissions. In contrast, there are some good tool for the Social Auditor.  I use frequently, satellite data to audit and check the "methane emission" factor in the ESG Audit & the Social Audit. 

The high resolution satellite data of Jamnagar Refinery shows two pockets of methane emission, shown in dark blue cloud patch within yellow circle. These two pockets are undetected in the CRISIL ESG Rating.

The satellite in color band B12-B11-B04 detects the brown color cloud patch of methane emission very clearly. The two pockets in the brown color are marked with red arrow. These two pockets of the methane emission,  is seen from 2021.    

In petroleum refinery, methane emissions can be classified as one of the three general sources : 1) fugitive; 2) vented; and 3) combusted. The fugitive emissions are  careless leaks emitted from sealed surfaces, such as packings and gaskets, leaks from pipelines (resulting from corrosion, faulty connections, etc.). The vented emissions,  are releases to the atmosphere by design or operational practice. Examples of vented emissions include emissions from continuous process vents, such as dehydrator reboiler vents; maintenance practices, such as blow downs; and small individual sources, such as gas-operated pneumatic device events. Similarly, combusted emissions are exhaust emissions of unburned methane fuel from combustion sources such as compressor engines, burners, and flares. Incomplete combustion of methane fuel in compressor engine exhaust is the only significant source of methane in this category.

The Jamnagar refinery of the Reliance Industries Ltd (RIL) may fall in any one of the three categories mentioned above. Whatever be, this methane emission is seen continuously in specific satellite from 2021 to 2023. The Jamnagar refinery was commissioned in 1999. In between 1999 to  2021, this emission was existing or not is a matter of separate enquiry. But, from 2021 to 2023 a continuous methane emission is seen at two different locations at the Jamnagar refinery. 

This demonstrates clearly, that there is a mismatch between Environment Policy of the RIL and the ground situation of the Jamnagar Refinery. This is clearly contradictory statement. Any prudent "Social Auditor", shall allot zero rating for such major violation, then what the CRISIL has rated. 

The RIL has good name. The RIL is expected to conduct a self Social Audit of the three pillars very honestly and load the Social Audit report on the website. It shall improve the business. The Social Auditor note may be harsh and strong. But this is healing medicine for "sustainable business".  What is seen through the facts, documents and ground observation that is honestly reported by the Social Auditor.  This shall allow the stakeholders, investors and  customers to gain first hand correct idea on the ESG rating & how to proceed.   

The "ornamental language" and "excellent good words" maintained in  policy, fails when ground situation is audited and  monitored. The CRISIL failed to understand this basic difference. It appears the CRISIL has rated the ESG of this  industry only looking such ornamental languages. Good Social Auditor should must ignore  such document with "professional skepticism" and visit the problem site.   

This also demonstrates that the Internal Audit,  for monitoring the ESG at the Reliance Industries Ltd is either collapsed or is of very poor standard.  

This is only the random ESG Audit of  the "Environment factor" of the Reliance refinery at Jamnagar. How the other two different pillars of the ESG stand here is still unverified. The Social and Governance rating supplied by CRISIL may be  defective and beyond trust like the Environment pillar.     

( Birendra K Jha,  is a Pan India Practitioner on the "Social Impact Assessment Audit" & "ESG Audit".  He is a Qualified & Certified  Social Auditor from the ISAI (ICAI). He is Director of HR Lab, a Social  Audit firm. Apart from Social Audit, he provides consultation on the CSR Audit, ESG Audit, CSR funds; CSR Programs; CSR Need Assessment; CSR Program Measurement; Entry & Registration- Social Stock Exchange & provides Capacity Development Training to industries on the CSR & ESG. He is based at Delhi-NCR. He overlooked at senior position as General Manager and Deputy General Manager in the previous South Korean MNC Company in India handling human resource and social audit of ESG practices for more than a decade. He may be approached at: birendrajha03@yahoo.com )