21 May, 1998

Dr. Chris Fay, Shell UK, Chairman and Chief Executive

We hope that the first Shell UK Report to Society, following on from previous Environmental Reports, marks the beginning of an important new phase in our Dr Chris Fayrelationship with the outside world and sets new benchmarks for openness and accountability. We believe that the Report, which complements the Shell Group Report ‘Profits and Principles’, sets out a clear agenda for corporate social responsibility that goes beyond charitable giving and traditional community support.

Our Report sets out the Shell UK position across a wide range of topical and important issues: from air quality to equal opportunities, from sustainable development to serving the customer. In each of these areas we are asking searching questions, reviewing past practice and developing new approaches consistent with our commitment to a more sustainable future.

Shell UK cannot provide all the answers to major social and environmental concerns. It would be entirely inappropriate for us to do so. Issues such as air quality and the future of transport policy in the UK, for example, pose serious challenges to us all – government, local authorities, manufacturers and consumers. Their solution can only be found through co-operation at the local, national or even international level.

For our part, we believe that companies cannot divorce themselves from what is happening out there in our local communities and that we have a major role to play in building a strong, dynamic and successful society.

For us, ‘investing in the community’ is not just icing on the cake, but an integral part of the way in which we do business. That's why I personally attach so much importance to the work of the Shell Better Britain Campaign and to our other community programmes. These programmes are helping to deliver real improvements in people’s lives. Working together with our employees, community groups, local industry and others, they are promoting innovative schemes to improve the environment and to address important social concerns.

Shell UK is investing in the future through practical community initiatives, including the Shell Technology Enterprise Programme which every year gives over 1,000 graduate students valuable work experience. We believe that we have a duty to support excellence, to give young people new opportunities, and to work positively with local authorities, the voluntary sector and others. In the future, the successful company will not be judged solely in terms of the financial bottom line. And some would argue that this is already the case. Responsibilities to the environment, to the health, safety and welfare of our staff, and to wider society will form an integral part of the way in which we do business. At Shell UK, we recognise that our most precious resource is not under the sea, but in our offices, sites, terminals and platforms. Our staff are closest to the action and they have a genuine stake in the success of our business.

In recent years, Shell UK has successfully applied new technologies and new working practices to improve the environment, to prevent unnecessary damage, and to speed the clean up of contaminated sites. Nowhere have these improvements been more successful than in the dramatic reduction in flaring and venting during the 1990s. In the North Sea and at our refineries, some flaring and venting remains absolutely essential for safety reasons. Nevertheless, Shell Expro has reduced its figures by over 40% since 1992, while flaring at Shell Haven and Stanlow refineries has fallen by 50% over the same period.

Equally however, we have a duty to disclose statistics which may make for less comfortable reading. No one would believe us if we claimed that everything in the garden was rosy. We have never done this in the past and we are not about to start now.

In this year's Report, you will see that we have missed our target for oil spills Throughout the early 1990s, we were able to report on steady improvements with total spills falling to 7 tonnes by 1995. The 1997 figure of 111 tonnes, including two incidents amounting to over 72 tonnes, is therefore completely unacceptable. As Chairman, I have already taken steps to ensure that further resources are devoted to addressing this issue, that procedures are tightened up, and that individual staff are clearly reminded of their responsibilities to reverse this upward trend.

Concern for the environment, for health and safety, and for broader social goals, are not ‘optional extras’ or responsibilities which we can simply leave to others. We see these responsibilities as positive opportunities to build trust, to improve performance, and yes, ultimately, to increase profitability. Equally however, there are very clear limits to our role. We can never be an all-embracing corporate ‘nanny’ stepping into areas where government, local authorities and others cannot or will not tread. That is simply not our role.

But we are, I believe, taking the first steps toward something new. We are doing more than challenging the notion that companies can ignore their wider social responsibilities. We are moving toward an explicit commitment to triple bottom line reporting, to the creation of a genuine stakeholder company, and to integrating sustainable development into our day to day business planning and management decision-making.

These changes will inevitably take time. If anyone expects a 'Big Bang’ overnight they are going to be disappointed. Long held assumptions and working practices will need to be challenged and then challenged again. And I do not pretend that this will be easy. The businesses which make up Shell UK must demonstrate in deed, as well as word, that change is being made and that our public commitments are being matched by real progress on the ground.

Already, there are encouraging signs, and we start from a solid platform of established health, safety and environmental reporting. Later this month, we will be submitting a detailed report on Shell UK’s approach to sustainable development to the Government. But there is a world of difference between publishing environmental and safety targets and integrating sustainable development into our day to day business activities. In this respect, we still have some way to go before we can clearly demonstrate that environmental and social factors carry equal weight with the financial bottom line except in extreme circumstances.

Our harshest critics of course will never be satisfied for they have a fundamentalist objection to our core business - the production, refining and distribution of oil and gas. I'm tempted to say many things, but announcing the end of our core business is not one of them! When others talk about the three pillars of sustainable development, they sometimes ignore or overlook the fundamental economic factors which are so central to human progress. For us, wealth creation and economic prosperity remain at the heart of all that we do. But this does not mean that we in turn can ignore environmental and social concerns. Quite the reverse.

This is very much a first Report. We do not claim to have all the answers and there will be many who find gaps, and who urge us to go further in the coming weeks and months. The lack of established targets in the People Giving their Best section, for example, is an obvious gap and one which we will be addressing as a matter of course for future reports.

That is why today is about first steps and the contribution that Shell UK can make in partnership with others. We have to face daily the practical challenge of juggling competing interests, of balancing conflicting demands, and of satisfying the needs of different stakeholder groups. The first Shell UK Report to Society reflects above all else, these fundamental social, environmental and economic realities.

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