The timeline of energy development projects now is largely driven by sustainability and social performance issues, says Marvin Odum, president of Shell Oil. That’s prompting innovations in how the company involves external stakeholders, incentivizes employees and drives changes throughout the entire energy industry.
Marvin Odum, President of Shell Oil Co.
“When I look at an investment proposal now,” says Marvin Odum, president of Shell Oil Co., “it still covers the technical issues, of course. It certainly covers the financial issues. But fully half of that proposal deals with what I would call the nontechnical risk: social performance and sustainability issues.”
“Here’s where it gets even more interesting," he continues. "As you get better companywide at exploring, understanding and addressing those nontechnical risks, it drives innovation. Because mitigating those risks often drives you right back into the technology loop — back into asking how can you solve novel problems in novel ways, and how can you do it at affordable cost? At this point, it may be the number one driver of our innovation program.”
Like other energy companies, Shell is in a classic “between a rock and a hard place” situation. The world wants what Shell provides, but it wants it when it wants it, at a price it likes to pay, and with positive or at least neutral environmental and social impact. That’s forced the company to adapt its traditional innovation approach — and even its overall organizational structure — in some surprising ways.
The need for those changes has also been heightened by the environmental damage and public relations disaster of the BP oil spill in 2010, Odum says. “What the Gulf of Mexico spill shows us is we are dependent on how the whole industry performs; it affects a part of our license to operate.” That is true even though Shell enjoys a reputation for sustainability performance that is stronger than that of most other energy companies. For the last two years, respondents to MIT Sloan Management Review’s annual sustainability survey have named Shell Oil among the top 10 companies that are “world class” at paying attention to the issue.
Still, dealing with the broader public perception and wariness that greets energy companies, says Odum, has become a major focus of the company. Today, managing the concerns of external stakeholders has prompted changes in management approaches and strategy internally, and sustainability issues have moved in Shell from being a company “priority” to a “core value.
6 Comments On: From "Trust Me" to "Show Me": Moving Sustainability at Shell Oil From “Priority” to “Core Value”
What a solid way to face the future, as JC says,preserve the core, embrace the future.
LJR
If sustainability is a core value, change the name from Shell Oil to Shell Energy, get heavily into distributed and renewable energy and do what BP said they were going to do but never did – move Beyond Petroleum. It needs to be more than a PR campaign.
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the ultimate value is morality and humanity, this is wkat every company must do
While I appreciate what Marvin Odum says about sustainability being a core value as opposed to a priority and the differences therein, I do wonder if this will hold in the longer term. The last couple of years have seen a relatively brief financial crisis due to government stimulus, but if we see a deeper worldwide recession in future this will be the true test of sustainability as a core value.
I work as Sustainable Development and Social Impact Assessment Adviser in Shell Nigeria, part of my job is SD integration in projects from Identify Phase(via NTR workshops). This is the best guidance note I have read concerning what I do and how our team is striving to ensure that impacts are designed out and so we can focus on residual risks. This interview is insighful, educative and has encouraged me personally in my day to day work. Thank you Mavin