Shell publishes first sustainability report

Oil group aims for fully integrated management systems by 2002, pulls out of US climate lobby

Royal Dutch/Shell, the world's largest oil company, yesterday sought to redefine itself as a company committed to sustainable development and high ethical standards. The initiative follows several years of controversy over alleged human rights violations in Nigeria, its attempt to dump the Brent Spar oil storage buoy at sea and its stance on climate change.

In the first of a new annual series of reports, Shell reviewed its performance against nine business principles intended to encapsulate the "triple bottom line" of financial, social and environmental factors that underpin the idea of sustainable development. Shell Chairman Cor Herkströter said he wanted the principles to "reach into the very heart of our corporate culture and pulse through the entire organisation, in every corner of the world".

In a sign of changing times, Mark Moody-Stuart of Shell Transport and Trading told journalists in London yesterday that the group's US arm was pulling out of the Global Climate Coalition (GCC) - a powerful industry lobby group which has opposed international moves to cut greenhouse gas emissions. Mr Moody-Stuart said there was a "fundamental difference of opinion" with other GCC members over ratification of last December's Kyoto climate change agreement.

Shell has been strongly criticised by environmental groups for supporting the Kyoto deal while remaining a member of the GCC. Greenpeace yesterday welcomed the company's move.

In its sustainability report, Shell acknowledges that "curbing the use of fossil fuels has obvious business implications" for the company. However, it claims that existing oil and gas reserves could be consumed "without raising atmospheric carbon concentrations above the limits suggested by even the most pessimistic observers".

The report raises key questions about the role of multinational companies in a rapidly evolving society. It invites readers to "tell Shell" what its policy should be on several sensitive issues, including bribery, forcing contractors to accept its business principles and whether Shell should operate in poorer countries that apply lower environmental standards than are considered acceptable in the developed world.

Shell presents a "road map" of how it intends to absorb sustainable development principles into its operations. By the end of 1999, all Shell companies must put in place formal health, safety and environmental management systems. By 2002, it aims to fully integrate its financial, environmental and social responsibility management systems and publish externally verified performance reports.

Commenting in the report, John Elkington of consultancy SustainAbility, said that he had previously felt senior Shell executives to be "in denial," but that there was now a "widespread recognition" that the company must perform against sustainable development standards.

Follow Up:
Shell, tel: +44 171 934 1234. References: "Profits and Principles - does there have to be a choice?"

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