<<

. 11
( 32 .)



>>

listed among the 250 largest corporations in the world reported on
corporate responsibility issues, which represented a significant
increase from 58 per cent to 80 per cent between 2002 and 2005
(KPMG 2005).
Steps have also been taken to create common environmental
reporting standards tailored to the needs of the oil and gas sector.
In 2005, the International Petroleum Industry Environmental
Conservation Association (an organisation representing oil compa-
nies and associations from around the world) and the American
Petroleum Institute (a trade association representing oil companies
in the United States) issued the ˜Oil and Gas Industry Guidance on
Voluntary Sustainability Reporting™. The guidance includes six core
environmental performance indicators and nine supplementary
The environmental challenge 69
*




indicators, in addition to health and safety, social and economic
indicators. For each environmental indicator, a specific guideline
and a unit of measurement (e.g., gigajoules for energy use) is provided.
The 2005 Oil and Gas Guidance is not as comprehensive as the
reporting guidelines of the Global Reporting Initiative (GRI), which
comprise seventeen core environmental indicators and thirteen sup-
plementary indicators (see Table 4.3 for a comparison). However,
while the GRI provides generic indicators suitable for any type of
industry, the Oil and Gas Guidance is much more specific to the oil
and gas sector and comprises indicators including ˜hydrocarbon spills™
and ˜flared and vented gas™. The 2005 Guidance is thus more useful for
addressing the specific industry context. Before the Guidance was
created, a World Bank staff member interviewed by the author in
Washington, DC in 2004 commented: ˜The oil and gas companies
would benefit from a more robust system [of social and environmental
industry standards] that™s relevant to them.™
The author of this book has analysed recent social and environ-
mental reports published by twenty oil and gas companies to ascertain
the use of the ˜core™ environmental indicators from the 2005 Oil and
Gas Guidance in practice. The analysis covered the reports of ten
Western multinational companies (Shell, BP, Chevron, Exxon,
Statoil, Norsk Hydro, Total, ENI, Repsol and OMV) and ten multi-
national companies from emerging markets (China National
Offshore Oil Corporation/CNOOC, China Petroleum & Chemical
Corporation/Sinopec, Lukoil, Gazprom, MOL, Petrobras, Petronas,
PKN Orlen, PTT and Sasol).1 The results are summarised in
Table 4.4. ˜Reported™ information means that the exact figures or
data has been provided by the company. ˜Limited™ information means
that either no exact figures or no precise information has been
provided (e.g., related information, a graph without a specific figure


The 2006 data were used for 18 companies. As a result of the unavailability of the
1

2006 report, 2005 data were used for CNOOC and 2007 data for Petronas.
70 Beyond Corporate Social Responsibility
*




table 4.3: Comparison of environmental performance indicators

2005 Oil GRI
Category Indicator Guidance Guidelines
Water Freshwater use Additional
Total water withdrawal Core
Water sources affected by withdrawal Additional
Recycled and reused water Additional
Spills/ Hydrocarbon spills to the environment Core
discharges
Discharges to water Core Core
Water/habitats affected by discharges Additional
to water
Other spills and accidental releases Additional Core
Other effluent discharges Additional
Waste Total waste Core
Hazardous waste Additional Additional
Non-hazardous waste Additional
Materials Materials used Core
Recycled, reused or reclaimed materials Additional Core
Emissions Greenhouse gas emissions Core Core
Indirect greenhouse gas emissions Core
Initiatives to reduce greenhouse gas Additional
emissions
Emissions of Ozone-Depleting Core
Substances
Other operational air emissions Additional Core
Flared and vented gas Core
Resource use Primary energy use Core Core
Indirect energy consumption Core
Reductions in indirect energy Additional
consumption
Energy savings from conservation and Additional
efficiency improvements
New and renewable energy resources Additional Additional
Biodiversity Location and size of land with high Core
biodiversity value
Description of impact of activities Core
Habitats protected or restored Additional
The environmental challenge 71
*




table 4.3: (cont.)

2005 Oil GRI
Category Indicator Guidance Guidelines
Initiatives for managing biodiversity Additional Additional
Protected species with habitats in areas Additional
affected by operations
Products Mitigation of environmental impacts Core
and of products and services
services
Reclaimed products and packaging Core
materials
Other Fines for non-compliance with Core
indicators environmental laws and regulations
Environmental impact of transport Additional
Environmental protection Additional
expenditures
Environmental management systems Core
Sources: www.oilandgasreporting.com and www.globalreporting.org (accessed
25 February 2008).




for effluents or no precise information on the application of the ISO
14001 standard).
The analysis of environmental reporting suggests that it is still not
possible to systematically compare the environmental performance of
different multinational oil companies, even using the main recom-
mended indicators. The 2005 Oil and Gas Guidance is not followed
across the sector and there is sometimes a lack of clarity with regard to
which standards are actually used by companies. A number of com-
panies such as South Africa™s Sasol make explicit use of the reporting
guidelines of the Global Reporting Initiative, not the 2005 Oil and
Gas Guidance.
The most regularly reported environmental indicator is the total
greenhouse gas emissions, and it is possible to compare company
performance on greenhouse gas emissions across the sector.
table 4.4: Core environmental indicators reported by selected oil companies in 2006

