Paul Holmes 24 Feb 2009 // 12:00AM GMT
Bjorn Edlund joined Royal Dutch Shell in the Fall of 2005 and is responsible for the energy group's worldwide reputation management, internally and externally, with a special focus on the company’s relationships with stakeholders. He began his career as a news agency journalist, and worked with United Press International in Sweden, Germany and Spain from 1977 until 1983, when he joined Reuters, holding positions in Mexico, Argentina and Germany. Edlund has worked in global business communications since 1989 and came to Shell from ABB, where he headed communications and sustainability affairs.
Paul Holmes asks Edlund 10 questions.
Paul Holmes: How have the events of the past decade or so—from Brent Spar to Nigeria to the crisis over the company’s oil reserves—impacted the way in which Shell engages with its stakeholders, including its critics? To what extent did those events focus senior management on the value of a good reputation?
Bjorn Edlund: The oil industry has always been at the heart of politics, and Shell had many challenges earlier on, such as the criticism during the apartheid years, when we remained in South Africa. Shell used issues management even before 1995. That said, the year of Brent Spar and the deep crisis in Nigeria after the military dictatorship killed the writer Ken Saro-Wiwa and his fellow activists, was a shock to the system. So, structured, proactive stakeholder engagement became the job of senior business people in Shell.
From late 1995 Shell reinvented its philosophy and praxis for external relations with a single-minded determination to learn from these experiences and get out front of the pack. Shell engaged with many of our critics to learn what they expected, and undertook a head-to-toe review of how we work and communicate. Many changes followed.
The common thread in both incidents was that the company had lost touch with changing expectations in society. Our government-approved solution for the Brent Spar facility—sinking it in a remote part of the Atlantic—may have been superior on safety and environmental grounds, but it gave Greenpeace an iconic focus for its multi-year campaign to ban industrial waste being dumped in the oceans. So it was not the best solution. Our approach in Nigeria, making determined representations for clemency “behind closed doors,” while not commenting publicly, was seen as the silence of complicity while human rights were being trampled. Shell appeared to have missed the arrival of the age of social consent.
PH: Environmental issues have been high on the global agenda in recent years, and the oil company is regarded by many as part of the problem rather than part of the solution. Under the circumstances, what can a company like Shell do to demonstrate that it is a responsible citizen, and what’s the best outcome you can hope for?
BE: Extractive industries are always going to be held to exacting standards for environmental performance. Getting hydrocarbons out of the ground can disrupt the natural environment. Refining to convert oil into fuel and chemicals also has impacts. That’s the nature of our business, but we have an objective ‘not to harm’ and are taking every effort to achieve this.
That puts a heavy onus on our operations to minimize environmental impacts, be vigilant in managing risks, and meet commitments on remediation when upstream operations have reach the end of their productive life. We openly report about our performance.
The best approach is always local. If we get it right in the community, we will have achieved more than 75 percent of what is possible. We stumble too often, forgetting that permits aren’t enough. And when we do, we feed our local and global critics. If we focus on early engagement locally and address real concerns openly, we can usually create the trust we need, simply by working together with the community.
I’m thinking about Alaska, where the Eskimo communities are concerned that offshore oil production will interfere with core traditions like whale hunting. So we must work with them to study and improve oil spill response in case of spills in ice, and if mud and water discharge from drilling rigs would have an effect on fish and other animals.
As an oil company, we face shared industry issues around the environment, as well as the global concerns around climate change. Here, we need to speak up, and make sure people understand why we are advocating certain positions such as the need for government subsidies to demonstrate how carbon capture and storage will work on a larger scale, and why carbon trading must recognize stored CO2 with equal value as avoided CO2.
PH: Soaring oil prices have sparked a lot of debate, much of it ill-informed—about the oil industry and basic economics. What can be done in such an overheated environment to help people understand the issues?
BE: This touches on a broader problem that we have, that people don’t understand energy and the business around energy. That’s our own fault, because in decades past the industry has basically told people that all they need to know is whether they need diesel or gasoline, and if they want a premium fuel or not.
When the oil price debate heats up, I think you must be out there, with business people explaining the issue, and our senior people will generally agree to play that part.
We also have clear information for all our employees, who act as ambassadors in their own social circles.
We try myth busting in media relations work. It is clear that we must hammer on about the basics, both how the commodity oil markets (where we make most of our money) work, and how pump prices are set and which portion is tax.
If you examine the tone of coverage over the last 12 months, the serious media is doing a better job in providing context and balance to explain why prices continue to rise, and I believe we are starting to see a more adult conversation about energy security and global demand. Shell and other oil companies need to be part of this conversation and not run away from the fact that high prices are causing misery and pain. Prices will continue to be set by markets, but we can make a difference by helping customers with more efficient fuels and advice on fuel-efficient driving.
We also have a few good projects around the basic energy literacy I mentioned, examples of which can be found at our website (www.shell.us/home/content/usa/responsible_energy/education/energize_your_future/education_index.html).
We also need a sense of perspective about oil prices. The margins on retail sales of oil are remarkably thin; the big winners from high oil prices are government treasuries from taxes, excise and royalties.
PH: Perhaps the most ambitious program Shell has undertaken in recent years is the dialogue on energy scenarios to 2050. What’s the thinking behind that program, and what do you hope to achieve?
BE: You’re right that the engagement program around Energy Scenarios to 2050 is ambitious. It needs to be. The world is at a cross-roads and decisions in the next 2-3 years will critically determine whether we can avoid dangerous climate change without also sacrificing economic growth and living standards.
