Case studies of how BP and Shell are approaching sustainable development

Abstract

Firms in all industries must respond both to the changing dynamics of markets and to the expectations of stakeholders within those markets. Within the last two decades, nongovernmental organizations and other parts of the public have been increasingly active in shaping public expectations for firms to conduct their activities in ways that minimize undesired social and environmental impacts. These expectations for firms to balance their short terms goals of profitability with the long-term needs of the society and environment can be broadly referred to as corporate "Sustainable Development." The current day debate surrounding SD as applied to global corporations is complicated for many reasons, as this document explains. Large global oil and gas firms that are in the business of exploiting non-renewable yet strategic natural resources are by no means immune to these changing stakeholder expectations. These companies deal with the commodities that fuel both development and pollution. As a result, the debate surrounding SD affects their corporate strategy. Increasing global connectivity via the Internet has provided concerned citizens with the ability to apply pressure in a collective and immediate way. In the last decade, negative media has highlighted the impact these public pressures have had on oil and gas firms' image. It has also highlighted the potential scale to which these pressures can impact a company's future as a, profitable firm. We studied two oil and gas firms, Shell and BP. Both have re-positioned and re-branded themselves by taking proactive measures to meet and even exceed the expectations of their various stakeholders. By entering into dialogue with their constituencies, they have increased innovation toward sustainable practices, and in so doing, have boosted public trust. By analyzing live cases, we reveal their approaches in bringing the ambitious ideals of sustainable development into practice. Each case was successful due to its project-specific approach which catered to local needs. Additionally, each firm's history, organization and culture dictates its SD strategy - i.e, there is no universal approach. However, regardless of individual styles, "transparency" and "engagement with stakeholders" are vital ingredients to success in SD. But these must be learned through practice.