Speeches

Well, what a pleasure to be in a room full of public affairs and communications professionals.    I have considerable respect for what you do.    I have seen it in my company and in others. 

Proverbs 17.28 tells us - “Even a fool, when he holds his peace, is counted wise.  And he that shuts his lips, is esteemed a man of understanding”.  Nevertheless, I thank the Centre for this invitation to address you tonight.   Shell has been a strong supporter of the Centre since it was formed nearly 20 years ago.

This talk has been billed to include lessons from the Shell experience.   I am happy to tell you something of our story  - at least from my point of view  -  and to offer a few suggestions on managing reputation.    But I don’t have all the answers and of course you’ll draw your own conclusions.

Shell operates in well over 100 countries around the world.  We’re present in many non-western and developing countries.   Counties where governments and local communities have their own, distinct views, about the role of a business enterprise and its relationship to governments and society.    And there is also a diversity of views about business and society in the West.

Some of you may have seen a movie called “The Corporation” some years ago.  It exposed the mistrust and distrust of large corporations.  Shell was featured in the film.  We’re the archetypal “big company” and we’re very much aware of concerns about the size and assumed power of big business. Now, decisions made by big companies can have a big impact on the lives of communities.  But history and common sense both indicate that the degree of freedom for managements to exercise power, over their social and political environments, has been greatly exaggerated.

Leaders of large corporations are often perceived as immoral, or at least amoral.  Unfortunately, this generalisation is reinforced by regular disclosure of aberrant behaviour, sometimes even in highly principled companies like my own, and it is also pervasive in a small number of corporate cultures.

The stereotype of the ruthless, arrogant, anti-social corporate executive  –  so foreign to those I have worked with for 40 years in my own and in other companies  -  is deeply embedded in our popular culture.

Rather than respond to such stereotypes, Shell prefers  -  I’m sure you’ll all be surprised to know -  a more informed approach.   For many years, we’ve been conducting what we call the Shell Reputation Tracker, in our key countries, including Australia.  The Shell Reputation Tracker seeks out the opinion of people who matter to us, including governments, media, NGOs, academics and what we refer to as power loci.  Combined with our Brand Tracker, which tells us what our customers think of us, the SRT tries to give us a workable picture of how we are perceived in the outside world.    We now have a view, built up over time, of how our reputation has changed, for better and for worse.   It shows how we’re faring against our competitors, and against big business generally, and it tells us how Shell in Australia is doing, compared with  Shell companies elsewhere in the world.

I have long reconciled myself to the fact that petroleum companies will never be top of the popularity charts, but the SRT helps us understand what we’re doing right and where we can improve.   Quite often, it’s the verbatim comments that give us the most insight into the key issues  –  more on that later.  

Conducting the SRT annually reminds us that reputation is something that must be worked on continually.  It is not enough to undertake reputation-enhancing activities in response to a crisis or event  –  people see straight through that.  And that brings me to the first of my suggestions to you  – understand your reputation, and work on it continually.  Remember, a good name is sooner lost than won.

Our most recent Shell Reputation Tracker shows us that Shell’s reputation has improved over recent times.   But we know, that people have not forgotten the past, nor do they see Shell Australia in isolation. 

1995 was Shell’s “annus horribilis” in reputation terms  -  in particular because of events in Nigeria and the decommissioning of a North Sea oil facility called Brent Spar.

First, Nigeria.  Shell operates as a minority joint venture partner with the Nigerian government and several other multinational companies.  The local Ogoni people that live in the oil-rich Niger Delta, were angry about their share of the Nigerian Government’s distribution of royalties and other benefits.  This was a major catalyst in a violent separatist struggle against the Government.  Sabotaging pipelines and attacking the sites we managed, was a tactic in the struggle, and government forces used strong measures to defend these facilities.  Shell’s engagement in the defensive action was misrepresented badly in the propaganda war.  Our  minority position, did constrain our freedom to act, in some dealings with the community.   Nevertheless, we conducted an active community investment and support program, which continues at an increased level to this day.

