It is heartening to come across companies and leaders that are actively engaged in applying systems thinking; it is even more heartening to hear both positive results and frank observations. A recent interview with Marvin Odum, the president of Shell Oil Co. (the US subsidiary of Royal Dutch Shell) in MIT’s Sloan Management Review demonstrated an applied systemic view of the company and the industry and the landscape in which it must operate.
Royal Dutch Shell has long been famous for its use of scenario planning, a process that helps the company consider how different variables will affect possible futures, and how it can reduce risk and increase resilience. Here are some of the actions Odum says the company is taking to incorporate sustainability into its decision-making processes:
- Going beyond technical challenges: Focusing on solutions for the technical and operational aspects of a project is no longer enough. Odum describes the effect of the “non-technical” aspects of an energy project – essentially the needs of the affected communities and stakeholders:
“The timelines of these projects now is largely driven by those social performance and sustainable development issues, as opposed to the technical and other commercial issues.”
Stakeholder engagement is essential to a successful new energy project, but it has the consequence of extending the
timelines – inclusion, collaboration and compromise take time and effort.
- Going beyond the company walls: Preparing for the future might mean advocating for sustainability across your entire sector because an event that happens to one company affects the public’s perception of the entire industry.
“As Shell starts to take a very large position in natural gas in North America, the question I ask myself leading this business is not what is Shell going to do in terms of our own performance, but how do we set baseline performance and regulatory standards in this business so it becomes attractive to everybody involved and we secure that critical license to operate?”
- Going beyond the experts in the room: In the past, businesses have quantified their benefit to the community in terms of economic impact, such as job and infrastructure creation. More businesses now realize that the involvement of all stakeholders in a potential project is not just a nice thing to do, it is the best way to generate the most effective options for action. Odum mentions the advantages of working with Alaskan natives, particularly indigenous peoples, who have long-term memory of their environment:
“We’ve studied Arctic ice for years. But what we hadn’t done as much as we do now is work with indigenous people who have lived in that ice for millennia. They have what they would call traditional knowledge about how this ice changes over decades and centuries, and they have deep knowledge about what you have to really be prepared for.”
Engaging all internal stakeholders is also key. According to Odum, sustainability was a major driver in Shell’s 2009 reorganization, to get sustainability out into the project teams across the company. Employees are “beginning to understand that this [sustainability] is not an add-on that strips away profitability because it lengthens timeline and adds cost, but that it’s simply not possible to have a successful project if you don’t do this right.”
- Moving sustainability to the core: Shell’s management seems to understand that sustainability is not an afterthought or a public relations campaign. As Odum says, it’s not even enough for sustainability to be a priority; it must become a core value:
“Priorities change with conditions, they change with financial performance and maybe the economy. Core values don’t.”
How does your company’s performance affect your customers, stakeholders and industry peers? What methods are most effective for promoting sustainability internally and externally?