ExxonMobil, whos UK arm is Esso, is currently coming under in creasing pressure from environmental organisations for its part in scuppering international agreement to limit the burning of fossil fuels and persuading George Bush to pull the U.S out of the Kyoto agreement. Recommendations Technology differentiates Shell from its competitors. It will also be the key to anticipating future markets whilst at the same time help Shell cater to wider social demands for more sustainable energy resources.
In the future Shell will need to reduce the time it takes for the deployment and incorporation of new technologies and initiatives around its global network of operations. The faster the organisation can adopt and incorporate new technologies the faster the return in terms of either cost savings or entry into new markets. Shell is also in an excellent position to commercialise new technologies through Shell Global Solutions, the consultancy arm of the organisation making Shell expertise, knowledge and resources available to other organisations. The use of patents and licences will provide revenue with which to offset the initial costs of research and development of new technologies.
Shell will need to adhere to its theme of portfolio management. The organisation will need to identify potential, suitable new additions to its portfolio to compliment its existing holdings as well as move into areas of opportunity and innovation. The comparison of figures regarding Shells environmental liabilities and total spillages highlight a number of areas where performance can be improved. Firstly the gap between target and actual thousand tonnes of spillage is 7.9 thousand tonnes, just 2 thousand tonnes less than 2000's total spills figure (9.9 thousand tonnes). This sharp increase needs to be addressed.
Shell will need to identify and implement initiatives to combat the rise in spills. The organisation could look back to 2000 and examine the policies and procedures that lead to that years low spill figure. By comparing these to the policies and procedure implemented in 2001 Shell can identify differences and implement policies and procedures to decrease and eventually eliminate spills. Technology and learning can also play a key role here, with the development and innovation of methods and practices used in operations. Research and development can result in advancement in areas such as transportation of product (safer stronger pipelines with reduced spillages). This would not only benefit the organisation in terms of its environmental position but also in stock available for sale.
To continue to improve performance and achieve its objective of world leadership in energy and petrochemicals Sell needs to refine and develop its areas of competitive advantage. The organisation will need to use money, materials and energy ever more efficiently to create value, reduce costs and minimise environmental impact. Over all Shells performance in 2001 slipped from the standards achieved during 2000. Although there have been significant additions to Shells portfolio there has also been a reduction in competitive advantage with organisations such as BP gaining ground in areas such as branding and attracting and retaining top talent.
Businesses generally are coming under increasing pressure from members of the public and more recently government to clean up their act. In July 2002 a MORI poll revealed that 92% of people believe "multinational companies should meet the highest human health, animal welfare and environmental standards wherever they are operating". This Mori poll played a key part in a private members bill demanding greater social and environmental accountability from big business. The bill was backed by a range of organisations, including Friends of the Earth, Amnesty International, the New Economics Foundation and Save the Children, and required companies to provide environmental reports, consult on big projects and established a new regulator for corporate environmental and social standards.
In the investment community there is more and more emphasis on social and environmental responsibility. There is a growing expectation of stakeholder groups that organisations should perform and behave in a more open, socially caring and responsible way. These principles are even more important in times of intense pressure, for example where there is a real or perceived risk to public health, safety and environment.
Although the inevitable war in Iraq is not primarily about oil, the range of possibilities that could occur in Iraq need to be included in Shells short as well as long term strategies. As the worlds second most oil rich region, with its reserves located relatively shallow beneath desert conditions, Iraq plays a key role in the global oil business. In the likely outcome of a U.S/U.K occupation and redevelopment Shell will be able to use it's operational advantage of speed of execution and it's knowledge and technological advantage of expertise in sub-surface evaluation to move ahead of its peers developing Iraq's resources.
But Shell's investments in renewable energy aren't as they seem. In a sense they are, in that they are being treated as real businesses. However the use of renewable energy will not in any way prevent climate change in itself; it will only decrease in the use of fossil fuels. A Shell scenario for future energy supply reckons that renewable energy will provide around 15% of world energy by 2030; however this is within the context of expanding total energy consumption (with statistics saying that there is only enough fuel to last us till 2050) and oil and gas production will almost double over that period (Shell has quietly withdrawn its more optimistic scenario of 50% renewable energy by 2050). Clearly, despite the renewable energy's growth, there is still a massive problem.
Shell could improve the way it communicates with its various audiences, both internally and externally and need to build consensus (e.g. through press campaigns, employee awareness meetings and publications, community forums, and shareholder updates). They currently have a report published every year called People, Planet and Profits. This reports aims to inform the public of Shells aims and objectives regarding environmental and social aspects of their business. This report is a huge improvement in the way Shell communicates with its stake and shareholders and the general public. A few years back they would not have even done this much. The main problem with this though is the fact that this report is still slightly biased and doesn't really show negative issues surrounding the company and ways that they will approach fixing this.
A strong record of environmental and social responsibility will increase the image of a company as a desirable business partner, supplier or employer, not just a good neighbour. The strong reputation earned in this way can create and sustain competitive advantage by helping to win customer preference, secure outside financing, and gain government approvals on more favourable terms. Shells social and environmental record isn't very strong if they do improve this they will contuinue to expand, and attract and retain a top knotch work force which is important to Shell which is stated in there mission to maintain a diverse work force.