The oil and gas sector has been among the leading industries that have championed CSR worldwide, partly because of the negative effects of day-to-day operations and the resulting protests by civil-society groups and environmental advocates. Amid increased awareness and demand for sustainable solutions, oil and gas companies are jumping at the opportunity to promote and publicize their social and environmental credentials, going as far as labeling their products as environmentally friendly due to use of natural gas or investing in green technologies. Progress has been made in this space, but what continues to be missed is that companies have a responsibility for their impact on society and the natural environment, often beyond that of legal compliance.
In Lebanon, we’ve been witnessing several initiatives in this scope, ranging from providing hybrid cars charging facilities, EcoDiesel fuel, to the recently inaugurated sustainable gas station by IPT, a first in the country featuring advanced solutions and innovations in the field of energy and water conservation and pollution reduction, and an initiative that is worthy to applaud and emulate (full information about the new initiative can be found on the company’s website).
The sustainable gas station, one of 35 fully-owned gas stations and more than 170 franchised gas stations across the Lebanese territories, is the result of IPT’s drive to supply cleaner and innovative petroleum products and services locally, recognizing their responsibility to improve their practices in the environmental field where their business has the highest impact. IPT has taken a greater step in this direction by issuing a “CSR review” showcasing its work and achievements in different areas, identified as the company’s CSR strategy component.
However, despite a well-intended effort to name this document a “CSR Report”, the review that looks more like a marketing brochure, hardly complies with minimum reporting standards for a company that claims to be a leader in SDG 7 (Affordable and Clean Energy) and is a participant of the UN Global Compact, an initiative with its own communication on progress (COP). A failure to respect the latter principles could lead the company to falling into a blue-washing entrapment (see page 19), i.e. wrongly relating its practices to the global initiative’s requirements for the sake of the GC logo. In contrast to the environmental overview, disclosure on major activities and local community investments is weak, even though the “IPT review” consistently mentions supporting the community through social initiatives and local development.
The review only contains input and no output measures; IPT provides information on where they were involved with some justification on their reasoning for investment, however make no mention of how much they spent on education or philanthropic activities or how many local stakeholders participated in a project. They also provide no measures on how effectively money was spent, the impact they have made, and the aftermath of their community investments, which should be the norm in any professional CSR Report. It is, therefore, difficult to quantify the benefits publicly.
A Missed Opportunity
It is important that companies learn from other CSR and sustainability reports when issuing their own, and IPT has tremendous room for growth in their sector. The review could have been used to inform stakeholders how IPT is addressing stakeholders’ CSR concerns and incorporating them into the company’s strategic decision-making processes. It could have also been considered as a starting point for any serious CSR commitment as it is the most significant tool to lay down the vision, the strategic orientation, the calculated objectives, metrics and performance indicators, a materiality analysis and a stakeholder mapping, an impact analysis, among many other variables that are usually expressed in a collective tone through stakeholder testimonials, endorsements and case studies that would emphasize achievements outcomes and real impact, as well as through ample information for transparency and accountability purposes.
With all this lacking in IPT CSR review, it became very difficult to draw on a multi-year strategic agenda with a clear vision and forward-looking plans.
Furthermore, there appeared to be minimal understanding of the true nature of CSR (or sustainability – used interchangeably) and of the Sustainable Development Goals (SDGs). Unfortunately, if there are no clear principles that dictate a structure, flow or logic to creating such a document, then the company is setting itself up for wide criticism. In addition, the Chairman’s message does not reflect any strategic direction, nor does it explain the report’s objectives in a way that truly reflects the purpose of publishing such a report. It goes without saying that when a company publishes a “CSR review”, it must conform to certain standards to help amplify its accomplishments through convincing statements and inspirational messages, which unfortunately are not reflected in this document.
While CSR is defined in many ways, it generally refers to how a company addresses and manages its environmental, social, corporate governance and economic impacts and how such impacts may affect the company’s stakeholders. Throughout this document, IPT continues to miss the mark on explaining its CSR objectives, goals and does not provide any measurable indicators. CSR provides companies an opportunity to strengthen their business – whether through cost savings, risk mitigation or value enhancement, while contributing to society, focusing on the important areas of interaction between the company and its key stakeholders and addresses value creation actions as part of the company’s strategy. Given this factor, IPT’s review does not truly reflect the above variables and is instead presenting a storybook of impressive accomplishments and successes but with no tangible business goals.
