CR Leaders: Sir Mark Moody-Stuart (Part 1)

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In a special two-part CR Leaders Corner, AccountAbility interviews Sir Mark Moody-Stuart on a wide range of issues in the oil & gas and extractives industries, and beyond. AccountAbility is joined by Dr. Assheton Carter, Chair of the AccountAbility Standards Board, among other roles.

Part two of the interview can be found here.

Sir Mark Moody-Stuart was Chairman of the Royal Dutch/Shell Group from 1998 to 2001 and of Anglo American plc from 2002 to 2009. He is Chairman of Hermes Equity Ownership Services.

After gaining a doctorate in Geology in 1966 at Cambridge, he worked for Shell in various roles starting as an exploration geologist, living in the Netherlands, Spain, Oman, Brunei, Australia, Nigeria, Turkey and Malaysia, as well as the UK.

He is a Director of Accenture and Saudi Aramco, chairman of the Innovative Vector Control Consortium for combating insect-borne disease, and a member of the Advisory Council at AccountAbility. He was a member of the UN Secretary General’s Advisory Council for the Global Compact 2001-2004 and was appointed to the UN Global Compact Board and as Chairman of the Global Compact Foundation in 2006. He was appointed Knight Commander of St Michael and St George in 2000.

Dr. Assheton Carter is a veteran consultant on business sustainability, a social entrepreneur, and a responsible investment advisor. He has launched many significant public private partnerships, such as the Energy and Biodiversity Initiative, the Business and Biodiversity Offset Program, and the Public Private Alliance on Conflict Minerals.

He has structured innovative ‘green’ supply chains, including the first traceable gold and diamond jewelry for the world’s largest retailer, Wal-Mart. He is a partner in Althelia Ecosphere, an impact-investing platform; Managing Partner of the Dragonfly Initiative, an advisory practice serving businesses in the precious metals supply chain; and chairs and serves on several boards and panels for resource companies, standard-setting organisations, and NGOs. Dr. Carter is Chair of AccountAbility Standards.

 

AccountAbility: Thinking back on your career and being a pioneer for corporate responsibility (CR), what projects are you most proud of?

Sir Mark Moody-Stuart (MMS): In the late 90’s Shell went through a very difficult time with the Brent Spar event and the execution of Ken Saro-Wiwa. Coming out of that, we embarked on a major process of stakeholder engagement, because clearly something within the company had gone wrong. We asked ourselves: Do our present principles fit our purpose? What does the world expect of a global corporation now?

This became a very intense engagement with people inside of and outside of Shell – media, politicians, NGOs, labor unions, etc. Out of that engagement we developed revised principles that went over very well with our external stakeholders. The main concern of our external stakeholders was not over the quality of our revised principles, but whether we would be able to carry them out.

Out of this process came the first Shell Sustainability Report in 1997, entitled “Profit and Principles: Does There Have to Be a Choice?

The stakeholder engagement and reporting processes were major turning points in Shell. Before we undertook our review, we thought we were reasonably good at stakeholder engagement, but we ended up realizing that we had much work to do. Following the review, Shell embraced openness and the ability to listen, which we fed back to interactively developing our report.

Once the report was published, many people inside and outside of Shell were very interested in what we called “dilemmas,” or “What should we do where there are benefits in a course of action, but also potentially negative effects?” These dilemmas drove people to realize that the issues confronted by Shell were not just black and white. There weren’t, and still aren’t, clear-cut answers in many cases, but if you engage people, it’s a very constructive process.

AA: Many positive experiences in sustainability and CR have come out of similar dilemmas.

MMS: Absolutely. If a corporation is under attack or criticism, it’s not just the leadership of the corporation who feels it; everyone in the corporation feels an assault on their self-esteem. People in a company think, “Well, I thought I was doing a good job, and all of a sudden people don’t think that.” So actually everybody in an organization is interested in making whatever changes are necessary. Crises inspire people across organizations, not just the leaders.

AA: Having worked on CR issues for a variety of companies, what advice would you impart on others trying to steer sustainability efforts within their organizations, regardless of industry?

MMS: Steering sustainability efforts hinges on engagement and consultation. Basically, all actions in all industries impact society and the environment – both positively and negatively. A truly thorough process of stakeholder engagement is about much more than just informing people about what you’re doing. It revolves around sitting down and talking about sustainability with all pivotal stakeholders, including with your critics. This process allows you to detect what your company’s impacts are, engage with those you think are affected, and engage with those you may not have known were affected. The process also puts you in touch with people who have ideas as to what might be done. Companies get a lot of information from this process.

People working to advance sustainability within companies then should make sure that the company has the proper engagement, help with engagement; and possibly have third-party facilitators who can help the company engage with people who might not otherwise happily talk to you, or whom might not occur to you that the company should be talking to.

AA: Stakeholder maps that many companies draw up have the company in the middle of a circle, with other stakeholders and constituencies surrounding it. But you’ve said, “We actually need to have society or the development goal in the center, and then business should be one of the actors that joins others in the circle around society or development goals.” Does that illustration still provide a good tool for explaining and discussing CR??

MMS: It does, though this is not an original thought of mine. While at Shell, we worked with the Ecumenical Council for Corporate Responsibility (ECCR). I drew the classic stakeholder diagram, with Shell in the middle and the other actors around Shell, and one of my colleagues from ECCR, Barbara Hayes, said to me, “You’ve actually got it wrong – it’s society in the middle, and everyone is a stakeholder in it. We’re all stakeholders in society.” That was a light bulb moment for me and I’ve always remembered it. It’s very important because the objective of a corporation is to provide goods and services to society, and if you see your customers as society at large, everything begins to fit into place.

AA: You refute some aspects of the “resource curse” in the introduction of your new book, noting that some countries reap the benefits of extractive industries, while others don’t. Malaysia versus Nigeria, for example.

What role, if any, do you feel investors and multinational companies have in realizing the benefits of resources in different countries?

MMS:  Well, I don’t say the resource curse hasn’t affected certain countries, but it affects countries if they do not have the leadership and capacity to guide and apply their resources constructively. So, the resource curse is not inevitable.

Some people would say companies shouldn’t be engaged in countries that do not have the capacity to use the windfalls of resources. Shell went through this exact argument in the case of Chad, which I cite in the book. A lot of NGOs said, Chad was a poor country coming out of the civil war, and if resources were developed, people would fight over the proceeds. To many, this line of reasoning is a very arrogant approach: that a country is too poor to know what to do with its revenue. On the other hand, conflict and graft are fairly likely outcomes in developing countries with poor institutions.

Together with the operator Exxon and partners, we worked with the World Bank to try and coerce the Chadian government to put the proceeds into a fund that required responsible use. This approach was a brave experiment, but unfortunately didn’t work in the end.

That said, the resource curse is less about natural resources than it is about financial resources. A great wall of money hitting an unprepared and inadequately governed country causes problems wherever the money comes from. This has been the case when a lot of aid or debt forgiveness enters countries.

Companies can’t combat the causes of the resource curse alone, or even in industry coalitions. But we can do it, or we may have an impact on it, if we work in coalitions with others. The Extractive Industry Transparency Initiative (EITI) is an excellent example of such a coalition. One of the big benefits of coalitions like EITI is that countries agree to set up an independent advisory body within individual countries. These advisory bodies bring together civil society, business, and others, and create a license to comment on and criticize what government is doing with money from natural resources. In many countries, creating such a body is already a huge step forward because it is the beginning of popular participation. The government is no longer free to do anything it wants, it’s accountable to somebody.