Environmental Sustainability

Introduction

Basic Energy Consultants is an organization that offers devices used for environmental management and related activities. With regard to the changing societal attitudes on green and the recent concerns over peak oil, our company has decided to analyze the activities of Statoil, a major energy company in oil and gas production. The analysis aims at judging the measures that were taken by this company towards sustainability.

As a representative of Basic Energy Consultants, I have been requested to write a report, which provides a critical analysis regarding Statoil’s sustainability related activities. A particular attention is paid to their report titled “Sustainability 2011”.

The issue includes a critical analysis of the measures, which Statoil has put in place to demonstrate its concern of environmental management and sustainability issue of its business operations. Moreover, it includes the following areas: the impact of Statoil’s activities on the environment including the importance of Statoil`s action, alternative energy, which is associated with acting in accordance with laws on sustainable water strategies, prevention of oil spills, the questions of biodiversity, natural gas and sustainable Arctic operations.

Statoil and Environment

The main goal of Statoil regarding environmental issues is to ensure sustainable development and to help in improving the surrounding environment. Thus, the company offers particular initiatives that help in reaching the company`s goal (Statoil 2013). 

The main areas of the company`s attention are: impact assessment, health, safety and environmental policy, Arctic challenges, biodiversity, clean air, emissions of hazardous substances to water, and sustainability performance. Each of them include the characteristics of the company`s approaches within corresponding sphere, present challenges that characterize certain category supporting it with some statistics and chronological data, or offer further steps for prospective development.

The area of impacts` assessment includes information on authority application starting from the nineties. The data is divided into particular categories depending on the type of its development. There are also some sub-categories that can be accessed only in the Norwegian language.

The information regarding impacts` assessment is also divided into groups: international, national, regional and local. The international part consists of all documents that are related to the authority application and impact assessment process regarding onshore facilities, pipelines and international fields in fifteen regions all over the world.

The area of health, safety and environment is reflected in ensuring safe operations that are aimed at the environment and people’s protection, assets and communities’ preservation. Statoil claims about that it efficiently uses natural resources; the company also argues that its energy provision is directed at the sustainable development support.

The company believes in the possibility of accidents prevention so the safety can be guaranteed. Thus, special attention is paid to the part of what the company does to prevent those accidents from happening. However, in case an accident occurs, the company is prepared to react immediately with an aim of reducing losses or injuries. The company states that life saving is its highest priority.

As the Arctic regions have twenty-five percent of total oil and gas reserves all over the world, the demand for hydrocarbons there is quite high. That also provokes the decline of the reserves in other places, and many oil and gas companies put the Arctic region on the top list.

When we consider the production of oil and gas, we deal with numerous challenges of the Arctic region. Those challenges are connected to corresponding technology, which should be of social and environmental nature. Thus, there is a need for appropriate co-existence of both indigenous people and fisheries that want to keep the sea clean.

Migratory animals such as caribou and reindeer should be taken into consideration as well. Another challenge is the possibility of an oil spill and a difficulty of taking all emergency measures in inaccessible tundra areas that are covered with ice.

According to the Statoil’s website, social and environmental strategies are established in order to be prepared for possible future challenges; and the Barents Region is the main focus (Statoil 2013). The main goal of that strategy is the development of operational procedures and technology that can allow the company to do its business in a sustainable manner in the Arctic regions by 2030. 

Focusing strongly on the Arctic regions, the intensive programs and researches are developed to meet the technological challenges such as production systems and drilling, oil spill response, long distance transportation of oil and gas that are still unprocessed, material science, health and working environment in cold climate, etc.  

With an aim of broadening its expertise, Statoil has signed a Memorandum of Understanding with UNEP and some educational institutions. The main reason for that was improving the company`s expertise and knowledge of those prospective stakeholders that will face the production of oil and gas in the near future.

In order to reach its goals regarding the cooperation with potential stakeholders, Statoil considers that its information and knowledge can provide more effective and constructive feedback during various consultations. The cooperation with those stakeholders is beneficial as they are not only able to provide accurate information on the environmental issues but also to present their own interests. All of that is vital for Statoil as they can both impact the land minimally and identify good co-existence solutions.