There seems to also be misguided structure in the review, confounding what should be listed under workplace, marketplace, environment, and community. For example, in the best practice section, most of the information presented should be under Environment and Marketplace. There is no mentioning of the latter in the publication or as a strategic pillar. There also only appears to be few workplace initiatives, and most of the initiatives listed under the Environment section are awareness raising campaigns or awards (!), which typically do not impart information relevant enough on the target stakeholders, the purpose, the impact, and other elements.
Disclosing the company’s impact on the social systems within which it operates, including those relating to human rights, society and product responsibility is a necessary imperative in every CSR report.
The industry is highly energy-intensive and a focus on increasing internal efficiencies while reducing environmental impact should therefore be a key issue for all companies operating in this sector. Oil and natural gas companies generate greenhouse gases (GHGs) in almost every aspect of their work, from the finding, extracting and processing of hydrocarbon resources, to the transforming and delivery of these resources to customers. The direct greenhouse gases are emitted from combustion in stationary and mobile internal combustion engines, gas processing equipment, and from venting, flaring, and fugitive methane. It is therefore essential to disclose and mitigate emissions.
In this review, there is no mention of what IPT is doing in terms of energy efficiency initiatives at its headquarters, or how it is mitigating the risks on customers and residents who live by and have access to their stations. What the company is promoting as clean energy is extremely crucial and the main component of the company’s strategic sustainability vision, yet, the company should also report on how it is taking measures to reduce its footprint at its own headquarters in Amchit at least. And while the company showcases its compliance with international standards of environmental protection and health and safety, it does not explain the negative impact its business could be responsible for generating and how it is offsetting it.
While CSR Reports typically vary in format, length and detail, there are certain elements and disclosures that are relatively consistent throughout such reports. Upon evaluation of IPT’s review, it is recommended that future CSR reports focus on material issues most important to IPT and its stakeholders; A primary objective of corporate stakeholder engagement is to build relationships with stakeholders to better understand their perspectives and concerns on key issues (including CSR issues) and to integrate those perspectives and concerns, when and where feasible and prudent, into the company’s corporate strategy.
The absence of an ethics disclosure was also missing from the review. Disclosing the company’s values, principles and standards is recommended for the future editions, as well as detailing its strategy on ethical and lawful behavior and reporting concerns about unethical or unlawful behavior and matters of integrity.
IPT mentions that they have a CSR strategy, however, it does not detail the company’s CSR practices and policies. Essentially, without a clear strategy outlining the company’s policies and objectives on the long term, no third-party would perceive IPT’s genuine involvement in its activities through a clear vision, commitment, and focus on the core issues that matter to the company and its stakeholders, subsequently improving the resilience of the organization, but rather an intention to showcase them merely as a PR activity.
In addition, it is also recommended to incorporate, as often as possible, easy-to-read visuals, figures, stakeholders’ feedback and endorsements. This also includes disclosing the company’s past CSR successes for comparability and accountability purposes, future CSR goals, the details behind its CSR campaigns and awards (such as the funds behind these activities and the outcome of the distributions!), and adding third-party evaluations, to verify the reliability of and provide further credibility to the company’s CSR reporting processes and information.
Furthermore, and most importantly, a recurring question that comes up whilst perusing the publication is understanding the “how’s” and “why’s” of IPT’s achievements of these strategies, specifically, how does it relate to IPT’s “sustainability strategy”. Disclosing the company’s impact on the social systems within which it operates, including those relating to human rights (relating to the extensive foreign labour working at IPT stations in particular), society and product responsibility is a necessary imperative in every CSR report.
Finally, to advance CSR, it is crucial to understand that businesses and society are not independent from one another, but rather interdependent in order to prosper.
It is vital to include a forward-thinking CSR strategy which holistically evaluates a company’s social and environmental impacts. Forward-thinking businesses secure their economic performance while also ensuring that short-term behavior is not detrimental to society or the environment.
Blue-washing: blue-washing is a technique employed by corporates and companies to form collaborations and associations with various United Nations Agencies to portray themselves as being compliant of the ten principles of the United Nations Global Compact, while not being so in actuality. Thus, the companies that associate themselves with the United Nations, for the sole purpose of advertising themselves being in congruence with the principles of actions against child labour, slavery and corruption, safeguarding human rights, and being servient to labour unions are said to be engaged in the practice of blue-washing. The color blue comes from the blue logo of the United Nations. However, their association with the United Nations Agencies is merely a blanket for doing work under the aegis of the principles formulated by the UN, and not actually working in the direction (refer to the CSR Glossary recently published by CSR LEBANON for further insight and similar terms).
Author: Deena Tannous - Responsible Business
Source: Responsible Business Magazine