Industry moves to chart social issues

Royal Dutch/Shell was the first major petroleum company to publish financial, health and safety, environmental, and social data in one report. Shell said financial and health and safety data are disclosed routinely and environmental disclosure is growing common, but there is no established method of benchmarking social performance (OGJ, May 4, 1998, p. 54). Since Shell's report, London-based environmental consultant Sustainability Ltd. has taken the first step towards "green" benchmarking

July 13, 1998

3 min read

David Knott
London
[email protected]

Royal Dutch/Shell was the first major petroleum company to publish financial, health and safety, environmental, and social data in one report.

Shell said financial and health and safety data are disclosed routinely and environmental disclosure is growing common, but there is no established method of benchmarking social performance (OGJ, May 4, 1998, p. 54).

Since Shell's report, London-based environmental consultant Sustainability Ltd. has taken the first step towards "green" benchmarking under a project funded by the United Nations Environmental Program.

This fall, Sustainability and UNEP will publish findings of a study of petroleum companies designed to: compare current levels of environmental disclosure; devise a "towards best practice" guide for environmental disclosure; and explore how social and human rights performance can be meaningfully measured and reported.

Shelly Fennell, director of Sustainability, said the project is at the halfway stage and will involve compiling data from more than 50 top exploration and production and refining companies.

Fennell said the information will come from all publicly available sources, not just company reports, but that there is a wide variation in levels of disclosure and willingness to reveal sensitive information.

Indicators

Helen Stibbard, research associate at Sustainability, said companies across all industries are trying to report environmental and social impacts.

"They are struggling with identifying indicators," said Stibbard, "and are interested in anyone else who is doing similar things. We have come up with a matrix of basic indicators that companies are actually reporting.

"We are finding that all the companies are using different assumptions and that social aspects are largely not indicated. So we are focusing on operational indicators to give an environmental footprint of the companies."

The indicators include energy, fresh water, and chemical inputs, and outputs of a wide range of substances, including oil spills, gas flaring, and emissions of volatile organic compounds, greenhouse gases, and a variety of chemicals.

Commitment

Fennell said the researchers hope to get opinions from companies on their definitions of the indicators and how much of their operations they cover.

"Some of the companies we have contacted want common standards," said Fennell, "but we suspect that others prefer to hide their impacts. It will be interesting to judge the quality of the responses, as these will indicate how serious the companies are about social and environmental disclosure."

Some companies, said Fennell, have been disappointed by a lack of response to their environmental reports to date. They see the comparisons in the study as at least some response to their efforts.

"We will include a table of how companies are disclosing information," said Fennell, "and while accessibility and format are important, we will be as objective as possible in looking at actual performance."

Among reasons cited for lack of disclosure are lack of standards and commercial sensitivity of some data: "We want to see a strong commitment to tracking these indicators, and we want to see what companies will commit to disclosing in the future."