Process and incentives

Environmental and social factors play a growing role in our investment decisions and in the way we plan and design major new projects. For example, we include the expected future costs of emitting CO₂ when making all major investment decisions. And an environmental, health and social impact assessment is required before we begin significant work on major projects or existing facilities. Any improvements identified must be made as part of the project’s design and operation. In 2007, we refined our standard process for developing new oil and gas opportunities to help us identify and address environmental and social issues earlier and more consistently (see case study below).

Sustainable development is also part of how we assess our performance and pay our people. It counts for 20% of the Shell Scorecard that we use in determining bonuses.

Getting in early: sustainable development in new upstream projects

When we looked at our projects for lessons about managing their environmental and social impacts better, one thing was clear: projects that considered these risks and opportunities early, and then addressed them through project design and execution, were more successful. Projects that started addressing the risks and opportunities later, had a higher chance of being delayed or diverted by community protests, environmental concerns or permitting problems.

In response, we made several changes to our process for new oil and gas projects. Each is now required to identify its environmental and social risks systematically at the very outset – long before the technical design or commercial conditions for the project are cast in stone. How well the project has understood and integrated these risks into its approach is then regularly checked. In addition, the most senior sustainable development managers from the business and corporate centre now review our more than 70 largest early-stage projects twice a year. To help project developers and review teams know what to look for, and how to change their projects to address these issues, we are strengthening their training in this area.