Leaders

By Veer, Jeroen van der | European Business Forum, Autumn 2006 | Go to article overview

Leaders


Veer, Jeroen van der, European Business Forum


EBF: The Financial Times recently reported that CSR is experiencing a renaissance: "The debate on climate change among businesspeople has moved on from whether it is an issue to when it will be and how far it may affect them." What are your views on this?

JV: I have three answers for this question, which relate to changes in the oil industry over the past 80 years, the post eight years and the past eight months.

What did customers and society expect from a company like Shell or ExxonMobil [then Standard Oil] 80 years ago? They expected products that were consistent and dependable. They wanted to be sure that the gasoline in their motorcar didn't damage the engine. As an interesting sideline, the adverts in those days carried the slogan: "You can be sure of Shell." The focus was on reliability and quality.

Things started to change. When I was an engineer at Shell, the quality of products was still a top priority but a second concern started to emerge. Customers wanted oil from safe refineries, produced from sea platforms that didn't leak. Local communities became more involved. That sparked this concept of "sustainability". In the mid-nineties, when I was the youngest member of Shell's board, we made CSR operational, it was no longer just a vague concept. Economic, social and environmental aspects were all entwined. Think of it like a three-legged stool-if your integrate two of the principles but not the third, you're not fully stable. That's when we started producing an annual Shell report on profits and principles. We have moved beyond just the safe refineries.

The past eight months have been an interesting time for Shell. At the end of 2005, we launched what we call the Three Golden Rules for all our staff. You fit in with the rules, or you look for a job elsewhere. This is not up for discussion.

First, you must comply with our rules and regulations, as well as our standards. Second, if you see someone doing an unsafe act or a non-compliant act, you must intervene. We call this rule: "Unsafe? Stop it." Third, show respect for your neighbours. You can sum up those three rules as: compliance, stop it, respect; an acronym for CSR.

Sustainability now forms 20 per cent of the employee scorecard. The score is based on a qualitative review by the board and discussions with our renumeration committee. We end up with one score for all employees worldwide. The outcome of this hits people in their pockets.

EBF: Climate change is a growing problem. Many firms now attempt to implement "carbon neutrality" as part of their strategy. What is Shell doing?

Can you give some specific examples?

JV: When we look at project proposals, we always consider whether a CO2 penalty would affect that proposal. We were very early traders in CO2; we executed the first every trade in EU allowances and continue to lead market development. In 1998, we decided to reduce the CO2 emissions of our own operations in line with Kyoto targets and, in 2005, we appointed a Mr CO2". Instead of being defensive about CO2, we need to look at the entrepreneurial opportunities. This is a chance to run pilot projects and to acquire new technologies.

Carbon neutrality is still fairly far out of sight for Shell but we are trying to take a more integrated approach to business, looking not only at how much energy we use, but also how much the end customer uses.

Last but not least, we are busy with two big demonstration projects. The first is in Tjeldbergodden in mid-Norway. Earlier this year we signed an agreement with Norwegian petroleum company Statoil to work on a new industry initiative, capturing CO2 from power generation and using it to enhance oil recovery. That means increased energy production with a lower CO2 impact.

The second project is coal gasification in Australia. The plan is for nearly all the CO2 generated to be captured and geo-sequestered.

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