Ranking by Total Ethical Performance
Position Company Percentage (%)
1 Royal Dutch Shell 82%
2 ExxonMobil 80%
3 BP 79%
4 Total 75%
6 ChevronTexaco 69%
7 Petrobras 53%
8 Pemex 36%
9 Lukoil 35%
10 PDVSA 13%
Shell decreased the oil it spilled to 6.100 tons in 2004, down from
18.700 in 1999, increased women in supervisory or professional positions from 17.1% (2000) to 19.5% (2003), reduced fatalities among employees and contractors, and pledged $5 million to Tsunami victims 3 days after the disaster. Chartered accountant organizations in the UK and Holland recognize Shell’s sustainability report as among the best.
In this study Management & Excellence SA looks behind oil’s strong numbers and public performance at how well companies are in terms of roughly 120 points of corporate governance, transparency, environmental management, ethics and corporate social responsibility-all areas of increasing interest to the investment community, politicians and the public. This is M&E’s second study of the world’s oil industry. In the first study M&E gave ethics management ratings, in this study there are scores of achieved points out of 100 possible percentage points.
Some of the points made in the study include:
. Petrobras is catching up with the European and U.S. companies bit by bit. Although it only achieves a total score of 53%, it complies with Bovespa level 2 corporate governance rules and invested $1.9 billion in environmental projects over the last 5 years. By comparison: ExxonMobil spent $2.8 billion in 2003 on environmental projects. However, these figures may not be comparable among companies.
. The state-owned companies Pemex (Mexico) and PDVSA (Venezuela) did the worst. PDVSA fails in most areas of transparency and corporate governance, not even publishing a proper code of ethics, attaining a very meagre 13% total score-Shell attaining a score 6.3 times higher. Investors have to guess about the management techniques behind PDVSA’s numbers.
. The U.S. and European companies have decreased emissions continuously year for year. Most certify the majority of their plants according to ISO and fatalities among employees and contractors are between 10 and 15 annually. Petrobras is at 19, by comparison, down from over 20.
. All companies spend substantial funds on training personnel. ExxonMobil spent $48 million to train over 31.000 employees in more than 500 programs. Well trained employees are more motivated and less to make mistakes in operating equipment, which in turn reduces the risk of accidents and spills. Given that most fatalities occur in Third World countries through road accidents, ExxonMobil, for example, runs driver education courses for truck drivers.
. Codes of ethics and conduct are becoming detailed, outlining exactly how company employees should behave with respect to bribery, buying and selling equities and hundreds of other areas. ChevronTexaco publishes its code of business conduct in 11 languages.
. The most dramatic improvement over the last years has been in corporate governance and environmental management. Most directors are independent on the Board of Directors and up to seven committees (Repsol) control ethical, compensation, nomination and safety issues.
. In analysing which areas oil companies did best at, “community programs” (a part of CSR) was the strongest overall area. Oil companies have traditionally given to the poor, educated the youth and supported the arts as an important promotion strategy. Total, for example, is sponsoring the Pharaoh exhibition in France and Petrobras set up “petrol station schools” at stations to train thousands of young people all over Brazil. Sponsoring motor sports is also a well-known part of this area, on which the companies do not publish budget figures.
. Despite voluminous environmental reports, only Total seems to take a detailed stand on the Kyoto issue, discussing general figures and projections on greenhouse gases in connection with Total’s own figures. ExxonMobil is pre-active on environmental issues in that its CEO and other top managers give regular speeches on the issues. Environmental groups accuse ExxonMobil of sidestepping Kyoto and indeed lobbying against it.