Can an energy company like Shell lead on environmental issues, community building and climate change? At first glance, such talk is analogous to a fast food company (or in corporate speak, a fast casual dining experience provider) embracing small local farms, artisan cheeses, composting and green design. For Shell and its competitors, waxing on about their work on climate change and community programs will raise eyebrows, especially considering the company’s complicated relationship with the Nigerian government.
But we are now in a world where stakeholders demand more transparency from firms like Shell. Fossil fuels have become more costly and logistically difficult to extract. And no company wants to be eviscerated publicly the way BP was two years ago during the Deepwater Horizon fiasco. Shell is already a few steps ahead of its peer companies. For example, Shell was a founding member of the UN Global Compact and claims it supports the move towards progress on labor and anti-corruption. At the same time the company is accounting for a growing population and therefore a growing demand for energy, the majority of which Shell says will come from fossil fuels.
Some of the highlights in Shell’s most recent sustainability report include the following:
Climate change: Shell’s focus on combatting CO2 emissions has four fronts. Increasing natural gas production, the development of carbon capture and storage (CCS), low-carbon biofuel production and improving the company’s own energy efficiency performance contribute to Shell’s strategy. The company is also supportive of frameworks that put a price put on carbon, and that includes cap-and-trade systems. Last year Shell opened a biofuel refinery in Brazil that uses sugar cane as a feedstock and is also exploring biofuels that come from non-food sources. CCS is also a huge part of Shell’s work to reduce carbon emissions and expects a large project in Norway to launch this year.
Community Development: Speaking of Nigeria, Shell has had a complicated relationship with one of the most important countries in which it conducts business. The company has contributed tens of billions to Nigeria’s treasury the past several years, but has also had its share of accidents, local sabotage and oil spills. Meanwhile Shell invested $78 million in community programs during 2011, and also supports a network of community health centers throughout the Niger Delta. Over 87,000 people in the region, many of whom live in remote villages, have benefitted from HIV/AIDS and malaria treatment to minor operations.
The environment: Shell actually had a net decrease in CO2 emissions in 2011, mostly due to divestments in some of its downstream businesses and reduced gas flaring in Nigeria. Opponents of Canada’s tar sands (or oil sands) will not be happy that the company’s water footprint increased largely because of Shell’s development of the Athabasca Oil Sands. The company partners with and takes advice from several leading environmental advocacy groups, which include The Nature Conservancy and Wetlands International. Whether such collaboration comes close to balancing out the company's environmental impact is a matter of debate.
Overall Shell’s 2011 sustainability report is a frank discussion of where the company improved and how it fell short. The company’s critics and supporters will easily find data that supports their point of view towards Shell and the energy industry in general. And stakeholders will appreciate the openness with which Shell discusses its strengths and weaknesses during 2011.
Photo courtesy Wikipedia.