Core environmental indicators
Hydrocarbon Discharges Greenhouse Environmental
Company Country spills to water emissions Flared gas Energy use management systems
BP UK REPORTED REPORTED REPORTED REPORTED REPORTED REPORTED
Shell UK LIMITED LIMITED REPORTED REPORTED LIMITED LIMITED
Chevron USA REPORTED LIMITED REPORTED REPORTED
REPORTED “
Exxon USA REPORTED REPORTED REPORTED REPORTED REPORTED LIMITED
Statoil Norway LIMITED LIMITED LIMITED REPORTED REPORTED “
Norsk Hydro Norway LIMITED LIMITED REPORTED LIMITED REPORTED “
Total France REPORTED REPORTED REPORTED REPORTED REPORTED LIMITED
ENI Italy REPORTED LIMITED LIMITED LIMITED REPORTED REPORTED
Repsol Spain REPORTED REPORTED
REPORTED REPORTED REPORTED “
OMV Austria LIMITED REPORTED LIMITED
REPORTED REPORTED “
Core environmental indicators
Hydrocarbon Discharges Greenhouse Environmental
Company Country spills to water emissions Flared gas Energy use management systems
CNOOC* China LIMITED LIMITED
“ “ “ “
Sinopec China LIMITED LIMITED LIMITED LIMITED LIMITED

Lukoil Russia LIMITED LIMITED
“ “ “ “
Gazprom Russia LIMITED LIMITED
“ REPORTED “ “
MOL Hungary LIMITED REPORTED LIMITED
REPORTED REPORTED “
Petrobras Brazil LIMITED REPORTED LIMITED REPORTED REPORTED

Malaysia REPORTED
Petronas** “ “ “ “ “
PKN Orlen Poland LIMITED
“ “ “ “ “
PTT Thailand LIMITED LIMITED LIMITED
REPORTED “ “
Sasol LIMITED REPORTED LIMITED
South Africa “ REPORTED “
Notes: * 2005 data were used for CNOOC because of the unavailability of the 2006 report.
** 2007 data were used for Petronas because of the unavailability of the 2006 report.
74 Beyond Corporate Social Responsibility
*




However, the widespread reporting on greenhouse gas emissions is
rather exceptional and is related to rising environmental concerns
over global climate change. With regard to other environmental
indicators such as ˜flared gas™, it is difficult to make comparisons across
the sector.
BP, Exxon and Total appear to follow the 2005 Oil and Gas
Guidance most closely, although other companies also provide a
substantial quantity of data; for instance, Shell fails to provide exact
figures on discharges to water, but the company provides annual
figures on hazardous waste and freshwater use. One can also see
continued improvements in environmental reporting; for instance,
Chevron began to collect data on water and waste performance in
2006, which the company had previously not collected at the corpo-
rate level.
With regard to emerging market companies, there are huge differ-
ences in environmental reporting and environmental practices
between different companies. Brazil™s Petrobras, South Africa™s
Sasol and Hungary™s MOL have particularly sophisticated reporting
mechanisms and sophisticated environmental management systems.
In contrast, the Chinese oil company CNOOC and the Malaysian oil
company Petronas not only have underdeveloped reporting mecha-
nisms but also do not seem to address a number of important environ-
mental issues in their operations.
In general, emerging market companies have less developed envi-
ronmental reporting, and even the best performers lack clear, uniform
reporting standards. None the less, one needs to remember that the
annual reporting of environmental data and the 2005 Oil and Gas
Guidance are relatively new and companies continue to make
improvements to their standards of reporting. Most importantly, the
recent developments in environmental reporting allow us to see
some areas where oil companies have made environmental improve-
ments and a number of areas where they have so far failed to make
improvements.
The environmental challenge 75
*




Obviously, environmental reporting is merely a means to an end,
with the end being improved environmental practices. The reports
allow us to trace performance over time and they provide evidence
that oil companies have made some improvements in their environ-
mental performance over the years. For instance, Shell has reported a
decrease in the volume of oil spills from 19.3 to 5.7 thousand tonnes
between 1997 and 2006 (a 70 per cent decline), while Chevron has
reported a decrease in the volume of oil spills from 54,696 to 6,099
barrels between 2002 and 2006 (a decline of almost 90 per cent).
A crucial area of recent environmental concern has been green-
house gas emissions and their contribution to global warming. An
important contributor to carbon dioxide emissions has been the
flaring of associated gas during oil-production activities in developing
economies, and some oil companies have made major progress on
reducing gas flaring. For instance, Mexico™s Pemex is said to have
reduced flared gas from 6,821 to 3,586 million cubic metres between
1998 and 2001 (World Bank 2004), while Shell planned to reduce gas
flaring from its operations in Nigeria to 15 per cent of the total
associated gas produced by about 2010, from a level of 65 per cent in
1997 (Shell Nigeria 2007; Frynas 2000, 164). Shell reportedly reduced
its total greenhouse gas emissions from 109 to 98 million tonnes of
carbon dioxide equivalent in the period 1997“2006, while BP™s total
greenhouse gas emissions have decreased from 82.4 to 64.6 million
tonnes of carbon dioxide equivalent between 2002 and 2006.
Another important indicator of environmental performance is the
number of oil spills above one barrel of oil (159 litres). The incidence
of oil spills is not strictly comparable year-by-year because it can be
affected by levels of production and by natural disasters (e.g., hurri-
canes in 2005), and the volume of oil spills in a given year can be
affected by a particularly big oil spill. None the less, the 2002“6
comparison of oil spill data suggests that companies are progressively
reducing the number of oil spills. Of the four big oil majors, BP, Exxon
and Chevron have reduced the number of oil spills; Shell did not
76 Beyond Corporate Social Responsibility
*



<<

. 11
( 32 .)



>>