Sustainable Development of Shell Corporation - Case Study Example

Sustainable Development of Shell Corporation Abstract This paper is a 10 page paper that evaluates Shells performance as a sustainable corporation. It discusses concepts needed to evaluate the company, sustainability, environmental management systems and environmental performance measures. It then looks at how Shell is doing and compares it to a competitor. Bringing the reader to conclusion that Shell is actively working to be an environmentally friendly company, looking to provide products and services well into the future. INTRODUCTION Most countries have regulatory laws on the book designed to protect the environment that industries need to comply with. In the United States, the Environmental Protection Agency (EPA) is in charge of making sure industry is compliant with standards set into law. On the worldwide scale some developing countries do not have any guidelines, where as European Union and the United Kingdom do. European Union is responsible for a host of regulations that reduce greenhouse gas emission, preserve bio diversity, protect water supply and impose stiff fines for non compliance. The United Kingdom also has its own sets of rules and regulations, also enforced by fines for non-compliance. The International Standards Organization (ISO) has developed ISO 14000 and particularly ISO 14001 pertains to development and reporting sustainability of a company. ISO 14001 is a voluntary guideline that is compatible with the EU environmental management auditing standard (EMAS). This is one complexity that faces all companies that are trying to develop environmental sustainability. Developing a company that is both environmentally friendly and sustainable is the trend of the times in which the world finds itself these days. Shell is a worldwide company that has accepted this challenge of sustainability and reducing its impact on environments in which it operates. Herein is a brief overview of environmental management systems and environmental performance measure that make up a sustainable company. Thereafter evaluations of which systems have Shell put in to place, followed by a comparison of Shell with one of its competitor’s programs to evaluate how well Shell is in becoming an environmentally friendly and sustainable company. First there will be a discussion of sustainable development, environmental management systems (EMSs) and environmental policy management (EPMs). Sustainable Development What is sustainable development? Sustainable development refers to using resources in such a way that fulfill our human needs today as well as save the environment from detrimental impacts caused by our actions. Corporate sustainability is a term coined to evaluate a corporation’s responsibility to efficiently use its ecological capital. It also includes measures that should be taken to replenish some of the ecological capital that is being utilized by the organization in order to benefit the environment and future generations (Young, 2000). If a company is depleting natural resources without replenishing, it is hampering the chance of the future generation ability to use that natural resource. Natural resources all over the world are limited and their stock is depleting. Hence, it is the prime responsibility of organizations today to practice corporate sustainability in order to benefit themselves and their future generations (Lester, 1992). In order for a company to have sustainability it has to incorporate the 5 Rs into its natural resource management. The 5 Rs are reduce, reuse, reclaim, recycle and replace. These also have implications across the life cycle of products and services that industry provides. Environmental performance measures are means of evaluating how well a company is performing in a wide range of indicators throughout the production process. Environmental Performance Measures What are environmental performance measures (EPMs)? EPMs are a method of evaluating a company’s performance as it relates to environmental management systems (EMSs). Measuring the reduction of released by a company, would an EPM. It is a quantitative value of progress in following a policy implemented under and EMS. Many companies utilize just one aspect of impact or a portion of indicators to evaluate their performance. Bennett and James (1998) developed a diamond that considers the environmental impact from suppliers through consumer. Indicators would consider impact of the company in terms of energy, materials, waste, and emissions. Reducing consumption of raw materials, energy, reducing waste, eliminating emissions would be indicators that could be used to measure a company’s performance. Environment Management Systems: An environmental management system (EMS) is a process through which a company becomes aware of its impact on the environment. Figure 1 demonstrates the cyclic nature of planning implementing, reviewing and modifying policies. Some of the key elements of an environmental management system include a policy statement outlining the dedication of the organization to the environment and then outlining the various areas of environment affected significantly. After identification comes development of sound objectives and policies that serve as the environmental goals; training of the concerned personnel and staff, and finally a review to access the success of the system completes one cycle. (Rugman, 2001) When an EMS is implemented into corporations there are four models that demonstrate the level of integration of the EMS into the corporations. (Tinsley2002) Figure 2 provides a chart of these and relative level of corporate integration. EMS model Operational profile Level of integration Devoid No EMS or just Starting to develop Low or none Isolated Has