Shell Interview & After Enron Q&A with Cruver

In consideration of this week’s reading, I had the honor of interviewing Mr. Frazier Wilson, VP of Shell Oil Company Foundation and Director, Social Investment. He provided several thoughts regarding Corporate Social Responsibility from a global energy company perspective.  After interviewing Mr. Wilson I had an opportunity to interview via Q&A by email a gentleman that was a financial employee at Enron during the fallout. Mr. Brian Cruver, former Enron Energy Trader and Author of Anatomy of Greed: The Unshredded Truth from an Enron Insider and USC Alumni, afforded me answers to a few questions.  Mr. Cruver gives his thoughts on financial reporting since the Enron fallout and whether it is a social responsibility.

In my opinion Shell has evolved as a socially responsible company from challenges in the past including the sinking of the Brent Spar. They have followed the unspoken guidelines, which includes integrating business and society (Porter & Kramer, 2006), of making social responsibility an integral part of their overall business strategy and look at CSR as sustainable development for the company.  Additionally, Wilson identifies three key areas, community, education and environment, of sustainable efforts and commitments, which are sweet spots where initiatives are good for both profits and social welfare (Franklin 2008). Finally, Wilson gives his thoughts as to why financial reporting is a social responsibility and being transparent is one factor.

Please hear the entire interview on voice thread for Wilson’s complete comments:  https://voicethread.com/share/3219645/

What is Shell’s business rationale for its “Social Responsibility” efforts?

“The way shell views its involvement in the community is it’ really is part of your license to operate. Where you have a workforce presence, you want to be a part of that community so you can build trust. And also ensure they have quality of life you encourage your employees in the community in that space. As we look at what we do, we just don’t do it from the standpoint of business. We do it from the standpoint of creating a better environment for those that help you with your energy access. We don’t look at it as corporate sustainability; we look at it as sustainable development.”

What makes a company like Shell Socially Responsible?

“Part of being socially responsible, sustainable development for us, is engaging and trying to address community needs as well and look for those society issues where our expertise and our employees can add value. We focus in community, education and environment… (Wilson elaborates on these areas) all these things are stuff we deal with in society as a whole. If we can be apart of that and use our expertise as a technical company and our expertise and interest of our employees that helps us be a better and more responsible company and the ideal partner and employer.”

Do you feel Shell is doing “Social Responsibility” well and why?

“I feel Shell is doing a good job with our outreach to the community. Being in my role I would love for us to have additional resources to do more but again with that as most companies and most families are dealing with you have limited resources and try to manage those resources accordingly and find the best impact and return for that investment.”  As Frazier continues, he talks about how SR means being more strategic in their partnerships. ”We are more strategic in who we partner with. “

In light of what has happened in the energy industry with Enron and a few others, destroying investor and employee trust, do you think financial reporting is a social responsibility?

“Financial reporting is a social responsibility. You are required through SEC. Shell stepped out early with our Sustainability Report. We came out and we are very transparent with what we are doing with our operations, our financial even including our social investment activity. Again it helps the public get a better understanding of what you do, why you do it and how you do it.”

How does Shell connect the two, Financial Responsibility (or reporting) & Social Responsibility?

“One way we connect the two…with Shell safety is paramount.  So when we look at new projects and new developments the first thing you look at is safety. But the other aspect of that is what would be your impact to that community. Our commitment is that we will not harm the community. It will either be the same or better than it was when we entered into that project. “

Wilson follows up with what Shell considers when they are going through their business justification.

How does Shell see its future with Social Responsibility?

“Again, as we continue to look for the opportunities to have an impact you want to partner with organizations who are sound and meet the needs of the community. Again we’ll continue to look for ways where we can add value to the community as well as meet our business needs. The two go hand and hand. If you treat them as silo operations you will have gaps and you will miss opportunities. But when you partner and look at it, as one you will have a stronger product a stronger outcome and a stronger community. “

MR. BRIAN CRUVER

Following are the Cruver questions and answers. There is no voice thread on these. The Q&A was done via email.

How do you think financial reporting to the public has changed today?  Generally, reporting is more difficult for companies, and there's more "prison risk" for executives; however, the public is not really gaining any more insight (with respect to an investment in a company) than they were previously.  

What do you feel the future looks like for investor relations…where is it headed? 

Individual investors continue to wonder what it is the company may be hiding, while institutional investors generally have an inside track. The game is fixed. Investor relations isn't really headed anywhere different.  

Can the average individual investor really see what is going-on with a company through its financial report? 

No. But they can be aware of that reality, and choose investments based on the track record and trustworthiness of management.  

What do you feel is the most important information in a financial report that investors and employees should look for?

 I look at revenue and margins, and try to time investments when both are accelerating (and before hype has led to overvaluation). And who is in charge.  

Do you think financial reporting is a “Corporate Social Responsibility”? 

No. CSR is not a regulatory requirement. And the most socially irresponsible companies are very good at financial reporting.  

What role do you think corporate communications plays in gaining public trust?

 Not sure which aspect of corporate comm you are referring to. But I see public trust developing from every function of the company, from how executives and employees behave, to how sales and marketing represents the product, to what PR tells the media, to what the CFO tells Wall Street. Public trust is achieved via a collective effort of all aspects of an organization.   

In conclusion, I think much has changed in financial reporting as far as making the companies more accountable since the Enron fallout but as far as the investor or employee is concerned not much has changed in trust or helping them to better identify things that could go wrong with a company through the report. As Cruver suggested, you have to look at and be aware of other things. Lastly, I found it interesting that Wilson felt financial reporting was a social responsibility and Cruver felt it was not but felt that the companies that are socially responsible are good at financial reporting. Based on Wilsons interview Shell has incorporated financial reporting in their CSR plans perhaps making it one of the reasons why they feel they have separated themselves from the rest of the energy pack. This could be a competitive advantage.

REFERENCES

Franklin, D. (2008) Just Good Business: A Special Report on Corporate Social Responsibility,

The Economist, January 19, pp. 1-14.

Porter & Kramer (2006), Strategy and Society, Harvard Business Review.