BP Annual Report and Form 20-F 2011 - Company Reporting

Business reviewperformance on a quarterly basis. They agree strategic direction and groupstandards which are then implemented through business specific diversityand inclusion plans. We supported the UK government-commissionedLord Davies review in 2011, which made recommendations on increasinggender diversity on the boards of listed companies.We are also incorporating detailed diversity and inclusion analysisinto talent reviews, with processes to identify actions where any issues arefound. We continue to increase the number of local leaders and employeesin our operations so that they reflect the communities in which we operate.By 2020, more than half our operations are expected to be innon-OECD countries and we see this as an opportunity to develop a newgeneration of experts and skilled employees. At the end of 2011, 15% ofour group leaders were female and 19% came from countries other thanthe UK and the US. When we started tracking the composition of our groupleadership in 2000, these percentages were 9% and 14% respectively. BPhas increased the percentage of female leaders in 2011 and remains focusedon building a more sustainable pipeline of diverse talent for the future.We aim to ensure equal opportunity in recruitment, careerdevelopment, promotion, training and reward for all employees, includingthose with disabilities. Where existing employees become disabled, ourpolicy is to provide continuing employment and training wherever practicable.Employee engagementExecutive team members hold regular town halls and webcasts tocommunicate with our employees around the world.Team meetings and one-to-one meetings are the core of ouremployee engagement, complemented by formal processes throughworks councils in parts of Europe. These communications, along withtraining programmes, are designed to contribute to employee developmentand motivation by raising awareness of financial, economic, ethical, socialand environmental factors affecting our performance. The group seeks tomaintain constructive relationships with labour unions.We conduct an employee engagement survey to monitor employeeattitudes and identify areas for improvement. Our 2010 employee surveywas delayed to allow for organizational changes to be reflected in thesurvey construction. This was completed and we carried out an employeeengagement survey in 2011. The 2011 survey found that employees arecommitted and understand BP procedures and standards. The resultsshow that there are a number of areas that can be improved. These includeincreasing transparency of the promotion process and being clear about theorganization’s priorities. Business leadership teams reviewed the results ofthe survey and have agreed actions to address the identified issues.The survey includes 10 questions which make up the employeesatisfaction index. The overall employee satisfaction index score for 2011(62%) was below the score from 2009 (65%) but above that of 2008 (59%).The code of conductThe BP code of conduct sets the standard that all BP employees arerequired to work to. It is aligned with our values, group standards and legalrequirements, and it clarifies the ethics and compliance expectations foreveryone who works at BP. The code was updated in 2011 and now putsgreater emphasis on a values-based approach.The code defines what BP expects of its people in key areas such assafety, workplace behaviour, bribery and corruption and financial integrity.Employees, contractors or other third parties who have questions orconcerns that laws, regulations or the code of conduct may be breached,can get help through OpenTalk, an independent confidential helpline. Thenumber of cases raised through OpenTalk in 2011 was 796, comparedwith 742 in 2010. In the US, former district court Judge Stanley Sporkinacts as an ombudsperson. Employees and contractors can contact himconfidentially to report any suspected breach of compliance, ethics or thecode of conduct, including safety concerns.We take steps to identify and correct areas of non-compliance andtake disciplinary action where appropriate. In 2011, 529 dismissals werereported by BP’s businesses for non-adherence to the code of conduct orunethical behaviour compared to 552 in 2010.BP continues to apply a policy that the group will not participatedirectly in party political activity or make any political contributions, whetherin cash or in kind. We review employees’ rights to political activity in eachcountry where we operate. For example, in the US, BP facilitates staffparticipation in the political process by providing staff support to ensure BPemployee political action committee contributions are publicly disclosedand comply with the law.TechnologyTechnology in BPWe define technology in BP as the practical application of science tomanage risks, capture business value and inform strategy development.This includes the research, development, demonstration and acquisition ofnew technical capabilities and support for the deployment of BP’s knowhow.BP’s model continues to be one of selective technology leadership,under which we focus on major technology programmes that best supportour business priorities and competitive performance.External assurance is achieved through the technology advisorycouncil, which advises the board and executive management on the stateof technology within BP. The council is comprised of eminent business andacademic technology leaders.In 2011 we invested $636 million (of which $12 million relatedto the response to the Deepwater Horizon incident) in research anddevelopment (R&D). This compares with $780 million in 2010 (of which$211 million related to the response to the Deepwater Horizon incident),and $587 million in 2009. The increase in the underlying R&D spend isrelated to our major technology programmes. See Financial statements –Note 13 on page 208.Our innovation ecosystemBP has hundreds of scientists and technologists across the group, withseven major technology centres in the US, UK and Germany. We accessexternal expertise through various forms of partnership and collaboration,from joint research agreements to venturing. We have a strategic approachto university relationships across our portfolio for the purposes of research,recruitment, policy insights and education.BP has long-term research programmes with major universities andresearch institutions around the world, exploring areas from reservoir fluidflow to energy biosciences. These include the following programmes:• The Energy Biosciences Institute (EBI) is BP’s largest external R&Dinvestment, being a $500-million 10-year commitment to a multidisciplinaryresearch partnership with the University of CaliforniaBerkeley, the Lawrence Berkeley National Laboratory, and the Universityof Illinois. Now in its fourth year, the EBI is generating multipleinnovations, particularly in the field of cellulosic conversion, that give ourbiofuels business viable opportunities for commercial application.• BP’s energy sustainability challenge (ESC) is a research programme with13 leading universities to establish trusted peer-reviewed data on therelationships between natural resource usage and different energypathways. The aim is to better understand the implications of energyproduction and consumption on potentially-constrained land, water andmaterials resources, and assess corresponding technology and policyopportunities. One of the early publications resulting from this researchis the University of Augsburg’s handbook, Materials critical to the energyindustry.• In September 2011, BP opened the BP energy innovation laboratory atthe Dalian Institute for Chemical Physics (DICP) in China as part of a10-year extension to our research agreements with DICP.• In January 2011, BP started a new three-year policy programme atHarvard University’s Kennedy School focused on examining current andfuture potential policies on energy, security and climate change.BP is a founding member of the UK’s Energy Technologies Institute(ETI) – a public/private partnership established in 2008 to accelerate lowcarbontechnology development. As at 31 December 2011, the ETI hascommissioned over $200 million of work covering over 30 projects acrossa wide range of technologies. The ETI has also developed an integratedmodel of the UK energy system which projects potential pathways out to2050 to meet the UK’s emissions targets.74 BP Annual Report and Form 20-F 2011