accredited EMS, but is functioning in only one area of the company Low or moderate depends on size of company Devolved Has accredited EMS, One MGR is key in doing all the tasks involved with it. Moderate, but looses expertise in environmental issues Integrated Has accredited EMS that functions through all areas of the company (HSE) High, fully functioning and documentable results are available The questions for the rest of this paper will be how well Shell utilizes EMS and EPM? To begin the discussion of Shell, an evaluation of the EMS and EPM used by Shell will be presented. Shell Sustainability: Shell boasts of being environmentally sustainable throughout the processes that take place in its organization. They believe in a positive contribution towards environment and society, which are two major elements of the sustainable development system. According the global website, they have also won the 2009 Business Week Greener China Award that was presented to them in light of their environmentally friendly practices in China. There are major elements of environment and society on which Shell is focusing. Their major environmental emphasis is climatic change, biodiversity, product stewardship, cleaner air and reducing water usage. According to the corporate website, the organization has been contributing to sustainable development and considers it an important part of its business philosophy. They believe that their core values inculcate sustainable development throughout the work processes, its people and its organization. Their aim is to meet the growing needs for energy with the help of local communicates, making sure that the negative impact of their operations is minimized as much as possible. There has been adequate disclosure regarding their environmental friendly practices; with the help of performance measure indicators, sustainability reports and outside auditing of reports. (Martin, 2000) They also measure their efforts against various indicators and benchmarks which have been set by the industry. Work safety for their employees is also their top priority. Their aim is to develop a safe working environment where there are zero fatalities and minimum number of incidents as they value their human resources more than anything. This overall strategy has been employed by Shell throughout the world. How did they achieve such accolades? Shell employs basic health, safety and environment standards throughout its operations in the world, called the Health, Safety and Environment Management system. It has been developed to provide a systematic approach to ensure that the organization complies with various laws and regulations of the countries it operates in, to demonstrate that all the hazards that have been outlined by the managers and reports are adequately managed and any issues relating to them are timely solved. It also ensures that they are continuously monitoring the environment and their work processes to achieve continuous improvement in their HSE performance. Figure 3 provides an insight into Shell Canada Limited process for their HSE environmental management system. Figure 3 Shell Canada Limited, 2004, Used without permission from Shell This management structure that the company follows is based on the ISO structured framework of planning, doing, checking and providing feedback to the concerned personnel for continuous improvement. Performance measures against their environmental sustainability standards are also monitored. Shell is successfully employing the environmental management framework in all its operations. When it comes to greenhouse gas emissions, the company is continuously re-visiting their current strategies and improving on older ones. There has been a significant decline in the green house gas emissions from 2004 to 2009. When it comes to spills, there are systems that have been put into place that are decreasing their spill with each passing year. Shell is working in public-private partnerships to decrease the emissions and carbon dioxide emissions from their emissions. Shell, basically being a producer of petroleum, is continuously striving through research and development to improve efficiencies and mitigate carbon dioxide emissions from their operations (Petroleum Review, 2008). Shell is currently employing water renewal activities by providing the used water for other industries that may be able to use it for their operations rather than disposing of used water. Resource Savings and Shell: Resource savings basically means the development of efficient systems in such a way that the output doesn’t decrease; however, the number of resources that are being put into a system are decreased in order to conserve those precious resources from depleting. In the petroleum industry, resource savings is of instrumental importance and the petroleum reserves all over the world are being used reverently for our energy needs and requirements. If they are used in such a fashion for another decade we would be facing severe issues related to petroleum reserves depletion. Shell has been the pioneer in starting the movement of resource conservation in the petroleum industry and including it in their core strategy. When it comes to resource savings, there are a number of initiatives that they have taken, throughout their systems, to monitor and review the techniques that they are using, and the ways and means through which they can create energy efficient systems that helps them to conserve the resources that they are using for production (Shell, 2010). Shell Employs the 5 Rs The 5 Rs should apply to Shell if they are truly moving towards being a sustainable company. Looking first at the supply chain they reduce reliance of natural gas and oil by working to develop new sources to meet future energy needs. Shell uses bio