Abstract

Which is worse - emitting 100 tonnes of CO2 into the atmosphere or discharging 1 tonne of oil into the sea? This paper will show how sustainable development targets can provide a common basis for comparing different types of environmental impact. The cost of meeting corporate sustainable development targets for different environmental themes is derived. The results are then used to prioritise environmental investment decisions. Specifically, this paper describes:

  • the use of environmental effects (such as Global Climate Change) rather than activities (such as flaring) for measuring environmental performance;

  • how to derive corporate targets for exploration and production operations from sustainable development targets in international and national sources;

  • the determination of annual environmental budgets by spreading the implementation cost of a sustainable development programme over an agreed timeframe;

  • attracting support from business units and using their input to estimate the cost of meeting sustainable development targets for current and planned activities;

  • deriving a price tag for different environmental themes;

  • the use of results to prioritise environmental investment decisions.

Introduction

Some fundamental issues surface once a company's environmental policy goes beyond meeting national and international regulation. By how much should we beat existing regulation? How much should we spend? Where are environmental improvements most needed?

The thinking behind this paper started with recognising the advantages to industry of setting proactive environmental targets, instead of reacting to prescriptive changes in legislation1.

This led to the concept of using sustainable development targets to provide a common denominator that links different environmental themes, making it possible to directly compare air emissions with marine impacts, or acidification with resource use. At the same time some operators were beginning to use targets to set priorities for environmental improvement programmes.

Amerada Hess Ltd (AHL) gained certification to the international standard for environmental management systems, ISO 14001, in late 1997. A substantial part of work in the development and subsequent maintenance of the management system was the implementation of a suitable target setting process. A fundamental requirement of the ISO 14001 standard is the demonstration of continual improvement in terms of the system itself and more importantly, environmental performance.

Initially, Amerada Hess Ltd developed a ‘bottom up - top down process’. That is, on an annual basis individual business units would determine the contribution they could make to improve the Company's environmental performance. Executive management would then determine what targets could be achieved. However, difficulties in the process highlighted the need for greater direction from executive management on areas of environmental priority.

This paper describes the results of a study that was commissioned by AHL to meet this need by developing a more transparent process for setting targets and prioritising environmental investment. The overall process that is recommended is shown below.

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