Sustainable development is about business, not philanthropy. It is about performance, not promises. But, says Philip Watts, it is a responsibility that business cannot shirk.
The future of our planet and of human society depends on sustainable development. Business has an essential role in contributing to this – by finding innovative ways of meeting present and future needs that are socially and environmentally sustainable.
Doing so presents companies with commercial opportunities and inspires business innovation. Put simply, sustainable development is good for us all.
Some people question whether business should be involved with sustainable development. Shouldn’t we rather be focused on our customers and on delivering returns to our shareholders? Isn’t that how we best contribute to society? It certainly is. But how we do it matters – to our customers, our employees, our neighbours and our shareholders – and always has. We succeed by responding to their developing expectations.
Many people were surprised to see business playing such a prominent part at the World Summit on Sustainable Development in Johannesburg last year. To my mind, this presence was very important. We needed to show that business is not the problem, but an essential part of the solution.
And I believe we did much to demonstrate this. The partnerships between businesses, governments and NGOs agreed in Johannesburg represent practical initiatives that will make a real difference to the world’s poorest people.
I was in Johannesburg as chairman of the World Business Council for Sustainable Development and have no doubt that the business contribution is greatly enhanced by our ability to work together. The council brings together 160 international companies from 30 countries – exchanging experience, joining in common projects and contributing to the debate.
The concept of sustainable development emerged as a way for governments to tackle the fallout from the powerful forces of globalization, liberalization and technological advance.
These offer great benefits. However, the speed and scale of change affects people’s lives and raises understandable fears. Many see globalization as a destructive force and target multinational business as the greedy and exploitative embodiments of all that is wrong with society.
But business is part of society and our success is linked to society’s progress and prosperity: I believe that with political will and responsible business, globalization will be recognized as a positive force.
Business, though, cannot act alone. It has to work with governments – although it can never take their place – and with others. Governments have the responsibility for creating the right conditions for investment, including good governance, economic and regulatory stability and reliable infrastructure.
Companies must ensure that their business is carried out responsibly, efficiently and profitably – and that it contributes to the community, particularly where people are affected by their operations.
The key point is that sustainable development is about business, not philanthropy. Charitable giving can be important. But what really matters is how we make our business decisions and undertake our business activities.
What does this actually mean? Let me give some examples from the energy business.
The world faces great energy challenges – extending access to modern energy to the billion people who still suffer from being without it, meeting the expanding energy needs of the developing world, ensuring the secure energy supplies modern society depends on, reducing the environmental impact of producing and using energy, responding to climate change.
So there are many different ways in which energy companies can contribute to sustainable development – such as providing solar power to remote rural communities, producing and processing oil and gas more efficiently and cleanly, offering less carbon intensive choices, extending capabilities in developing countries, developing new ways of meeting energy needs and of dealing with carbon emissions.
For all companies, contributing to sustainable development requires clarity of values, principles, standards, and commitments. Sustainable development must be made an integral part of business processes for planning, decision-making, execution and reward.
However, the focus must never be just internal. It requires engaging with others – appreciating their perspectives, responding to their expectations, learning from their experience. World Economic Forum meetings provide valuable opportunities for such engagement.
It also requires a strong commitment to transparency. Trust in business – and other institutions – has been declining. Recent corporate scandals have been particularly damaging.
Regaining trust is an imperative. The starting point must be being seen to be open about what we do and what we plan – whether in our accounting or our impact on society and the environment.
But it is only a starting point. What really matters is performance – being seen to do what we say and deliver what we promise. That is surely the only way to build trust. But it is bound to be a long haul. And, as in the child’s game of snakes and ladders, any failure can send you sliding straight back down again.
I have stressed the need for people to “see” what we do. Commitment and performance only change perceptions if they are well communicated. Doing so requires a lot of thought.
Regaining trust is a challenge for one organization. It is clearly a much greater one for business as a whole, where one bad apple can taint us all. Business and political leaders have a responsibility for creating a climate that demands high standards. Again, World Economic Forum meetings can play a valuable role in this.
Shell companies have been committed to sustainable development since 1997. It is a tough journey. We have learned a lot and made considerable progress. We cannot claim to be perfect but do try to be open about where we are going and how well we are doing.
We have no doubt that it has been good for our business and believe that our long-term commercial success depends on being seen to meet people’s expectations.
Sustainable development is essential if the world is to meet the needs and aspirations of all people without risking turmoil and environmental catastrophe. It is a matter for all society, particularly governments, and not just business. But business has a vital role in making things happen. It is a responsibility we cannot shirk.
Philip Watts is chairman of the committee of managing directors of the Royal Dutch/Shell Group of Companies.