fuels and bio fuel blends to reduce reliance on crude oil. Bio fuels also burn cleaner thus reducing the footprint of the vehicles that run it. Shell strives to reduce pollutants emitted from factories and corporate office sight. For instance, Shells new office facility in the Netherlands has a near zero carbon footprint. They are also reducing the emission from all their facilities by looking for cleaner greener means of meeting power needs. They work to reduce flaring, a burning of oil as it is extracted from the ground. Shell also has worked to reduce spills of oil and gas that are within their control. In operation they work to reduce their impact on the environment. Shell employs capture, contain and store methods for reducing CO2 released into the air. Where Shell removes oil sand to use as a source of oil, Shell returns the used sand to its original place, lessening the environmental impact on biodiversity and natural setting. They reclaim used water to ship to other companies so that the waste water is reused. Shell uses recyclable plastics for its petrochemical products. As a company they practice recycling of as materials as possible. In marketing the tout themselves as a green company that is environmentally conscientious. Shell employs marketing that focuses on their initiatives for making the world a cleaner and greener place. Their adds show how recycling of water is useful, how they reduce emission by employing carbon capture and storage (CCS). Shell shows their concern for safety of their workers and the world around them in ever external and internal communication. Shell web site is full of information on how they care for and protect the health and safety of employees and the environment. So is Shell really leaps and bounds ahead of the rest? Shell vs. BP Every year Shell releases a sustainability report. Within the report there is evidence that Shell is actively taking steps to be a sustainable company. Shell also invites an outside team to audit its sustainability report. This is a crucial step in compliance with EMAS and ISO 14001. Since BP another global producer of petroleum products also releases a sustainability report, it would make sense to compare the results of both companies. This will provide evidence that Shell is the best at being sustainable or it will refute it claim to fame. Within the reports there are some similarities that make comparison here fairly clear and simply. For instance both companies provide a section that shows their emission of gasses released into the air. Shell BP 2009 2008 2007 2009 2008 2007 64 72 79 70 66.2 69.9 Million Tonnes (Mte) 123 126 119 220 210 200 Thousand Tonnes (Kte) GHG 67 75 82 65 61.4 63.5 Million Tonnes (Mte) Figure 4 Emissions of Carbon Dioxide, Methane and Greenhouse gasses (taken from SR 2009 of both companies) Since there is no standard of reporting, one can only assume that these figures are comparable. Two BP breaks up emission into categories, which are combined for total emissions here. BP reports their methane emissions in Mte, but Shell in Kte, so the BP numbers had to be converted to Kte to show comparable data. Both companies seem fluctuations from year to year, though it appears that Shell has reduces emission of and greenhouse gasses steadily over the past three years. Both companies do face the same issues in respect operations. They have to figure out how to meet the increasing demand for oil and gas while lessening their impact on the environment. Both companies spend a lot on research and development to find new means of supplying the public while meeting local laws on environment protection. Alternatives to crude oil used by both companies are oil sand and oil shale. Both have invested in bio fuel research and bio fuel blends to stretch gasoline used from crude oil. The reality for both companies is that when the underground supply of crude oil is gone it will be billions of years before there is more. This also holds true for natural gas. On the safety front, both companies are involved in off shore rigs. In 2009 both companies reported contractor fatalities; Shell 19, BP18. As for employee fatalities shell reported one while BP reported zero. Accidents will happen and both companies provide support and grief counseling for families of the fallen. BP is more in depth in reporting on days missed due to injuries or illnesses of employees. This is a difference caused again by the lack of standardized reporting guidelines. Both companies due have a fully integrated HSE environmental management systems in place. Overall the conclusion is that while both companies do a good job it appears that Shell may hold a slight advantage over BP. Is it significant enough to call them well ahead of the competition? Conclusion: In the light of thorough discussion and evaluation, Shell is seen to be successfully implementing the strategies of sustainable development through the major processes of its organization. A proper analysis of their environment management systems and environmental performance measures as reported and audited, reveals that they are following the guidelines set by the ISO 14001 and the frameworks provided by the EMS throughout their organization. Shell has had success in reduction of most of the measurable results from their environmental management systems. Having a fully integrated EMS that involves health, safety, and environment is a substantial change to previous policy. Now after nearly a decade of perfecting their EMS and evaluating their sustainability with effective means of measuring results they have established themselves as a leader in innovative operations and techniques. Their sustainability reports have shown this to be true. They continue to have their sustainability reports audited by outsider. It is this audit