The Value of Social Responsibility

Published Dec 11, 2003
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Health, Safety and Environment

The conditions within which business operates throughout the world are changing. Business is adapting to those changes, and modifying its behavior in accordance with the new rules. So just as business is recognizing the value of proactive environmental management, another ground rule has been placed on the boardroom table. To deal with these challenges in Statoil is Eli Aamot, the newly appointed Vice President of Environment. She carries on a 30-year effort in the oil and gas company to include values of sustainability in its business strategies.

The goal posts of corporate responsibility have shifted in the last decade or two. Business now enjoys reduced taxation, fewer trade barriers and economic liberalization. But there is a price to pay for these benefits; society is looking less to Government and instead is expecting business to be more accountable for the social and environmental impacts of its activities. This was evident at the recent World Summit for Sustainable Development in Johannesburg, South Africa.

One motivating factor for business to take issue with its values is a growing list of “corporate casualties” of companies that have failed to sufficiently consider the social and environmental implications of their actions. These companies may have suffered consumer boycotts, diminished brand values, decreased share price and increased costs as a result of their alleged involvement in issues including everything from the use of child labour in developing countries, trading with oppressive regimes and major pollution incidents.

But while the initial response of many companies has been to mobilize a defensive public relations response and to deny that the perceived impact is real, other companies are becoming more sophisticated, more knowledgeable and more influential about corporate values. There is growing evidence that companies are starting to respond well to the challenges. The changed approach reflects the concept of sustainability.

Instead of solely relying on economic performance as a means of maintaining a successful business within the free market, it is becoming increasingly important for legitimate companies to expand the basis of corporate decisions and performance assessment to encompass the other faucets of sustainable development, namely the social and environmental elements. Therefore businesses today are gathering, publicizing and responding to information that has not traditionally been considered critical by corporate decision makers.

Statoil’s Values
As one of the world’s largest exporters of crude oil and gas, Statoil is in an expansive industry that operates in regions with poor track records as regards to human rights violations, poverty control and climate destruction. Many large companies have established departments that are dedicated to handling these issues.

What values are the most important to Statoil, and, as Director of Environment, what is your role?

Eli Aamot: During our 30 years of existence we have had a strong focus on HSE – health, safety and environment. We have also engaged in climate issues for the last ten years. We support the Kyoto Protocol and have developed projects within the framework of Kyoto with a $10 million investment in the World Bank Prototype Carbon Fund. Because of Statoil’s international expansion, we established some years ago a department which was to focus entirely on country analysis and corporate social responsibility, or CSR. CSR has been a core value since day one. So, too, has emphasis on business ethics and human rights. My position as Vice President for the Environment has existed for the past ten years.

Statoil has recently gone through an open evaluation of its core values. Why are values such as “sustainable development” and “corporate social responsibility” important?

EA: Our commitment to sustainable development is underpinned by principle. We have a moral obligation to do what is right. We share a responsibility for our common future. Being a good corporate citizen is also a matter of enlightened self-interest. There is a business case to be made for sustainable development. Our contribution can help to preserve and create value by strengthening our position in labor, consumer and capital markets.

We have just released our first report on sustainable development as part of our business strategy. And we were recently included on the Dow Jones Sustainability Index - the top ten per cent of oil companies ranked in terms of sustainable development achievements.

One of our main contributions to sustainability is our effort to produce oil and gas as cleanly as possible. The Norwegian petroleum industry is among the most energy efficient in the world. Our carbon dioxide emissions are roughly 40 kilos per unit – the standard cubic metre of oil equivalent - as opposed to a global average of 130 kilos.

Statoil is an active member of the World Business Council for Sustainable Development (WBCSD), a coalition of 160 international companies that “work towards sustainable development via the three pillars of economic growth, ecological balance and social development”. In Johannesburg, WBCSD co-launched a statement with Greenpeace – its traditional opponent – saying that business and environmentalism would work together towards a common structure for global climate protection.

Can an organization like WBCSD actually produce stronger business focus on values of sustainability?

EA: I see great potential in WBCSD. It pulls many progressive and forward thinking companies together to create a platform for business on from which to play a constructive role in defining and creating a sustainable future. Business will necessarily be a part of this effort, and the work of WBSCD will contribute to an increased focus from business.

How do you explain to business leaders and to the public world opinion that sustainability is not an oxymoron in a business based on non-renewables; that economic growth and sustainable development aren’t contradictory values?

