DOING THE RIGHT THING
Royal Dutch Shell plc
“I think we need to take back the trust that we’ve lost along the way. But we have to do it by the right action,
not just talk.”
“You can’t trust companies to do the right thing, so don’t bother with CSR – Corporate Social Responsibility!” said the editor of the Financial Times, and Chad Holliday was genuinely surprised. Who could be against companies doing the right thing for society?
This was 2002 and Holliday, who at that time was CEO of DuPont, had just published the book ‘Walking the Talk: The Business Case for Sustainable Development’ along with a group of co-authors. He attended the book launch in London and this was where he was in a panel debate with an editor of the FT.
“The editor’s point was that the vast majority of companies won’t do the right thing by themselves, so laws must be enforced anyway and why then should a few companies bother with CSR?” explains Holliday. Of the 200 people in the room, probably 190 would have sided with the editor, he estimates today. “And the last ten worked at DuPont,” he says with a laugh.
However, times have changed. A debate like that today would probably divide the room more equally. “It may not be 50/50, but things are moving in that direction,” he says, “driven perhaps most of all by the realization that corporate responsibility is not just the right thing to do, it is also a business opportunity. Even investors are getting the message.”
“Probably half of them see the need to act responsibly from a risk management perspective. They want to make certain there are no liabilities. The other half are thinking about opportunities, such as new products,” says Holliday.
During his tenure at DuPont, the company moved towards a sustainable business model, growing financially while at the same time reducing its ecological footprint. However, doing the right thing is not necessarily easy. It took some time to get
the tools right. “Just telling the organization what to do by imposing targets, for example for the reduction of greenhouse gas emissions, didn’t make a significant difference,” he recollects.
“We tried the top-down approach, and results didn’t move. So instead, we created what I call our internal cap-and-trade system, where great projects to reduce greenhouse gas emissions could be brought forward outside the normal budgeting process so they didn’t compete with normal business. The net impact was a cut in emissions of 62% in a period when production rose by 30%,” says Holliday.
The difference was that the system encouraged mid-level managers to engage. In Holliday’s experience, they are the most important group to obtain a commitment from when you want to change a company. But they can also be the hardest to
get on board.
“The top can say all the right words and the middle will say they are supportive, but they won’t necessarily be. They want to do the right thing just as much as anyone else. However, their priority is to get a new product out or expand capacity in other
ways, that’s the human nature of business. If you don’t take sustainability outside normal processes, at least in the beginning, you will only achieve small changes,” says Holliday.
A few weeks after this interview, Holliday took the position as Chairman of the Board at Royal Dutch Shell plc, a company that has a history of working hard to do the right thing, but also has been hit hard in the public sphere when it turned out that its perception of the right thing to do was not generally shared by its stakeholders.
“Shell, like every company, must listen to all its stakeholders and be open to a wide variety of perspectives. We all need to change our way of thinking. There is distrust in business today that wasn’t there when I started in business in the seventies.
I think we need to take back the trust that we’ve lost along the way. But we have to do it by the right action, not just talk. We have to do the right things for the right reasons.”
A LITTLE NUDGE TO START THINGS MOVING
In Chad Holliday’s view, business is ‘stuck in neutral’, afraid to invest because they do not know if now is the right time to shift to sustainability. He hopes politicians will provide a little prod to set them in the right direction.
“Governments could send the signals we need to nudge business leaders in the direction we know that we ultimately have to go. This could increase the positive momentum,” says Holliday.