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Oil Search: Helping create a sustainable future?

By Katherine Evans on August 10, 2011 at 12:05pm.

Oil Search has been in business since 1929. Today, as one of Papua New Guinea’s (PNG) largest companies, it operates all of its home country’s oil and gas fields. The company has a 29% interest in a local Exxon Mobil led-LNG project which is anticipated to double PNG’s GDP when production exports plateau in 2014. Oil Search is publicly listed on both the Australian and Port Moresby Stock Exchanges and majority ownership is held by the PNG government.

Content:

The subtitle of Oil Search’s first corporate responsibility report, Helping create a sustainable future in PNG, might seem an odd choice for an oil and gas company with significant investment in the controversial coal seam gas industry. Indeed, Oil Search spends much of the report explaining what sustainability means to the company. It’s of the social variety, the health and wellbeing of the people of Papua New Guinea.  Social development, education and medical initiatives for employees and the communities in which Oil Search operates, and respect for local traditions are all hot button issues to which the company has devoted much page space. Keeping with the theme of social sustainability, Oil Search has chosen to report socio-economic indicators in line with the Millennium Development Goals - sending a clear message to readers that the company takes its role as a major player in the PNG community seriously.

This is not to say that other aspects of sustainability are not well covered. In response to lobbying from Australian Ethical Investment and The Climate Institute, Oil Search agreed to disclose its carbon reduction strategy - clearly a sensible decision as PNG, a small island developing state, is particularly vulnerable to the projected impacts of climate change. Governance issues regarding the distribution of assets from mining and exploration to the community are also a key focus.

The report states that sustainability has been a focus for the company over the past 20 years and interestingly for a first report, initiatives delivered over 4 to 5 years as well as those planned to address specific issues in the future are reported. Indicators of performance since 2006 are also listed, confirming much work on driving non-financial performance has been going on ‘behind the scenes’ for some time.

Communications:

As Oil Search becomes a more mature reporter, the graphic design and functionality of its reports might become more finessed. This year’s report, an interactive pdf, suffers from being text-heavy in parts. Pages filled with words are followed by full page photos.  Readability would have benefitted from a greater mix of the two elements.

Twenty five pages of this 100 page document are spent introducing the company and explaining its significant role in PNG society and economy. Much detail listed in the annual report is repeated in the dedicated corporate responsibility report. In future, as readers of sustainability reports become familiar with this organisation, there will be no need for such an approach. Referring readers to websites and other sources for existing, background information is a great way to make sustainability reports more accessible.

Credibility:

The objectives set by the company for future performance focus on initiatives to be delivered. Changing the focus to detail the outcomes Oil Search wishes to achieve will help confirm to readers that the company has a clear understanding of what it means to build a sustainable future - whether social, environmental or as a responsible corporate citizen in a developing country.

The report includes a matrix which lists each stakeholder group, engagement methods, issues raised and the company’s response. This latter item, so crucial to demonstrating transparency and securing stakeholder trust, is too infrequently reported.

Yet, elsewhere within the report, Oil Search states there is significant ‘room for improvement’ in the way in which it engages stakeholders. A core objective for 2011 is to develop and execute a formal Stakeholder Engagement Plan. Oil Search, like other mining companies in the Australasian region, seems to be leading the way in community dialogue compared to peers from other sectors.

Measured language throughout this first report demonstrates to the reader that the company has taken a balanced approach to its dialogue with stakeholders. The company’s challenges and its responses are presented in a clear and straightforward manner. It’s a  GRI self-assessed application level  ‘B’  report, and the company is upfront about the deficiencies in its data collection systems (such as the inability to collect comprehensive GHG data or information on operations outside of PNG). This gives confidence that the company will work on addressing these gaps for future reports.

Recommendations:

• Continued and consistent explanation of the organisation’s understanding of sustainability is critical. Explore ways to make Oil Search’s communications more succinct and use cross-platform functionality to minimise duplication.
• Make the report more focussed and less lengthy. Readers are most interested in recent performance, not the history of the company.
• Design and editing are crucial in getting the report read. 

Katherine Evans  is a Consultant at Net Balance, a sustainability advisory services firm with offices in Melbourne, Sydney, Brisbane and London. www.netbalance.com