Shell’s 2011 sustainability report provides a window into the company’s impacts, operations, and future, with one exception: oil
Shell’s 2011 sustainability report begins promisingly (and frighteningly) enough, with projections that, by mid-century, the world’s population will grow to nine billion, the number of cars on our roads will triple, and global energy use will double.
The report reiterates the International Energy Agency’s warning that “without a bold change of policy direction, the world could lock itself into an insecure, inefficient and high-carbon energy system as early as 2017”. Quite apart from this discussion, Shell mentions that 1) it produces 2% of the world’s oil, and 2) the use of its products accounted for an estimated 570m tonnes of CO2 emissions in 2011.
Given such a sobering backdrop, one might hope to find in the report a robust discussion of how we could begin to move away from our dependence on oil as fuel and as feedstock, and how Shell is reframing its business strategy towards that end. At the very least, one might expect the report to mention that, in transport alone, oil products generate more than 20% of global GHG emissions.
One would be disappointed. The company sees oil and nuclear supplying as much as 70% of demand in 2050. What comes afterwards is left to the imagination.
Sustainability, for Shell, seems mainly to do with improving its health and safety performance reducing oil-spill volumes and cutting energy and water use in its operations – all important goals. But addressing the increasingly unsustainable use of fossil fuels to meet energy demand seems to hold no place in Shell’s business strategy, which is to deliver “more energy to [its] customers” by developing more natural gas and oil reserves.
Dash for gas
The company says it is “taking action today” on climate change by supplying more natural gas for electricity generation; helping to develop carbon capture and storage (CCS); producing “low-carbon” biofuels; and improving energy efficiency in its operations. Given demand projections, these approaches will hardly begin to scratch the surface.
In Shell’s climate-change narrative, coal-fired electrical power generation is the villain, and natural gas is the superhero. Shell is curiously silent on the contribution of oil to climate change and its ultimately finite nature as an energy source.
The report discusses at length Shell’s focus on extracting natural gas for power generation. Given the abundance of the world’s natural gas reserves, and that natural gas is a lower-carbon source of electricity than coal, that strategy certainly makes sense.
Yet the report treats with a light touch the impacts of hydraulic fracturing, or fracking – the method used to extract “tight gas” trapped in deep underground rock formations. These impacts include water contamination, chemical waste disposal, and earth tremors. Shell refers to these impacts obliquely as “concerns among some communities” and “questions”. Rather than detailing how it is addressing these issues, the company notes that it has put in place “operating principles” for the extraction of tight gas and oil.
Vague language
Given that Shell is likely to increase production dramatically in the coming years, however, these vaguely worded principles seem feeble in comparison with the potential impacts of its fracking operations.
The report contains numbers upon numbers – $1.1bn for R&D, 25tn cubic metres of gas in the field, 16.6% of senior leadership positions occupied by women, 2bn litres of biofuel produced – that are devoid of context, especially where comparisons are most warranted.
An example is the company’s much-touted biofuel production. Oil production is measured in “boe”, or barrels of oil equivalent, throughout the report. The report offers no comparisons, whether in terms of production or R&D, to communicate the pace or scale of biofuel production relative to the increase in global fuel demand or Shell’s investment in developing its oil and gas reserves. Shell leaves readers to do the maths, perhaps hoping they won’t bother.
Finally, Shell’s promotion of carbon capture and storage as a mode of reducing CO2 emissions is a red herring at best. Most telling is Shell’s assertion that government funding is necessary to move the technology beyond demonstration “because CCS projects generate no revenue for companies”. Given the current state of government coffers, and the fact that this past year was the most profitable year ever for the world’s largest oil companies, who’s better positioned to move the needle?
Snapshot
Follows GRI? Yes, at the A+ application level.
Assurance? GHG emissions data only.
Materiality analysis? Yes
Goals? Some
Targets? Some
Stakeholder input? Yes
Seeks feedback? Yes
Key strength: Transparency regarding ownership interest and production for key projects.
Chief weakness: No discussion of oil’s contribution to climate change.
Pleasant surprise: Interactive performance charts on website.
Kathee Rebernak is the founder and chief executive of Framework LLC.