As biodiversity is a key factor for sustainable development, it remains the main component of Statoil’s environmental policy as well. Biodiversity is not only a great source of food, natural resources and medicine, but it is also of great significance at a spiritual, esthetical and even cultural level. Thus, Statoil considers biodiversity as an integral part of not only environmental but also health and social factors as well.

Statoil takes an active part in various international projects such as Biodiversity Working Group, set up by the International Association of Oil and Gas Producers and the International Petroleum Industry Environmental Conservation Association. The company is also a partner of the program initiated by the UNEP’s World Conservation Monitoring Centre. They provide corresponding information on biodiversity through decentralized database systems.

Apart from cooperation with other oil and gas companies, Statoil also participates in an international project, which is designed to deepen the knowledge on the noise impact on various sea organisms. In order to improve its activities related to environmental issues, Statoil plans to review its activities in order to identify the challenges that are related to biodiversity in various business areas.

The compounds of sulfur and nitrogen cause acid rains. They not only harm freshwater fish populations, but also damage forests and other types of vegetation. The onshore and offshore facilities of Statoil use oil and gas for operations with major energy products such as fuel. Technologies employed by the company also use lower temperatures.

Sulfur dioxide is emitted through combustion of fossil fuels containing sulfur; its emissions can be reduced. Statoil is aimed at removing sulfur from fuel. Its refineries are located in Norway and Denmark. Statoil has also started to use the supply vessels that run on natural gas and not on diesel. That is an indicator of both environmental friendliness and economic efficiency.

Considering Statoil’s water emissions, the company states that their waste streams are purified and they are continually working on further reduction of those water emissions as goal remains to do their business without causing any harm to the environment.

The company has developed the Environmental Impact Factor, which is the risk assessment tool that is used by both the industry and by the authorities. This indicator demonstrates which water components are considered the most harmful. Being a good basis for having optimum environmental solutions, it enables monitoring, measurement and comparison of different sea discharges.

Statoil also carries out complete assessments of the discharges. Those assessments include emissions to atmosphere, energy consumption, chemical requirements and amount of waste.

The company is actively engaged in the process of testing of existing and development of new corresponding cleaning technologies and chemicals. Thus, Statoil is considered as a pioneer in employing hydrological cyclones for water purification.

Sustainability performance is one of the major prerequisites that distinguished Statoil from other leading oil and gas companies. As a result, Statoil has received high ratings according to  some Socially Responsible Investing indices. 

In 2007, according to the Dow Jones Sustainability Index, Statoil was ranked as the best oil and gas company in the world for its sustainability. It also kept its position during the following four years.  Statoil has also been highly ranked on such indices as the Goldman Sachs’ Environment, Social and Governance analysis, FTSE4Good criteria and Storebrand’s Socially Responsible Investment index.

The first focuses exclusively on the oil and gas industry. It usually assesses performance and quality management. It is based on twenty eight indicators, five various categories. It also reviews the companies based on cash returns and materiality.

The FTSE4Good Index Series has been designed to objectively measure the performance of companies that meet globally recognized corporate responsibility standards,  including environmental, social and stakeholder factors, corporate governance, ethics and labor rights.

The latter performs periodic analyses of those companies that are listed in the Morgan Stanley Capital International World Index. It is designed to reflect on a question on global corporate responsibility practices; and it originates from the sets of principles such as the Universal Declaration of Human Rights, the UN Global Compact, the OECD Guidelines for Multinational Enterprises, and the Global Reporting Initiative.

Analysis of Sustainability Report 2011

Reporting is a significant element that helps in understanding a company`s activities. Moreover, analysis of those activities within a couple of years allows understanding of a company’s strategic development direction, to see its strengths and to define its weaknesses. It can further improve the development of any company in the competitive market.

The company, especially when it is considered one of the major companies in a certain sphere, usually tries to operate maintaining its high status among the others. Even more attention is paid when the company deals with the activities that may harm the environment, for example, oil and gas corporations that operate on and offshore. Thus, the questions of the coexistence of sustainability principles and economic profit should be taken into consideration.

