SPE 86612
Social Performance
Stephen Macklin* and Saskia de Koning (Shell International EP B.V.)
*now with Salym petroleum Development B.V.
Copyright 2004, Society of Petroleum Engineers Inc.
This paper was prepared for presentation at The Seventh SPE International Conference on
Health, Safety, and Environment in Oil and Gas Exploration and Production held in Calgary,
Alberta, Canada, 29–31 March 2004.
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Abstract
For the purposes of this paper the definition of social
performance is all the different ways - directly or
indirectly – that EP businesses contribute positively to or
impact negatively on the people in the communities and
societies where we operate. Social performance should
not be seen as a substitute for sustainable development,
rather, as a key part of it.
There is no doubt – the old boundaries separating
business and society have changed. Increasingly,
society expects that businesses should make a
contribution to it, and we want to make that contribution.
It’s the right thing to do. It allows us, individually and
collectively, to realise our personal aspirations to make a
positive difference in the world. Also, it enables our
businesses to perform better.
Different groups of society have different expectations of
us as Figure 1 shows. To act effectively, we need to
recognise how we fit into society. In the past, EP
companies’ view of the world was like that of most
businesses, with themselves firmly at the center. Other
organizations populated that world in an orderly,
segregated way. Today the picture is more complex. EP
companies interact with a wide range of other groups, in
society, who also interact and overlap with each other.
Traditional relationships no longer apply. Engagement
and dialogue are crucial to managing our impact on
others, and their impact on us, effectively – both now
and in the future.
There is no time for delay. We should improve our social
performance continuously by listening and taking
appropriate actions. In addition, we should anticipate the
future. We must get our projects and operations in shape
for what will be required in 5-10 years time.
Shell EP’s vision for social performance is to work in
partnership to deliver net benefit to our neighbors,
communities, and to wider society affected by our
operations. This vision recognises that every project has
its associated costs and benefits - some financial, some
environmental, some social – for our businesses and for
those affected by our operations. Although the ultimate
balance sheet on impact should present net benefit to
all, no group should pay too high a price.
The paper will outline social impact, and describe the
recent developments within and key challenges faced by
Shell EP, and the key features of its approach.
Proposal
In order to integrate social performance into our
business operations, we must fully understand how
those operations impact society. After all, the lifetimes of
our ventures are measured in decades, rather than
years, and can exceed a century.
We can’t have an economic impact without having a
social one. Our activities bring obvious changes to the
physical environment. They also affect the economies
within which we conduct them. Revenues are generated,
jobs are created, new businesses are spawned.
People’s income levels change – and so do their
patterns of behavior, and their expectations of what life
has to offer. Our presence can introduce massive
changes in the local and regional infrastructure. It can
also cause cultural values, the hidden ‘backbone’, to
alter as well.
Our operations can have a social impact everywhere. It
is, perhaps, easier to see social impact of EP’s
operations in developing countries, where we have
prominence as one of the biggest industrial sectors.
However, the concerns and considerations of social
impact are equally pressing in the industrial world.
Maturing basins of the North Sea have serious
implications for local communities in Norway, the UK and
The Netherlands – implications, which require the same
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level of attention and planning as the social challenges
of rapid development in Sakhalin or the Niger Delta.
Although we all have a role to play some, e.g. managers
involved in strategy and planning, are more responsible
than others. Also, the best steps to optimization and
mitigation are via consultation, partnership and
agreement on joint action with all those involved.
Social impact takes many forms. Oil and gas
developments can trigger a wide range of impacts. See
Figure 2. Not all occur in all cases. Immediate
understanding of the host society is needed to know
which ones will be dominant – and how this is likely to
change over time. At different stages in a project – from
entering into a country, seismic, drilling, facility
development and operations, to decommissioning – our
actions will have different social impacts.
How we affect local society will also depend on our role
in a specific situation: as employer, neighbor, taxpayer,
customer, supplier, government partner, or joint venture
partner. The type of facility involved – e.g. pipeline,
plant, etc. plays its own part in shaping the impact.
Duration is a further factor: a 2-month seismic
exploration project leaves a different social footprint from
that of a 30 year, multi-well field development.
Shell EP’ commitments
Shell EP is committed to contribute to sustainable
development. As well as delivering a profitable business
and addressing environmental issues, we have made a
commitment to manage our performance in ways that
contribute positively to society. We must do this not
simply by making charitable donations where we
operate, but by comprehensively planning and managing
social impact - as we do financial and environmental
impact - in our operations from the earliest stages
through the life cycle. Shell EP’s commitments to social
performance are:
• Maximise positive and minimise negative impacts on
society:
o by undertaking social impact
assessments and other studies prior to
all new activities and significant
modifications to existing ones;
o by designing, constructing and operating
projects in ways that demonstrably meet
our requirements and commitments to
stakeholders;
o by undertaking social programme
delivery that is directly linked to our
activities.
• Understand the issues and engage stakeholders
(those with interest in our activities) in our business:
o by creating and maintaining stakeholder
relationships and partnerships based on
mutual trust and respect;
o by involving and responding to
stakeholders in our decision-making
process.
Maximum value creation
The social performance of a business is measured best
in terms of the value created for society and for the
business. Business value and social value are tightly
intertwined – it is impossible to sustain one without the
other. Different activities that relate to social
performance generate different amounts of value, as
shown in Figure 3.
In order of increasing value created, we can distinguish:
• Philanthropy, – grants and donations unrelated to
operations, social responsibilities, or business
objectives, (e.g. donations to a local youth football
team).
• Social investment – support for project/programmes
related to an EP operations corporate, social,
environmental and economic responsibilities (e.g.
community development projects).
• Strategic social investment – developing the local
community’s potential to benefit from the impact of
an activity (e.g. local procurement, building local
business skills).
• Impact management – maximising the positive social
impact of a project, and minimising the negative
impact, as an integral part of project management
(e.g. host communities recognise benefit by sharing
revenue in a sustainable and thriving industrial and
commercial community, having direct and indirect
employment opportunities, are engaged in the
management of impact, and do not see significant
downside to the Shell EP presence).
The greatest value to business and to society is created
by the EP venture itself – where social performance is
integrated through impact assessment in project design
and planning, execution, operating, decommissioning
and reporting.
People – and process-driven social performance
Social performance isn’t created by ‘businesses’ but by
people – all of us – working in effective processes with
the right motivation and the necessary capabilities.
Get it right from the start. The earlier social
considerations are integrated into design of a project, the
greater the value the project will create for society and
for the business. Conversely, the later issues of social
performance are addressed in a project, the more
difficult it will be to integrate them into operations, the
more costly will be the likely consequences, and the
more difficult it will be to implement.
Shell EP has started to integrate social performance
management into its expectations and operations.
Processes exist at two levels to make this happen: at the
company/business units level and the project level. At
each level there are three types of processes:
• Enablers – business processes used in the annual
planning and executions cycle.
• Implementation – where social performance
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commitments will be met.

