CR Leaders: Paula Luff, Hess Corporation

AccountAbility interviews Paula Luff, Vice President, Corporate Social Responsibility at Hess Corporation.

Paula Luff is Vice President of Corporate Social Responsibility for Hess Corporation, a global integrated energy company based in New York City.

Luff, who joined Hess in August 2007, established and leads formal Social Responsibility and Philanthropy functions for the company.

Prior to joining Hess, she was senior director of Global Philanthropy for Pfizer Inc where she set strategy and led the teams that developed flagship programs in global health for the company and its foundation: the International Trachoma Initiative, the Diflucan Partnership Program, Global Health Fellows, the Infectious Diseases Institute, Connect HIV, Community Health Ventures and Regional Health Partnerships. She also represented Pfizer on philanthropy and global health issues with the media, public officials, bi-lateral and multi-lateral organizations and other external stakeholders. Luff was also previously with CARE, the humanitarian organization fighting global poverty.

Luff holds a bachelor’s degree from the University of Wisconsin and master’s degrees from New York University and the New School University.

Luff Serves on the board of Philanthropy New York and on the global advisory council of Cornerstone Capital Group. She has served on the boards of Grantmakers in Health and Accordia (formerly the Academic Alliance Foundation for AIDS Care and Prevention in Africa).

AccountAbility (AA): Paula, you moved from Pfizer to Hess in 2007. Having worked in the corporate responsibility (CR) field for a variety of companies, what advice would you impart onto others trying to steer sustainability efforts within their organizations, regardless of industry?

Paula Luff (PL): There are a couple of challenges that people working in sustainability face. One is that sustainability and the definition of sustainability varies from company to company, and industry to industry. However, I think there’s a universal absolute minimum that everyone has to have in this field, and that is the support of senior management. Sustainability and CR must be central to the business and the way the company operates, and not just some nice thing the company does on the side. If professionals cannot get that kind of support, their ability to be effective in helping transform the way their companies operate will be seriously limited.

AA: Buy-in is essential to developing an impactful CR and sustainability program, how does one build support with senior management and develop executive buy-in?

PL: Quite frankly, when you enter a company you have to make sure that sustainability and CR are important to the company, even if the company is early on in addressing CR and sustainability. When I first came to Hess, senior management made it clear that if done well, social responsibility and sustainability present competitive advantages, especially in the extractives sector. Their vision was for our partners, national oil companies, and other stakeholders to want to work with Hess because the company is not only a great technical partner and responsible operator, but Hess also leaves countries, states, and communities better off.

AA: Thinking about the work you’ve done at Hess, what CR projects are you most proud of and why?  

PL: Instead of specific projects, I am most proud of the change in perception internally. For me, this progress began during a trip to Asia-Pacific when I had my first “ah-ha” moment. I went there to conduct a human rights training session with a group of drillers. Prior to the trips I received advice about the importance of emphasizing the risks under the Alien Tort Statute and the legal exposure for the company. So off I went with my slides, and I started talking about the Alien Tort Statute. I lost the audience in about 10 minutes, and thought okay, how am I going to get these people back?

As someone who speaks five languages, I knew the importance of communicating to others in a language they actually understand, so I thought what really matters to this group? What matters to them is delivering a project on-time, on-budget, and without any issues. So I asked some relevant questions. I asked, “If the fishing community feels that their catch has suffered tremendously from your presence and your operations and they decide to climb the platform, what does that mean?” That got people’s attention. When I started talking about topics the audience was concerned about and could relate to, we ended up having a phenomenal conversation about how respecting and communicating effectively with stakeholders can help safely deliver projects on-time and on-budget.

AA: At a recent forum at the Center for Strategic International Studies (CSIS), you mentioned that while philanthropy can have a very positive impact, other company operations, such as capital development and taxation, have a greater impact on CR and sustainability. Could you elaborate on this point?

PL: For industries like ours where we have a large physical presence over a number of years, our philanthropy spend, no matter how strategic, is dwarfed by the local purchasing activity in the supply chain, hiring, capital expenditure, and sourcing. Philanthropy is an important tool in stakeholder engagement, in community development, and in gaining and maintaining a social license to operate, but in and of itself, philanthropy is not sufficient. If you really want to make a contribution to sustainable development, you’ve got to do well in other areas, such as local workforce development, local sourcing and capacity development. Those activities present a greater opportunity for longer-term economic impact than any particular project. If you build the capacity of the local business sector, you’re making a sustainable contribution to economic development in a way that has a broader ripple effect.

