Introduction to Shell Global Scenarios to 2025

Introduction to Shell Global Scenarios to 2025 by Jeroen van der Veer Chief Executive:

Energy companies, more than most businesses, need to take a long-term view. That is why Shell has been producing Global Scenarios for more than 30 years. These scenarios are different from forecasts in that they provide a tool that helps us to explore the many complex business environments in which we work and the factors that drive changes and developments in those environments.

This information plays a vital part in the judgements and decisions we make about our business and its future, decisions which typically are about complex projects developed and operated over several decades.

Clarity and simplicity

In my view, the new Global Scenarios to 2025 bring clarity and simplicity on matters of high complexity.

In the 1990s, the Shell Global Scenarios explored a world of globalisation, new technology and market liberalisation, and an alternative model where emphasis was placed on social and community aspirations. In this spirit, the 2001 Global Scenarios set out two different worlds, Business Class driven by efficiency, economic integration and declining power of nation states, and Prism that highlighted the power of cultural values and cohesion. While these themes are still very relevant, the events of September 11, 2001 and the crisis of trust in the market arising from corporate scandals have brought profound changes in our business environment, which the Global Scenarios to 2025 also explore. In particular, the feelings of insecurity and mistrust that have arisen in the light of these events have led to new barriers to free movement of people, goods and capital, as well as a stronger role for the state both in protecting national security and in restoring trust in the market.

These changes make the interactions between market participants, states and society more complex. The scenarios provide a way of navigating through that complexity by outlining three sets of forces - market incentives, the force of community, and coercion and regulation - and how these drive towards three different objectives - efficiency, social cohesion and security.

These objectives are, at times, incompatible and the scenarios explore the resulting trade-offs that are needed to reconcile them, setting out what is called a Trilemma Triangle. The Trilemmaps that the scenarios team develops also provide insights on the kinds of strategy different groups may adopt in different strategic contexts.

That framework has led to the breaking of a time-honoured tradition in Shell Global Scenarios - that the analysis should lead to two alternatives. The new analytical framework has shown that three Global Scenarios offer the best way to capture the interactions between the three sets of forces and the subsequent trade-offs and choices that shape the business environment over the long term.

The first of these “possible futures” is called Low Trust Globalisation. This is a legalistic world where the emphasis is on security and efficiency, even if at the expense of social cohesion.

The second, Open Doors, is a pragmatic world that emphasises social cohesion and efficiency, with the market providing “built-in” solutions to the crises of security and trust. The third, called Flags, is a dogmatic world where security and community values are emphasised at the expense of efficiency.

To create analytical clarity, the scenarios no longer tell particular “stories”, but look at the interplay between the three essential forces and between the contrasted ways in which different groups can pursue their objectives. While they provide more complex and sometimes technical analyses of our business environment, these scenarios are based on a map which provides a simple, unified context which I find very powerful to better understand the various conditions under which we may have to operate in different regions or in different circumstances. This helps to bring the scenarios close to the reality of business.

The power of shared insights, within Shell and globally

Within Shell, I think the imperative is to use this tool to gain deeper insights into our global business environment and to achieve the cultural change that is at the heart of our Group strategy. We face real challenges in the future, we will all need to be able to respond to changing circumstances and make informed and rigorous judgements about our decisions: these scenarios and methodology will help us to do that better.

Within the global community, I also hope that they will have a wider resonance and I am encouraged by the reactions that a preview of this report elicited at the World Economic Forum in January 2005. Shell Global Scenarios, rightly, have an excellent reputation around the world. I know that they broaden one’s mindset, stimulate discussions, both with colleagues and with the global community. We often contribute our scenario expertise to help identify and address challenges of common concern, such as those of sustainable development, long-term energy needs or, more recently, the fight against AIDS and for development in Africa.

I am looking forward to sharing new insights with partners, shareholders, the local communities in which we operate and our many other stakeholders.

The enhanced methodology on which the Global Scenarios to 2025 are based reflects the talent of the Shell Scenario team led by Dr Albert Bressand and senior team leaders Peter Cornelius, Cho Kong, Norbert Roelofs, Wim Thomas, Angela Wilkinson -- not forgetting Kamran Agasi and graphic designer Peter Grundy -- as well as insightful contributions by external experts whom I want to acknowledge and to thank. This robust methodology will help us make further contributions to the wider debates about the fundamental questions that face us all.

Download the Executive Summary of the Shell Global Scenarios to 2025 (pdf, size 232Kb) - opens in new window
 
or Signposts - Supplement to Global Scenarios to 2025 (pdf, size 850Kb) - opens in new window

PDF files - Accessibility

For information on downloading PDF files, please visit our Accessibility Help page.