The communication and advocacy program around the energy scenarios is a continuation of our public policy work that started a couple of years ago, when our chief executive Jeroen van der Veer authored an op-ed article for the Financial Times about the role of governments in setting a regulatory framework to drive innovation on climate change mitigation and energy efficiency.
We’re aiming at being a good advisor on this issue, and the scenarios allow us to open and continue a whole host of dialogues with opinion formers and decision makers. So, instead of just focusing on corporate profiling that distinguishes us from our competitors on the basis of better technology and our ability to integrate huge energy projects in difficult environments, we’re overtly adding a dimension of advocacy, and taking a stand for action to get to a better place over time.
Shell has been doing scenarios for decades, but this is the first time we’ve come down on the side of one scenario, which, while certainly not perfect, provides a clear path to a better place than would be possible of market forces were allowed free rein.
PH: To what extent has Shell been active in digital and social media, from engaging with bloggers and other online communities to setting up your own blogs, etc.
BE: We’ve experimented with dialogue spaces on our website, but not yet embraced the full range of opportunities of social media. We’re working on it, from Youtube-type films on energy issues to blogs. Watch this space. We know it is important. In the last three months, there were some 14 million mentions of Shell in blogs, and clearly opinion is being formed in that space. We’re trawling the top 50-60 energy-related blogs, and will need to start participating in the debate at that level, too.
To lay the foundation, we have invested significantly to redesign and add greater Web 2.0 functionality to our website, which is a great improvement on the staid corporate site we had only a few years ago. The new site has more energy, more compelling content and is better equipped to allow us to tell our story in more engaging ways using animation, video and images. I’d highly recommend the short film on the energy scenarios to anyone wanting a quick understanding of the challenges ahead. We’ve introduced webcasts with our technology experts as a way to engage with media and other stakeholders.
PH: What is the division of labor between Shell’s in-house communications staff and its external agencies? What kind of issues or audiences are best addressed in-house and what is the most important value an outside consultancy can provide?
BE: The voice to the outside world must always be authentically Shell. So, as a rule, Shell communications professionals should manage the relationships with all vital audiences including governments and top tier media, and have strategic and tactical ownership of critical issues. Agencies can help develop and implement, but should never be in the driving seat—and should never be used to communicate to stakeholders on our behalf.
The most important contributions an outside consultancy can bring are knowledge of best practice in our profession, creativity and courage in helping Shell achieve our critical business goals, clear-thinking and confidence in helping to shape our story, and a passion for getting things done. A good consultancy can sometimes accelerate decisions and delivery that would otherwise get clogged by the inertia of internal consultation and collegiate thinking.
In general, agencies are great for “do-once-replicate-many-times” PR projects, and in our consumer-facing business, the lead agency does a lot of that, and very well.
From the group level, I tend to use the global PR agency more for strategic input and advice, since I want our overall communications output to come from us. One area where we go externally for strategic input and execution is in corporate brand advertising. Edgy creativity, in the main, comes in-house to die, so we must go to the advertising marketplace.
Over time, I suspect pressures on “unit costs” and speed of reaction and delivery will lead us to better refine the mix of agency/in-house work better.
PH: When it comes to outside consultancies, do you work with a global agency of record, or do you take a “horses for courses” approach? What’s the key factor in that decision?
BE: It is a mixture, as I said. We have a global agency of record for the Group, and another for one part of the business, and that is due to their respective strengths.
Overall, I don’t think we have a very mature way of deciding when to go to an agency, and when to undertake the work ourselves.
The key overall challenge is to combine a global approach in terms of consistency, while making sure that our people on the ground are able to make necessary adaptations so that it global initiatives are in tune, and not in conflict, with local attitudes and sentiments.
Looking ahead, I’ll be looking for greater standardization across the whole professional structure in communications including in our relationships with external agencies. This will improve consistency in our story and messaging, in strategic planning and tactical delivery, and generate cost efficiencies.
PH: Looking at all the markets where you do business around the world, is there one that presents particular difficulties or challenges?
BE: For us, understanding the differences is a challenge, for the global headquarters level in the business divisions and the central department. For a variety of reasons, reputation management is a challenge in each market. Some because of the focus in that market on certain issues, and the industry’s standing. I’m thinking about the US, where the oil and gas industry becomes a whipping post at regular intervals. In others, because the issues we face there have a great impact on our reputation everywhere; think about the situation in Nigeria.
Nigeria keeps me awake at night, not only because the security situation poses a constant risk to the safety of our people but also because it’s sad to see a country with so much potential in so much trouble. You wonder where the oil income has disappeared in the last five decades, which has been a period of missed opportunity to reduce poverty and build shared national wealth.
Overall, because of these differences, we have created geographic areas for cross-Shell communications management, and our new communications organization has a country focus. People live in countries, share language, culture, system of government, have a set of media, opinion formers, etc., so therefore it makes more sense to push decision-making, both on the issues side and as we try and spot opportunities to create space for the business, to the local level. And tie our regions together for synergies (think of the Arab-speaking world, or Latin America) across the specialties of media relations, internal communications etc.
PH: How do you evaluate the effectiveness of your public relations and engagement efforts? How much pressure do you feel to come up with a system that tells management what its return on communications investment is?
BE: Like all operations in Shell, we’re trying to achieve what the management books call top-quartile performance. We measure outcomes, through monthly media analyses and an annual multi-country reputation tracker. Our internal Shell People Survey to gauge employee views and satisfaction, and performance against key metrics for our engagement activities.
PH: With the exception of your own company, is there an organization out there that you admire for the way in which it manages its reputation, or an executive who you think really understands how to communicate?