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Through proactive stakeholder engagement, Shell is working with community members to identifyand mitigate social and environmental impacts in new and existing projects.
Gone are the days when financial performance was the exclusive business consideration, as social and environmental performance now factor into the risk/benefit analysis of forward-thinking companies. Such companies in the energy sector, whose operations create important benefits that fuel modern quality-of-life – but also create significant social and environmental risks – have been at the forefront of shifting their practices toward more positive impacts.
“There’s no question that when we go into a new project, we do it with a business objective – and, two other objectives have gained equal status: protecting the environment and creating a positive presence in the community,” explains Kevin Ilges, Shell’s Director of U.S. Social Responsibility & Business Support. “We admit that we may not always have the best knowledge and understanding of local environmental and social issues, which differ from community to community, so we now engage stakeholders at the very beginning, when we first start thinking about a new project.”
Shell’s enhanced focus on social and environmental performance is ingrained into company culture from the top-down, with new CEO Peter Voser continuing and extending its corporate commitment to sustainability. For example, the Shell board has a standing corporate social responsibility committee composed of non-executive directors that assess and advise the board, as well as reviewing and understanding first-hand Shell’s operational performance.
“The committee members don’t just hear presentations; they regularly go into the field, not only visiting projects, but also spending time with the community to hear their concerns,” said Ilges.
Shell recognizes that success is now predicated on future sustainability, so the company takes into consideration how present actions affect future generations. Internally, Shell has embedded social performance training into its project management courses, a new move from the past when such considerations were not part of its leadership development curriculum. Externally, Shell has initiated a new practice of developing strategic partnerships with environmental nongovernmental organizations (ENGOs), which help Shell by providing objective assessments of social and environmental impacts of projects.
And the process isn’t limited to new projects, as Shell has implemented it in Sakhalin Energy, a joint project with Russia’s Gazprom, after the oil and gas project came under criticism for social and environmental impacts. In particular, original plans called for the liquefied natural gas (LNG) pipeline to traverse – and potentially disrupt – the habitat and migratory routes of Western Gray Whales. Shell brought in the International Union for Conservation of Nature (IUCN) to create the Western Gray Whale Advisory Panel, an objective body that studied the problem and issued a report recommending that Sakhalin Energy redirect the pipeline – which it did.
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