EA: It’s possible to walk the talk with regards to sustainability. The world needs more energy, but all of it can’t be sourced to renewables. Our role is to deliver fossil energy as cleanly as possible. Our achievements have granted us business opportunities and a competitive edge on both the Norwegian Continental Shelf and internationally. Our work and technological development is noted worldwide. We recently received the coveted World Petroleum Congress 2002 Excellence Award for Technological Development for our Sleipner CO2-injection project. With this project we made it possible to safely store 1 million tonnes of carbon dioxide in the sea bottom every year, thereby contributing to a reduction of Norway’s overall CO2-emissions. The concept will also be used at the Snøhvit field.

The Norwegian Johannesburg delegation lobbied to remove a phrase that would have made economic treaties superior to environmental treaties. The press called it a “grand victory”. Do you agree?

EA: The victory was important. To decide that environmental treaties as a principle and under all circumstances should be subordinated trade agreements is in my mind not sustainable. Economic growth and ecological balance are equally important foundations of sustainable development.

Statoil operates in parts of the world – Venezuela, The Caspian Sea, West Africa – where central government is often weaker than here, where corruption, human rights and climate destruction are more prevalent issues. What criteria do you use for where to operate and not?

EA: We don’t have a set list of ‘no-go’-criteria. The only countries out of bounds are those that the Norwegian government recommends we do not trade with. Our general attitude is that it’s better for business to get involved than to stay away. It is important to strengthen the societies within which we operate.

Stakeholders expect us to fight bribery and corruption with transparency. In Angola, Global Witness, a non-governmental investigative organisation, has demanded that international oil companies make their accounts public to prove that they are not “complicit in the looting of the Angolan people”.

Statoil applies the same standards of accounting, reporting and transparency in Angola as we do in Norway. Our accounts and reports are available to the public, logged with the Norwegian Register of Company Accounts.

It seems that Statoil often goes above and beyond what is traditionally expected from them in order to contribute to the societies in which they operate. You recently participated in a special project in Venezuela. Could you tell us about it?

EA: Yes. Statoil approached the local UNDP office in Venezuela to discuss project involvement, and they suggested we might get involved in traditional social development projects. On learning that we wished to support human rights, however, UNDP offered us participation in a training- and awareness-raising programme for judges that were already under planning by the national courts and Amnesty International.

The project started in 1999 and was part of an effort to create a better legal system by increasing the judges’ ability to handle human rights cases. Amnesty International conducted interactive training sessions in collaboration with the courts. Statoil contributed financially – monitoring rather than attempting to control proceedings. The project gave us a chance to promote corporate values without overstepping our role as a commercial entity. We believe in the power of our presence to positively influence social conditions.

We are working on several other similar projects, and not only in the legal sector.

While other companies have begun to brand themselves as energy companies, Statoil still talks of itself as an oil & gas company. Where lies Statoil’s road ahead?

EA: We want to communicate that we’re an integrated oil and gas company because that is what we are. Oil and gas will be Statoil’s major source of revenue the next 10 to 20 years. Still, we are making extensive research efforts on CO2-management, hydrogen and renewable energy.

How will Statoil’s value initiatives affect the company’s market attractiveness and value?

EA: We see Statoil’s HSE and CSR profile as an asset, and want to make sure it remains that way. Our inclusion on the Dow Jones Sustainability Index is an enormous acknowledgement of our commitment to operate in an ethical, sustainable and socially responsible manner. We attained this position by integrating financial, environmental and social elements in Statoil’s management systems. This will hopefully make us more attractive to potential investors.

Where would you like to see Statoil in the future?

EA: Statoil’s ambitious target is zero harm to the environment. This entails several dilemmas. Reducing discharges into the sea might increase emissions into the air; increased oil recovery may increase emissions into the air and discharges into the sea. Balancing environmental concerns with health and safety issues is not always straightforward.

I want to improve Statoil’s understanding of what this target means. By that I mean challenge the environmental experts and other professionals to find solutions that can reduce further the environmental footprints of our projects. We need new knowledge about our impact on the value chain and new technology to reduce that impact. I want to dare the managers to increase their attention on environmental issues.

Statoil’s environmental performance is good: We have one of the lowest CO2 emissions per produced oil equivalent in the world. I want to communicate our environmental achievements to stakeholders, authorities and employees. This is important to secure an acceptance for Statoil’s further growth both nationally and internationally.

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