As the world has experienced a lot of oil and gas catastrophes, transparency in reporting and positive sustainability indicators are important in creating better image of the company. For example, Statoil has a separate download center webpage, where information is divided into particular categories (Statoil 2013).

Helge Lund, CEO of Statoil,  considers 2011 as a good year for the company. He admits that the company improved on safety by delivering more stable operations. That resulted in strengthening their financial performance as well. He also mentions the company`s strategy was updated uncovering the direction of the technology-focused company (Statoil 2013).

Virtual panel debate is a new method used by Statoil to demonstrate its annual reports. The main focus of the reports in focused on the expectations of the company`s stakeholders with the depiction of the ways in which the company responds to challenges. It is essential to note that sustainability part is fully integrated in this report, because it reflects the company`s commitment to sustainable growth in line with the principles of the UN Global Compact. 

Sustainability reporting is divided into four main subcategories that demonstrate the company’s performance. They are as follows: “HSE performance indicators”, “Environmental data”, “Social performance data” and “Statoil Employees” (Statoil 2013). Statoil presents theoretical explanation of the main terms that are used in the report.

The report on health, safety and environmental policies presents some charts and statistics using performance indicators. The charts demonstrate the number of serious incidents and fatalities, lost-time injuries, unintentional oil spills, total carbon dioxide, nitrogen oxides and methane emissions, total quantity of non-methane volatile organic compounds, volume of sulfur oxides, cases of substitute work and other injuries requiring treatment by a medical professional per million hours worked. The report also includes Global warming potential (GWP); it shows Statoil’s share of greenhouse gas emissions due to the company’s operated activities as compared to other companies and total energy consumption.

The serious incident frequency decreased in 2011 as compared to 2010. It includes both Statoil contractors and employees. However, in 2011, a contractor employee who performed maintenance activities at service stations in Riga (Latvia) was killed in a traffic accident.   

Charts on sickness absence demonstrate that it increased in 2011 most significantly in Statoil’s Norwegian branches.  In 2011 and 2010, the company calculated sickness absence as a percentage of planned working hours.

Other charts show non-hazardous waste recovery rate. That indicator represents the amount of non-hazardous waste for recovery as a proportion of the total quantity of non-hazardous waste. Statistics on regular discharges of oil to water are also provided. The data represent the total number of oil discharged to water environment due to Statoil activities. This indicator includes both marine and freshwater recipients.

The last chart demonstrates the total consumption of fresh water, which includes water from wells and reservoirs, lakes, rivers and streams, fresh water public installations that used by Statoil for its activities in million cubic meters.

Environmental data is five pages analysis of gathered information regarding Statoil’s major activities in Denmark, Norway, Brazil and Canada. The information includes the report on air pollution emissions to, water discharges r, as well as information on spills, wastes, water consumption, raw materials and energy.

All information is gathered separately within a particular zone, which gives an opportunity to observe the strengths and weaknesses of Statoil, which is trying to  perform  in line with the principles of environmental sustainability. Moreover, each territory is also given an exclusive comment, which helps to observe the main difference in the progress of the company from the environmental point of view.

Social performance data is a one-page report that presents the company’s main social performance. It consists of: statistics in relation to gender composition, reputation rankings, trade union membership and social investments.

Information on Statoil employees is a two-page report which demonstrates data regarding the number of permanent employees and percentage of women during a period from 2009 to 2011, total workforce by region, employment type, employment contract and new hires in 2011. Moreover, it presents a graph on Statoil’s turnover by gender and age. The report also shows a total number of employees and explains the reasons of their permanent reduction.  

Conclusion

As we see, Statoil’s sustainability performance is reflected by particular indicators which demonstrate the company`s concern regarding sustainability and environmental management. The measures, which the company would like to implement in future, are in line with its environmental concerns as well.

The company tries to mitigate risks while enabling business performance to be of significant importance to address particular challenges. It is also directed at solving sensitive and complex social, political, and environmental problems. Doing all of that in a transparent way and showing all the company`s activities in its reports will bring the operations of Statoil closer to people who reside in the areas where Statoil performs its activities.

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