• Assurance – monitoring the achievement of those
commitments.

As for HSE, a critical success factor is that the line must

own social performance.

Challenges of integration
Some situations make it more challenging than others to
integrate social performance into existing business
processes.

Working with joint venture partnerships. In projects

where Shell EP is the operator, we can implement our
business principles through strategies, policies and
systems. But we need to liaise with partners in the
project, at a very early stage, to find out what they
consider ‘the norm’ and reach convergence on areas of
significant difference. Where Shell EP is not the
operator, our influence on project decisions depends on
the agreements created when the partnership was
established. Negotiation of social performance standards
and implementation is key.

Greenfield/brownfield operations. In new or ‘greenfield’

operations we can integrate good social performance
management from the concept stage. The task is more
complex in ‘brownfield’ (established) operations. It may
take a while to unravel inter-related processes and
behaviors, to identify where social performance can be
integrated most effectively. We may also need to rebuild
trust. Knowing the tools and techniques that support
integrations will be crucial.

Shell EP has developed ‘how to’ lists of questions for

management teams to stimulate debate, to help
understand social performance challenges in the
organisation, and to help identify gaps.

Conclusions
In conclusion, the social impact of our activities can take
many forms. The greatest value to business and to
society is created by the EP venture itself – where social
performance is integrated through impact assessment in
project design and planning, execution, operating,
decommissioning and reporting. Social performance isn’t
created by ‘businesses’ but by people – all of us –
working in effective processes with the right motivation
and the necessary capabilities. Some situations make it
more challenging than others to integrate social
performance into existing business processes.
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Figure 1: EP’s role and interaction with society

Figure 2: Impact related to the social dimension.

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Figure 3: Value to business and society of different types of activity