that continues to challenge them to work towards improving their operations and products. Has Shell done all that it could do? Most likely not, but as a company that prides themselves in successes rather than failures the will continue to accept the challenges and develop better and better ways of reducing their impact on the planets fragile eco systems, on the air we breathe, and the products we use and consume all the while providing a work environment that is safe. References BP Sustainability Report 2009 (2010) BP.com, Retrieved July 3, 2010 from: http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/e_s_assets/e_s_assets_2009/downloads_pdfs/bp_sustainability_review_2009.pdf Brown, L., Flavin, C., Postel, S. (1992) Saving the planet: how to shape an environmentally sustainable global economy. Earthscan. Environmental Management System (2010), BSDGlobal.com Retrieved April 27, 2910 from: http://www.bsdglobal.com/tools/systems_ems.asp Environment and Society (2010), Shell.com, Retrieved April 27, 2010 from: http://www.shell.com/home/content/environment_society/ Environmental Management System (2010), BSDGlobal.com, Retrieved April 27, 2910 from: http://www.bsdglobal.com/tools/systems_ems.asp Lovins, A. B., L. H. Lovins, et al. (1999). “A Road Map For Natural Capitalism.” Harvard Business Review: May-June. Martin, M. (2001). Implementing the Industrial Ecology Approach with Reverse Logistics. Greener Manufacturing and Operations. Sheffield, Greenleaf Publishing Limited Porter, ME and Reinhardt, FL (2007) “A Strategic Approach to Climate “Harvard Business Review October 2007. Revell, A and Blackburn, R (2007) The Business Case for Sustainability? An Examination of Small firms in the UK’s Construction and Restaurant Sectors Corporate Social Responsibility and Environmental Management Rugman, A. (2000). The End of Globalization. London, Random House. 338.88 RUG. A penetrating critique of "green" strategy in chapter on social actors. Contrasts well with Korten's work. Shell Sustainability Report (2010), Shell.com Retrieved July 2, 2010 from: http://sustainabilityreport.shell.com/2009/servicepages/downloads/files/all_shell_sr09.pdf Shell Q1 profits soars on oil price, output growth (2010) Rueters.com, Retrieved April 27, 2010 from: http://uk.reuters.com/article/idUKTRE63R0JY20100428 Shell’s major competitors (2010) Hovers.com, Retrived April 27, 2010 from: http://www.hoovers.com/free/co/burn.xhtml?ID=50019 Tinsley, S., (2002), EMS models for Business Strategy Development; Business strategy& the Environment; 376-383 Retrieved July 3, 2010 from: http://ehis.ebscohost.com/ehost/detail?vid=8&hid=115&sid=e76db5f2-ecd2-42ce-8741-7591fa788b0d%40sessionmgr114&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=8533178 Young, R. R. (2000). “Managing residual disposition: Achieving economy, environmental responsibility, and competitive advantage using the supply chain framework.” Journal of Supply Chain Management: Winter Bibliography Fussler, C. and P. James (1996). Driving Eco-Innovation: A Breakthrough Discipline for innovation and sustainability. London, Pitman. Roberts, P (1995). Environmentally Sustainable Business: A local and regional perspective. P Chapman. Welford, R. et al (1996) Corporate Environment Management. University Press India. Shell.com. (2010) Corporate Website. Available from www.shell.com Reflective Statement The problems that I had with the first submission of the assignment were lack of development of theory. Also I had difficulty in application of theory in evaluation in evaluation of the Company’s policy and measures of its environmental activity. I failed to recognize that what were the issues that Shell faces in protecting the environment. In rewriting this paper I have tried to more fully develop the theory application to the paper to demonstrate an understanding of the concepts presented over the time spent in class. I better present an example of Shell’s policies and the outcome of reducing its impact on the environment. I chose to make direct comparisons between Shell and BP, another large multinational oil producer. I better substantiate the position that Shell is a leader in the process of EMS and EPM. This is accomplished during the direct comparison between the companies. I expanded the introduction by providing a brief explanation of theories. I discuss concepts in sustainability, EMS and EPM. I relate the 5 Rs to steps that are being taken with Shell at the supply chain, operational and marketing. I do hopefully to better demonstrate understanding of theory and how Shell applies it to their environmental policies. By making these changes and more closely following criticism from the first paper to improve the presentation, clarify my understanding and better demonstrate and support my conclusions, I hopefully will succeed with this paper. By demonstrating the key aspects of what shell’s policy does, how it is measured and evaluated, and finally demonstrates that Shell is successful in all areas of its policy on the environment. Overall this has been a difficult challenge and I have learned a lot through the process of writing this paper. Shell Paper Outline Introduction A. General opening B. Sustainability C. Environmental Performance Measures D. Environmental Management System Shell Sustainability A. Shells policies towards sustainability B. 5 Rs as they apply to Shell’s Supply Chain, Operation and Marketing Shell vs. BP A. Emissions from 2009 sustainability reports compared B. Safety compared C. Demonstrates Shell hold a slight advantage over BP in becoming a sustainable company, which is environmentally friendly. Conclusion A. Still room for improvement. B. Shell’s plan is fully integrated C. Shell uses audit of sustainability reports to make further improvement to their policy Read More