AA: What role has company leadership and the legacy of the Hess family played in developing CR policy at Hess?

PL: I have a unique position in the CR space because the person who runs the company has his name on the door and his father founded it. This makes personal and corporate reputation at Hess linked in a way unlike most multinational companies. The legacy of the Hess family is to focus on always behaving with integrity, and doing the right thing—especially when no one is looking. So for me, it wasn’t difficult to make the case for a comprehensive approach to corporate responsibility and sustainability. It’s about good business – it’s about being the best possible business and partner we can be. If we do these things well, we will be profitable and we will make the kinds of economic and social contributions that we feel a company like ours should be making in the space we’re operating in.

AA: Hess is a member of a number of voluntary sustainability and transparency commitments, including the United Nations Global Compact (UNGC) and the Extractive Industries Transparency Initiative (EITI). How has participation in such commitments impacted the company? 

PL: That’s something we are discussing a lot right now because the world has changed significantly since we made those commitments. Back in the early 2000’s, the expectation was to join and engage with civil society. However, over the last decade the goal posts have moved and what was once voluntary is increasingly becoming required. Look no further than the Dodd Frank legislation (specifically Dodd Frank 1502, 1503 and 1504), which includes legislation on both conflict minerals and disclosure of payments to foreign governments for extractive industries. The Dodd Frank Act continues to evolve, but the fact that what was once a voluntary effort under the EITI and other initiatives is now finding its way into major legislation, and company 10Ks, speaks volumes to the way the world has begun to think about CR.

With our commitments, one of the things my team has been focusing on over the last year is prioritizing what we need, and where our gaps lie in terms of making sure we’re “operationalizing” these voluntary principles and initiatives. Specifically, we have developed a company-wide training in human rights. We have also developed contract language about our expectations that now goes into every supplier contract, and we’re trying to get the language into production sharing agreements and various other joint venture agreements.

AA: What role is CR playing at Hess as the company transforms and evolves? 

PL: Our team’s focus is always on exploration and production (E&P) because that is where the greatest social risk is, therefore, the recent corporate changes haven’t changed our group or Hess’s focus on CR much.

What is pushing our CR strategy and engagement to evolve is Hess’s development into more of an on-shore player. We have had a significant off-shore presence for some time, but our presence has grown over time in North Dakota, Ohio, and other on-shore areas. This evolution provides opportunities for us to fine tune some of our stakeholder and community development approaches, and engage with our operations around issues that we may not face when they’re off-shore. It’s very different when you’re doing seismic in the middle of the ocean, rather than in someone’s fields.

AA: What other emerging issues do you see in CR, either for oil and gas, or more generally? 

PL: There is a lot of discussion around how you calculate the value erosion or the value-add of sustainability. How do you quantify this for the ESG community? How do you quantify this for the investor community? Analysts tend to look at a much more short-term time horizon when they’re evaluating a company’s performance, so the challenge is how you bake some of the longer-term sustainability metrics and valuations into that model? I’m not sure we have the key performance indicators or the tools to actually do those valuations in a standard and verifiable way.

AA: Oil and gas has had some high profile incidents in recent years. What lessons have you observed and how do you see CR practices going forward in light of these incidents?

PL: Recent incidents underscore my earlier point that CR is not about what you do after a crisis. It’s about how you operate to ensure that your processes, your staff, and everyone are laser-focused on how to get the job done right by the business and the community. That said, there’s a lot to learn from incidents that do occur. They highlight for any industry what companies need to do to ensure that they are delivering business value while also looking at safety, the environment and society.

AA: What is your strategy for implementing CR and sustainability programs in a company like Hess, which operates in many locations with very different social, political and economic make-ups? 

PL: It’s very challenging. Typically a corporate group’s role is to develop standards, guidance tools, etc., but we have found that’s not enough. We creatively tailor our approach to each situation. There is no cookie-cutter, one-size-fits-all solution to any issue. Each community is different, each culture is different, each setting is different and we’ve got to tailor our tools accordingly. At Hess, we put forth general policies and expectations, but we tailor how we implement them to each situation. And again you need to speak to people in a language that resonates with them, and listen. We don’t have all the answers. Learning is a multi-directional process.

AA: So tell us, what’s on the horizon for corporate responsibility at Hess?

PL: Well we’ve done a good job of developing the policies, the standards, and the guidance. Now we need to roll up our sleeves, get into the trenches, work with our business partners internally, and integrate sustainability into our operations in a way that it becomes second nature. That’s the next step for us. It’s going to be a lot of fun, but I think it’s going to be a lot of work and we’re looking forward to it!