Shell’s vulnerability to international criticism was greatly increased by the Government’s trial and execution of a group of Ogoni, led by poet and local hero Ken SaroWiwa.  This episode became a major focus for the global human rights activists, who campaign vigorously in western capitals.

Shell made strong representations at the highest levels and did everything we could, within the law, to stop SaroWiwa’s execution.   However, we were not able to stop it going ahead  – and we were held accountable by many in the international court of  western public opinion, for not doing enough and therefore allegedly for being complicit in the execution.

Some of you may recall that university students around the world pilloried the company with posters, street theatre and calls for boycott.

These events were very unsettling and distressing for our employees around the world.  I recall that a colleague, with his young family in a Melbourne suburban church, had to listen to the vicar praying to redeem the lost souls of Shell executives.

Some corporate critics demanded we abandon our business in Nigeria.   Those critics echoed the voices of those who had earlier pressured Shell to pull out of South Africa, during the apartheid era.   We didn’t do that.  We felt that, to appease western critics, we would have had to abandon our black South African employees  -  employees who were enjoying the same terms and conditions as their white colleagues  -  to an uncertain and probably dangerous fate.   We felt, that pulling out would  contribute to the devastation of the economy.   So we stayed.   There was little acknowledgement from these critics when, on his release from custody, Nelson Mandela thanked Shell for staying the course in South Africa.

Now, Nigeria continues to have many problems for us, but we believe we are doing the right thing by remaining there.   Right by Nigeria, right by our own employees, and right by the company.    We know that this is not popular in all quarters, even in Australia.  We get continuing feedback about this issue, in verbatim comments in the Shell Reputation Tracker and in ongoing media coverage.   However, we have learned over the past 13 years, that it is far better to tell our own story on Nigeria than to let it be told for us. 

And we’ve started to do just that.   Last year, we invited the head of External Affairs in Nigeria and one of his team, a local woman from the Niger Delta, to come to Australia.  They engaged honestly and openly with a host of stakeholders, including NGOs and employees, about our history in Nigeria and the current reality.   Perhaps some of you were at one of those sessions.   They were not comfortable but they very well received.  The challenge for us now, is to continue that dialogue, because we recognise that our operations in Nigeria will continue to be of interest to Australian stakeholders and that’s very relevant to our business here.

Let me move to the Brent Spar story, which also happened in 1995.    Shell, with our scientific consultants, concluded that deep-sea burial was the most environmentally friendly means of disposing of the redundant offshore facility.    This was confirmed independently by British government agencies. However this became a cause celebre for Greenpeace, who were looking for a peg on which to hang a campaign on ocean pollution.   After a global, high profile campaign by Greenpeace in the media and on the streets, Shell was forced to back down and to pursue an alternative disposal course.    Brent Spar has now been dismantled and forms the basis of a jetty in a Norwegian fjord.    Shell stood by what it believed to be the better technical course, withstanding a deteriorating reputation and consumer boycotts, until molotov cocktails thrown at German service stations put our employees at serious risk.

There are profound lessons for us in this event.  We clearly could have handled the issue better.  We should have understood the power of the global electronic media.  We should have sounded-out interested stakeholder groups, such as relevant governments and NGOs, more than we did, before deciding on a course of action.  We now know, that the right engineering solution is not necessarily the right solution all-around. 

Now, things don’t always go so badly.  We’ve found that it’s sometimes better to say we’re wrong and to apologise.

Some years ago, I ran our Refining & Marking business in Australia.  Early one morning, one of my Shell tankers tipped over next to the Glasshouse building in Swan Street.  Petrol spilled out, ignited and set the Yarra River on fire.  Thank heavens nobody was hurt, but the TV visuals were spectacular.  I was woken up at 3.00am in Sydney and by 6.30 I was in Melbourne, apologising to Melbournians on the radio and TV for the disruption and saying “I’d fix it”.  I was expecting trouble when the Premier rang me, but his only complaint was with my targeting  -  that I hadn’t destroyed the building instead of singeing it  –  because he reckoned it was a Melbourne eyesore.

The public issue went away after 12 hours.  In this case, the apology was well received.

