“TRUST IS ALL THE MORE ESSENTIAL IN AN ERA OF ECONOMIC VOLATILITY.”
I am pleased to introduce the Shell Sustainability Report for 2012. Against the backdrop of a still-struggling global economy, we continue to operate in economically, environmentally and socially responsible ways; and to invest for the future.
As global demand for energy continues to rise, we must develop energy resources that exist in increasingly challenging environments, or that are difficult to produce. Wherever we operate, we never cease in our efforts to keep everyone safe: whether our employees or contractors, or the communities near our operations. We recognise the special physical and technical challenges of working in some of the world’s toughest conditions, and we are determined to learn from our experiences to continue to improve the safety and reliability of our operations.
Trust between governments, industry and civil society is all the more essential in an era of economic volatility. Today that trust often appears to have broken down. To remedy this we need action, including a greater level of collaboration and transparency, and leadership to develop policies that work.
Sustainable development remains firmly at the core of our business strategy. Working with communities, governments, non-governmental organisations and others helps us to operate safely and responsibly. We take stringent steps to prevent harm to the environment and to build trust with communities close to our operations. For example, we continue to lead the industry in setting and following responsible guidelines for our tight oil and gas projects.
In 2012, Shell began the drilling of two exploratory wells in the Arctic waters off . This was a significant step forward in our efforts to develop these resources in a responsible way. We have worked closely with the people of Alaska’s North Slope, with regulatory authorities and with some environmental non-governmental organisations. At the end of 2012, however, there were regrettable incidents involving our drilling ships. We are incorporating the lessons learned from these events into our future plans.
A more sustainable future will require cleaner energy, and more efficient use of energy. With more people moving into cities, world population rising and living standards improving, all forms of energy will be needed to meet demand. Renewables such as wind and solar will continue to grow, but fossil fuels will still be meeting around two-thirds of energy demand in 2050.
We are already taking action to deliver more energy – and cleaner energy – using advanced technologies and innovative approaches. We are producing almost as much cleaner-burning natural gas as oil, producing low-carbon biofuel, helping to develop carbon capture and storage (CCS) technologies, and putting in place steps to improve our energy efficiency.
CCS is critical to reducing global CO2 emissions. In 2012, we decided to move ahead with the Quest CCS project that will potentially capture and store deep underground over 1 million tonnes of CO2 a year from our oil sands operations in Canada. We are also involved in a number of other CCS projects. We are not just talking about CCS. We are taking action – although without a strong price for carbon, these projects generate no revenue for companies.
We are also helping to shape a better understanding of the increasing stresses the world faces as demand grows for the interlinked essentials of energy, water and food. Most forms of energy production need water; energy is needed to move and treat water; and producing food requires both energy and water. These stresses are likely to increase because of climate change. In 2012, I brought together CEOs from a range of industries to identify steps each of us could take to start to mitigate these stresses and increase our resilience for the future. Innovative cross-industry partnerships can deepen resilience to stresses and build sustainability in the years to come. In early 2013, we published a new set of scenarios that focus on the challenges of an era of volatility and transition, characterised by rapid urbanisation and energy-water-food stresses.
Partnerships and principles
Industry can achieve more when working in partnership with governments, communities and others. In , 2012 saw a dramatic rise in the theft of oil from pipelines. The bulk of this oil is illegally exported overseas, and the rest turned into low-grade fuel in local makeshift refineries, causing environmental damage. These criminal activities reduce government income from the energy industry. The Nigerian government believes millions of barrels of oil a month are being stolen, amounting to a loss of billions of dollars a year in revenues. The energy industry cannot tackle this alone. It needs more action from the Nigerian government and help from local communities. The international community also needs to step forward. This industrial-scale crime is harming the Nigerian nation.
Shell was a founding member of the UN Global Compact and supports its principles in human rights, labour, environment and anti-corruption. In this report you can read about our progress in these areas.
The External Review Committee has again provided important contributions to the development of our Sustainability Report, and I thank them.
I invite you to send your comments on the report to:
Chief Executive Officer