Creating shared value
"Business can be a huge part of the solution to social and environmental challenges."
A conversation with Gord Lambert, Suncor's executive advisor, sustainability and innovation
As Suncor prepared to report on its sustainability performance in 2012, as well as the company's plans and priorities going forward, we found ourselves reflecting on how deeply impacted our business is by changes in market conditions and evolving stakeholder expectations. At the same time, we recognize the values we bring to work every day and the decisions we make have an impact on the economic and social well-being of our stakeholders and our shared environment. In the end, we are all part of something bigger — and we have many common goals and obligations.
We decided to make these interconnections a key theme of this year's Report on Sustainability and, emerging from that, we found ourselves addressing an obvious question: how can a company like Suncor best position itself to make a positive impact on the larger society? There's no simple answer, but we believe the principle of 'creating shared value' is a good place to start. In other words, we need to strive to create economic value in a way that not only benefits our shareholders, but also creates value for society.
Can you explain what the idea of 'creating shared value' is all about?
LAMBERT: This isn't an idea that originated with Suncor, but it's one that obviously resonates given our long-standing commitment to the 'triple bottom line' of developing energy resources in a way that generates economic growth and social benefits, while minimizing our impact on the environment. Harvard University's Michael E. Porter is one of the key proponents of the shared value principle and Canada's Oil Sands Innovation Alliance (COSIA) had him come to talk to member oil sands companies about this.
Professor Porter defines shared value as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. This isn't about 'sharing' the value already created by companies, which is a redistribution approach. It's about expanding the total pool of economic and social value.
What's exciting to me about this approach is that it encourages businesses to do what they do best — innovate and create value. And instead of looking to government to solve all our problems, it recognizes that businesses, acting as businesses, can be a huge part of the solution to many of the social and environmental challenges we face.
So how is this principle being applied at Suncor?
LAMBERT: Well, the first thing to say is that it's very early days yet. This is something we aspire to; I wouldn't in any way suggest we're there yet. But you can already see the possibilities — and the first steps we are taking towards realizing our aspirations.
When you consider Suncor's core oil sands resource, and where it's located, the concept of 'shared value' becomes very easy to understand. We've got these world-class reserves located beneath the boreal forest of northern Alberta. It's not like we can pick up and move our business. So we are all invested in the economic health and social well-being of the communities where we operate, and in the shared environment. The success of our company is inextricably linked to the vibrancy of that region.
So how do we create shared value in a place like the Wood Buffalo region of northern Alberta? You can see part of the answer in recent changes Suncor has made to its community investment program. We are trying to get away from simply supporting good causes — and there are no shortage of good causes — to being much more strategic in supporting initiatives and programs that build skills and knowledge in the community and improve the economic opportunities of local residents.
What are some examples of that approach?
LAMBERT: Two come quickly to mind. First, there's the large number of education and training programs we support, many aimed at Aboriginal youth. Second, there's the work we do with Aboriginal-owned businesses to help them develop business models and expand their capacity. In both cases, you can see the idea of mutual benefit at work. Those students, apprentices and businesses stand to have much brighter futures. At the same time, we're helping to produce the kind of skilled workers and regional suppliers that will contribute to Suncor's success for years to come.
Read more about how we partner with Aboriginal communities
What about the environment, where many would say the oil sands industry is a 'net negative' in terms of impact? How do you create shared value in this arena?
LAMBERT: Look, it's clear oil sands operations have a significant impact on the environment — all forms of resource development do. Even wind power has its detractors because of the impact it can have on the landscape. There's also no doubt our industry faces major environmental challenges, whether it's managing growth in greenhouse gas emissions, further reducing water use or reclaiming tailings ponds.
But there's a few points to keep in mind. First, a company like Suncor is committed to continuous improvement in its environmental performance. We do this through investment in innovation and technology and, increasingly, through collaboration with industry peers and others when it comes to the environment. And while there's a lot of room for improvement, we've made real progress, as a company and an industry, on many of those key environmental challenges.
The second big picture point is this: growing economies require responsible and affordable sources of energy. This is particularly true when it comes to transportation fuels, which provide mobility. So when you think planes, trains and automobiles, we're still going to rely primarily on oil for many years to come.
Our common goal is to create a more sustainable energy future that helps build stronger and more just societies. But how do we get from where we are to where we want to be? It's going to require significant investment in technology, innovation and new infrastructure. And that's the kind of financial capacity non-renewable resource development can help generate.
We've talked a lot about how business can affect society. What's the flip side of that coin?
LAMBERT: One clear example is changing stakeholder expectations. A generation ago, you couldn't have imagined an energy company having the kind of corporate-wide focus on sustainability that exists at Suncor today. That's changed because public expectations about priorities and performance have changed.
Another example of a potential impact is the recent debate over market access and efforts from some quarters to landlock Canada's oil sands resource. From a sustainability perspective, I'd argue this doesn't make a lot of sense. Given global energy demands, we're going to need all the forms of energy we can responsibly develop. Diversity is going to be the order of the day — and that's going to require more linkages to markets, not less. I also think the world could do worse than to tap into energy supply from an industry that's committed to continuous improvement in its economic, social and environmental performance.
When it comes to creating shared value, how important is collaboration?
LAMBERT: It's absolutely essential. Our energy future is all about making informed choices. Unfortunately, given the polarized nature of today's energy debates, that's not happening. I mean, we've got anti-wind people, anti-nuclear people, anti-coal people, anti-oil sands people and anti-pipeline people. A choice-based dialogue would be so much more powerful. It's easy to say what you're against. But what you are for? And are you ready to live with the consequences — intended and unintended — of the choices you make?
We're making some real progress in terms of industry-wide collaboration — the establishment of COSIA is a good example of that. But we need to be having a much broader public dialogue about plans and priorities for our shared energy future. And I think that's another area you can expect to see Suncor playing a leadership role in the months and years ahead.