The point is, that it helps to acknowledge that you’re not always right, it helps to understand that your stakeholders expect to be consulted, and it helps to apologise when something goes wrong.   In fact, at home, it helps me to apologise even if nothing has gone wrong.

Maybe your company lawyers will not always be happy about an apology, but I’ve found you can usually work this out.  Another point on style.   It’s my experience, that adopting a measured, understated approach to issues and crises, works best.  Maybe you’re surprised to hear that, from the head of a company not always known for its modesty.  However, if experiences of the last 10-15 years have taught us anything, it is that we don't have all the answers at Shell.

We’ve learned some sharp lessons in recent decades, that do help us manage through our continuing challenges.

After the traumas of Nigeria and Brent Spar in 1995, the company started to appreciate, that our way of thinking, and the value we placed on our intellectual, economic and scientific approach, were not universally shared.

So we began an ambitious, open, and as it turned out, highly visible program, to try and understand better our various communities.

We conducted round tables with critics, opinion leaders, interest groups, politicians and others - in 35 countries.  We spoke with our employees around the world.   Thousands of people were engaged over two years.  This exercise turned up many alternative perspectives, on what the various communities expected of Shell.

The experience was not only very enlightening, it contributed significantly to a new commitment to dialogue, and better ways of relating to our various publics.   We continue to practice this today and, I expect, for the future.

Now, I want to say a few words about another dimension of reputation, which is to be active in the communities in which you operate.  In  Shell we’ve moved away from what I’ll call a philanthropic approach, to one better described as “strategic social investment”.  We now have well-targeted programmes at  national and local levels, aimed at addressing real issues, like environmental degradation and childhood literacy.   And we feel it’ss important to get our employees involved.    It helps the local communities to see that Shell people aren’t all that bad, and it’s an important part of our Employee Value Proposition  -  our employees expect it of us.

Our approach here, is in line with that described in the Centre’s recent landmark report on corporate community investment. We choose our activities, to maximise the value of our contribution and to support the goals of our businesses.  All well and good, but please don’t assume, that these worthy activities give you credit in  some “favour bank”.  Doing good works doesn’t give you a single degree of protection from a Brent Spar.

Lastly, just a few words about the importance of business principles.  One of the resulting initiatives from our listening campaign of the late 1990s, was the publication of our then innovative and much discussed “Profits and Principles Report”.  Shell’s “business principles” had been developed in 1976 for internal use.  But in the late ‘90s they were declared openly as a statement to stakeholders about our commitments to them and the respectful and ethical way Shell would conduct all its activities.  They’re a firm guide to what we expect of our employees and they’re underpinned by comprehensive awareness and assurance procedures.

We see the Business Principles as the fundamental framework for all aspects of our business.  They’ve generally stood the test of time, and they are periodically reviewed to take into account current issues.  The last review included additional emphasis on social performance and engagement with communities, on sustainable development principles, and a renewed focus on dialogue.

As some of you may know, I’ve been with Shell for more than 40 years.  Why have I stayed for so long?  Because I believe in what Shell stands for.  And that’s what our business principles reflect.  The business has and will change, the people will change, but the business principles must and will remain the same.  I couldn’t have stayed with a company whose business principles didn’t match my own, no matter how exciting the industry. 

In finishing then, can I offer these suggestions:

• Really understand your reputation and how you’re perceived by your stakeholders, and continually work on your reputation  –  not just in times of crisis;
• Learn from your experiences and your mistakes;
• Be prepared to acknowledge, that you don’t have all the answers and engage widely and genuinely with your stakeholders; and
• Stick to your business principles at all times.

I think the Corporate Public Affairs function is critical to achieving these aims  –  it certainly is in my company.   You have the responsibility of ensuring your companies understand what communities, politicians, regulators and others expect of our businesses.  You help stakeholders understand the realities of your commercial world and your objectives.    And you enable your colleagues to understand, what blend of word and deed is best able to maintain your license to operate.   You create the space for your business colleagues to achieve the aims of your companies  –  and you are therefore critical to the success of your businesses.

I appreciate the opportunity to present these comments, and I wish you and the Centre all the best for your important work.