For the fourth consecutive year, Shell is the world’s best oil company in sustainability, social responsibility (CSR), corporate governance, ethics, and transparency, according to the fourth annual oil and gas rankings of Management & Excellence, based in Madrid.
The annual M&E rankings measure oil and gas companies’ compliance with 386 relevant international standards, including US and other national laws, including those of the US Securities and Exchange Commission and the latest requirements of the Sarbanes-Oxley Act. The rankings also take into account the Dow Jones Sustainability Index and other standards and industry benchmarks such as Global Compact, Millennium Goals, and reserves accounting - to name just a few - and are customized to the oil and gas industry.
The comprehensive M&E study covers more than 5,000 sets of compliance data and 386 accepted standards for oil and gas companies (374 for service companies).
Oil service companies are now facing increasingly tough ethical standards imposed by their clients and the market, and this year’s report includes the first in-depth assessment and ranking of the three leading global service providers in the petroleum industry.
As new pipelines (e.g. Petrobras’ Brazil-Bolivia pipeline) and higher volumes of petroleum products need to be refined and transported, companies have been increasing social investments (e.g. Shell is up over 20% annually) as one way of producing good will and thus hedging increased risks in the case of damaging accidents and incidents.
Employee training and HSE standards have driven accidents and fatalities down in the past year. In addition, corruption has dropped at Shell, which fired numerous employees over a bribery affair in Nigeria.
France’s Total improved the most over the past year (up 10% from 2006), followed by ENI and Petrobras, while Shell inched up 1.15%. Shell, which operates in 76 countries, has such a huge profile that it is difficult to improve broadly.
Companies such as Brazil’s Petrobras, with refining operations in only a few countries, can concentrate its community and sustainability efforts and thus excel more easily than a company with a larger profile.
UK-based BP fell to fourth place in the rankings due mainly to its Texas City refinery accident and the Baker Report.
A few conclusions from the 2007 study:
- Truly big companies cannot improve their sustainability performance as quickly as national or regional players;
- CSR programs are becoming more strategic, result-oriented, and more expensive to compensate for a growing risk level due to high volumes of production and transportation;
- Despite high levels of sustainability and environmental performance, only 2 companies are widely held in SRI funds;
- Corruption is declining as ethical policies get tougher;
- Global companies cannot advance as quickly as large national and regional players; and
- Companies are training their employees in ethics and social responsibility as well as in technical areas.
As previously stated, the 2007 M&E study includes an assessment of the leading oil and gas service and supply companies - Schlumberger, Halliburton, and Baker Hughes. All excel at corporate governance and financials, says the M&E report, but only the top two, Schlumberger and Halliburton, perform in human resources, sustainability initiatives, and community programs.
Service companies generally underperform compared with oil and gas companies themselves, but their business is less risky because they don’t own land, refineries, and transportation systems. This reduces their need for the same dimension of sustainability programs.
The complete M&E study is marketed through the Oil & Gas Journal’s Online Research Center. For more information, go to www.management-rating.com or send your e-mail request to [email protected].
