The Evolution of a Corporate Responsibility Policy

Today, Cenovus Energy Inc. released its new Corporate Responsibility Policy.  [Read the press release here.]

For any company, that’s a significant milestone.  For me, it’s an opportunity to look back at the evolution of a corporate responsibility policy through a decade of corporate change.

Back in about 2000, my then-client, PanCanadian Energy, a company to which I had been providing environmental and regulatory affairs advice for several years, asked if I could help them to develop a Sustainable Business Strategy. Naturally, like any self-respecting consultant, I said yes.  Thus we embarked on a complex and challenging effort to map the sustainability landscape relevant to the company’s business, to inform the development of an appropriate policy framework.

We compiled a catalogue of sustainability and corporate responsibility standards, codes of practice, guidelines, and investor rating schemes, and from these extracted a laundry list of key business practices in the areas of environmental, social, and economic performance, as well as in governance and ethics.  These business practices were taken as a proxy of emerging stakeholder expectations, incorporating, as they did, input from the investment community, civil society organizations, regulators, and other groups.  This compilation of key business practices was then used to benchmark PanCanadian, using only publicly available information, against a suite of peer companies in the oil and gas sector, as well as selected companies in other sectors perceived to be leaders in corporate responsibility.  We also conducted in-depth internal interviews with dozens of employees from business units across the company, to develop a picture of what PanCanadian was actually doing in each of the four performance areas and to identify priority sustainability issues.  This comprehensive benchmarking work (which led, incidentally, to the co-development of Five Winds International’s CSRInsight™ benchmarking tool), allowed us to see where PanCanadian stood in relation to its competitors and to industry leaders, and also, to see the gaps between actual performance and the performance a stakeholder might presume based only on publicly available information.

While we invested a lot of time and effort into this early work, the outcomes were critically important for successfully advancing the corporate responsibility policy:

  • we developed a robust understanding of the sustainability issues relevant to the company and the energy sector, and were therefore able to effectively communicate emerging stakeholder expectations to the company’s leadership team;
  • we identified where PanCanadian was a performance leader, allowing us to craft an implementation plan and communications strategy that leveraged the company’s strengths for early wins and greater buy-in;
  • we flagged performance areas where the company appeared to be lagging its peers, allowing us to prioritize areas for improvement and better manage risk; and
  • we revealed opportunities to realize greater value from better communication of performance in areas where public perception lagged actual performance.

Perhaps most importantly, we engaged employees from Day One, increasing the likelihood of buy-in at later stages of policy development and implementation.  This early work allowed us to build a strong business case that convinced the Board and executive team of the need for and value of a corporate responsibility policy, at a time when such policies were not as prevalent as they are today and empirical evidence of the business value of a sustainability strategy was still sparse.

The challenges were many.  As we completed the initial benchmarking and began work on drafting policy, the merger of PanCanadian with Alberta Energy Corporation was announced.  Fortunately, we had included AEC in the benchmarking work, so we did not have much rework to do.  However, the merger introduced a new Board and senior management team, many of whom had not been involved in the sustainability work undertaken at PanCanadian.  We shifted our focus to executive briefings to assist the Board and leadership team in understanding the business case for, the scope of, and implications arising from the development and implementation of the corporate responsibility policy.  We were dealing with two very distinct corporate cultures, at a time when the organizational structure was still in flux.  But rather than wait for the dust to settle, when it might have been easier to advance, we were keen to use the merger as an opportunity to integrate corporate responsibility into the new company’s business practices as early as possible.

With agreement from the new Board and executive team that corporate responsibility issues were indeed a priority, we revised our earliest policy drafts to reflect the scope and reach of the new company: EnCana Corporation.  There followed an intense period of employee engagement, working downwards through the management structure, to build awareness about the policy framework and to solicit input regarding the scope and content of the policy.  We were particularly focused on making sure the policy reflected the knowledge and experience of the employees, was relevant to their day-to-day business, and would support individuals in achieving the goal of conducting business in an ethical, legal, and fiscally, environmentally, and socially responsible manner.  We strived to find an appropriate balance between comprehensive and concise, between aspirational and realistic.  In the end, we crafted a policy that addressed Leadership, Sustainable Value Creation, Governance and Business Practices, Human Rights, Labour Practices, Environment, Health and Safety, Stakeholder Engagement, and Socio-Economic and Community Development.

EnCana’s Corporate Responsibility Policy was rolled out company-wide (which, at that time, included international operations) in 2003 and 2004, and contributed to EnCana being ranked seventh in the Globe and Mail ‘Report on Business’ magazine’s list of top corporate social responsibility performers in the oil and gas category by 2005.

Over the years that followed, the policy was tweaked here and there to reflect changes in the scope of the company’s operations. Then, in late 2009, EnCana Corporation divided its assets, leaving EnCana focused particularly on natural gas plays, and creating a new company, Cenovus Energy Inc., with oil, natural gas, and refining assets.

In a recent interview with 3BL Media, Craig Stenhouse, Cenovus’ Group Lead for Corporate Responsibility, said “starting anew, it gives us the opportunity to step back, digest, and come up with new approaches on how we want to move forward.”  And indeed, through 2010, Cenovus undertook a careful review of its CR policy in the context of its new operational focus, organizational structure, and culture.  A new Corporate Responsibility Policy was drafted, informed by a survey of Cenovus employees (conducted with the help of Canadian Business for Social Responsibility) and external advice (including yours truly).  After extensive follow-up engagement with employees and the leadership team, Cenovus released its new Corporate Responsibility Policy today.  The new policy is focused on six commitment areas: Leadership; Corporate Governance and Business Practices; People; Environmental Performance; Stakeholder and Aboriginal Engagement; and Community Involvement and Investment.

The legacy of the policy is evident; the structure and some of the language remain familiar.  But there are important differences, new language that reflects the changes we have seen in corporate responsibility practice in recent years.  Transparency. Innovation.  Materiality. As well, the new policy acknowledges environmental limits, and commits the company to applying a scientific approach to understanding and respecting those limits.  These changes, while simple, illustrate the importance of policy renewal.

Over time, stakeholder expectations evolve, new tools and technologies emerge, our knowledge and understanding expands, and best practice advances.  To keep pace with these changes and to maintain relevance and effectiveness, a corporate responsibility policy should be reviewed from time to time, particularly after significant shifts in operational focus or organizational structure. Sustainability is not static!

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