Integrating Biodiversity Conservation into Oil and Gas ... - EBI

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2.1 ADDRESSING BIODIVERSITY AFFECTS PROJECT-SPECIFIC PERFORMANCE At the project-level, public concern about the loss of biodiversity is an issue that should be recognized as an important business risk, and a company’s timely response to this concern is a key factor in ensuring that projects are executed without problems or delay. Identifying and addressing potential biodiversity impacts in project ESIA, company or project EMS and stakeholder consultation can reduce the risk of delays, unexpected crisis management costs, conflicts with local communities or governments, confrontations with NGOs and even the threat of civil or criminal litigation. Minimizing these risks can increase the predictability of being able to fully and effectively carry out project plans and improve the economics of a project. A good reputation and positive relations with local people may also mean greater cooperation and understanding in case of future conflicts. 2.2 PERFORMANCE AFFECTS COMPANY REPUTATION Performance at the project level can affect a company’s corporate reputation. The value of a company’s reputation and leadership image is difficult to quantify, but nevertheless it plays an important role in a company’s competitive strategy. A recent study by Interbrand and Citibank estimated that intangible assets, such as brand, reputation and goodwill, account for two-thirds of the value of the FTSE 100 companies and 75 percent of the value of top U.S. companies. Increasingly, society is becoming more aware of and concerned about threats to biodiversity and societal expectations for good performance on this issue are growing. “Protecting and sustaining the vitality of the earth is an obligation shared by all that live on this planet. Natural resource based companies, so closely linked to the earth and her bounty, have the opportunity and the obligation to continuously reduce their impact on the earth. Those companies that lead the way by both employing good practices and investing in targeted conservation actions will be rewarded by customer appreciation and increased operating efficiencies.” – Peter Seligmann, Chairman and CEO Conservation International A company that is known for effectively preventing and mitigating biodiversity impacts at project sites, for having company management systems and policies that address biodiversity considerations, and for making positive contributions to conservation enhances its ability over time to develop a reputation as a good performer, attracting loyal customers and employees, and enhancing its brand image. Companies seen as leaders on social and environmental issues can benefit from positive public relations opportunities, better relationships with stakeholders, a “bank of goodwill” FIGURE 3. INTEGRATING BIODIVERSITY CONSIDERATIONS INTO COMPANY POLICY, OPERATIONS AND MANAGEMENT SYSTEMS: TWO POSSIBLE PATHS 17 Integrating Biodiversity Conservation into Oil and Gas Development
among the public and positive media coverage. Conversely, accumulated problems at project sites and publicity about conflicts with communities or NGOs can negatively affect a company’s image, leading to a reputation as an irresponsible operator. Citizens’ campaigns, lawsuits and other negative publicity may affect the viability of other projects. With increased access to global information technology, a community near a new or proposed project may cite poor performance elsewhere as a reason for opposing the new project. Boycotts, lawsuits or other negative publicity may also have an impact on a company’s market value. For example, in 1995, Shell’s plans to decommission its Brent Spar oil storage buoy by sinking it in the North Atlantic Ocean met with severe resistance from Greenpeace, which subsequently launched an international campaign against the company. Despite extensive research that indicated that sinking the buoy was the most ecologically sound disposal method available, a boycott led to a temporary decrease in Shell’s sales in some European countries. 2.3 REPUTATION AFFECTS ACCESS TO BUSINESS RESOURCES A company’s track record for performance on biodiversity – and other social and environmental issues – can in turn affect its global competitiveness, in terms of access to key business resources, including land, oil and gas resources, capital and labor. A company with a positive reputation for responsibly addressing and preventing biodiversity impacts may become a company of choice for governments, investors, business partners and employees. In contrast, not managing biodiversity properly can be a long-term constraint on business and limit opportunities for future activity. 2.3.1 Access to land and potential oil and gas resources Companies need to maintain broad access to concessions and potential oil and gas resources in order to capitalize on the best investments and opportunities for future business development. Being aware of the potential biodiversity value of an area can save time and money during the pre-bid process, as governments may subsequently choose to limit access to resources in an area identified as having high biodiversity value. If a government does allow access to an area of high biodiversity value, a company with proven experience and success in using technology and practices to minimize the impacts of its operations may be a more attractive option as an operator. Once a project has begun, good performance in relation to biodiversity will make it more likely that future expansion plans or project proposals in another part of the country will be approved. “At ChevronTexaco, Protecting People and the Environment is a core value. Our goal is to be admired worldwide for excellence in this area. We recognize biodiversity conservation is an important environmental and social concern, and we accept the challenge and opportunity to show we can protect biodiversity while providing the energy resources the world needs. As a company, we are committed to demonstrate we can achieve those goals through our performance and partnerships.” – David J. O’Reilly, CEO ChevronTexaco “Shell believes that customers, governments and other stakeholders want to do business with companies that are developing imaginative and positive approaches to biodiversity – companies that are part of the solution, not the problem.” – Sir Philip Watts, Chairman Royal Dutch/Shell Group Furthermore, governments often respond to pressure from citizens who do not approve of a company’s activities, and a company with a poor performance record or reputation may lose existing permits or find itself with limited access to future concession areas. Additionally, anticipating the role of biodiversity in future regulations and decisions on access to land may help a company be more competitive and avoid being hurt by public policy changes that might affect future competitiveness. Choosing not to address biodiversity in 18 The Energy & Biodiversity Initiative
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