Introducing Sustainability into your Business Plan

Abstract

The Royal Dutch Shell Group's 1997 policy on Health, Safety and Environment included a commitment to sustainable development. Since then there has been a struggle to grasp the concept and to identify areas in which our inherently unsustainable business can make its mark. Shell has interpreted the Brundtland Commission's definition of sustainable development in terms of three fundamental pillars: economic growth, environmental conservation and societal gain. This paper follows ‘Shell in Egypt’s journey from making the commitment, through a phase of ad hoc contributions, and to a stage where sustainability is managed as any other business item. The ultimate aim of the paper is to demonstrate how sustainability will be introduced into the corporate business plan, as a measurable item against which we can measure our performance, be audited and benchmark. Also to offer ideas as to how this can be achieved in other companies. Introduction A sustainable development is defined by the Brundtland commission (Earth Summit, 1992) as a development that "meets the needs of the present without jeopardizing the ability of future generations to meet their own needs". The Royal Dutch / Shell Group of companies made a commitment in 1997 to try to meet both present and future needs by conducting its business in a way that is inherently sustainable. We believe that the needs of the present and the future can best be met by serving three main focus areas: capacity building, economic growth and environmental conservation. As such, there will be reference to the "three pillars" of sustainability in this paper: society, economy and environment. One might ask how did this philosophy evolve? It has taken us about two decades to fully integrate environmental issues into decision making and business planning. Today industry and the general public has come to expect environmental conservation of us - but not as a minimum; the minimum now includes community aspects as well. It is widely agreed that industry must engage the community that is directly or indirectly affected by a business. We must behave as good corporate citizens, participating, teaching and assisting the community wherever we can. Unfortunately this does not take into account that business must make money. Sustainable development is different. It demands both environmental conservation and capacity building, while still allowing a company to run its business profitably, and - in the longer run - add to the wealth of the hosting country's economy. In fact companies that behave sustainably have been shown to be better performers. The Dow Jones industrial average now features a new index, measuring sustainability (www.indexes.dowjones.com). The index measures companies on a series of sustainability indicators and ranks their performance on the stock market. It demonstrates that companies outperform the competition by almost 5% for 1% extra risk taken to achieve sustainability (referred to as the compatibility of returns). Moreover, there is a trend among private and institutional investors towards "ethical investment' meaning favouring companies that pay due attention to the community and environment. Although the criteria used by the Dow Jones index to measure sustainability are not quite those used by the Shell Group, the principle still stands. That principle is that sustainability is becoming an investible concept, and one who's practice is being broadly adopted to gain a corporate advantage.