EX­PERT SPEAK

Speak­ing at the Lex Mundi Sum­mit in Am­s­ter­dam, the Nether­lands, Shell Le­gal Di­rec­tor Donny Ching dis­cusses how the Shell Le­gal team is ad­dress­ing the risks of the fu­ture in a pe­riod of change and un­cer­tainty

Oil and Gas - - CONTENT -

To­day, we are in a pe­riod of change and un­cer­tainty as never be­fore. Law has al­ways been about prece­dent. Lessons from yes­ter­day, guid­ing ac­tions to­day. But how does a le­gal team ad­dress the risks of the fu­ture, the risks of a world in flux?

At Shell, we ap­proached this by bring­ing to­gether two very dif­fer­ent teams for one very dif­fer­ent ses­sion. It was 2016. In the UK, there was the Brexit ref­er­en­dum. In the Philip­pines, Ro­drigo Duterte took on the es­tab­lish­ment and won. In the US, Don­ald Trump was on the rise. It was time to re­set the way our le­gal teams looked at the world.

At Shell, we are lucky to have a ta­lented bunch of thinkers and strate­gists we call the sce­nar­ios team. This team stud­ies the big­ger pic­ture. For in­stance, their re­cent publi­ca­tion, Sky, shows a tech­ni­cally pos­si­ble path­way to­wards lim­it­ing the rise of av­er­age global tem­per­a­tures to well be­low 2 de­grees. The team works across dis­ci­plines, they ap­ply a ro­bust method­ol­ogy and they part­ner with in­sti­tu­tions such as the Mass­a­chu­setts In­sti­tute of Tech­nol­ogy.

The lit­i­ga­tion team in­vited the sce­nar­ios team for a two-day work­shop to help them to take a step back and look at the hori­zon. It was the start of a process that con­tin­ues to this day in ev­ery le­gal team in Shell. We need not only a firm grasp of de­tail, we need to see the big­ger pic­ture too.

SCE­NAR­IOS

Shell sce­nar­ios are just this. They are not in­tended to be prac­ti­cal, rather they help to in­form com­pany strat­egy and guide de­ci­sions by ex­am­in­ing re­mote events. They are not fore­casts nor pre­dic­tions. They are a set of in­ter­con­nected fac­tors and trends that lead to al­ter­na­tive views of po­ten­tial en­ergy land­scapes.

Our Moun­tains sce­nario, for ex­am­ple, is one of sta­sis, where world trends con­tinue, such as the con­cen­tra­tion of power among elites. Our Oceans sce­nario is one of change, one of peo­ple­power and in­di­vid­u­al­ism.

The Sky sce­nario is the lat­est one, and it is one in which so­ci­ety achieves the goal of re­duc­ing car­bon emis­sions as out­lined by the Paris agree­ment.

This re­quires un­prece­dented and sus­tained col­lab­o­ra­tion be­tween not just in­di­vid­u­als and teams, but so­ci­ety, mar­kets and gov­ern­ments. The three sce­nar­ios rep­re­sent dra­mat­i­cally dif­fer­ent worlds.

This is the big­ger pic­ture.

We wanted our le­gal teams to take a step back from the press­ing is­sues of the present, and ap­ply the same scru­tiny – with the same ur­gency – to the fu­ture. Not only did they need to look at the hori­zon, and search it hard, they needed to be open to dif­fer­ent pos­si­bil­i­ties, in po­ten­tially dif­fer­ent worlds, against dif­fer­ent time frames.

THE BEN­E­FITS OF CHANGE

Just ask Lon­don­ers what hap­pens when

you stick doggedly to your pre­ferred route. A pa­per by Ox­ford Univer­sity showed that when in­dus­trial ac­tion forced com­muters onto dif­fer­ent routes, a sig­nif­i­cant frac­tion changed their daily jour­neys and im­proved their com­mute.

They lit­er­ally found a bet­ter way. Dis­rup­tion be­came an op­por­tu­nity.

And so it proved with our ex­er­cise. By chang­ing our ap­proach, we found bet­ter ways to work in this com­plex, volatile time. By un­der­stand­ing fu­ture risk, and by do­ing it early and holis­ti­cally, it gave us a chance to turn a threat into op­por­tu­nity.

THREE AR­EAS OF RISK

We iden­ti­fied three ar­eas of po­ten­tial le­gal risk.

The first is the rule of law. We felt that we had to do more in this space to pro­mote laws that are equally en­forced, jus­tice that is ac­ces­si­ble to all and le­gal cer­tainty. This in­formed our new Ex­ter­nal Fo­cus strat­egy for Shell Le­gal.

The sec­ond area fo­cuses on hu­man rights. The im­pact of Shell’s op­er­a­tions on the com­mu­ni­ties in which we work is of huge im­por­tance. The third area is cli­mate change – and I will ex­pand on this, be­cause it is the most press­ing global chal­lenge.

I have a daugh­ter who is very, very en­vi­ron­men­tally aware. Ni­cole is also a for­mi­da­ble ad­vo­cate. She is study­ing to be a chem­i­cal en­gi­neer at one of the lead­ing en­gi­neer­ing uni­ver­si­ties in the UK and she wants to help to solve the cli­mate change chal­lenge. Even at home, I find my­self de­fend­ing Shell.

I ex­plain that Shell in­tends to play an im­por­tant role in the tran­si­tion to a lower-car­bon world. That we are chang­ing at ev­ery level, even in our le­gal think­ing. Her an­swer is sim­ple. It’s not what you say that mat­ters, it’s what you do. And she is right. This, for me, is the “Ni­cole” test.

We may we have iden­ti­fied three sig­nif­i­cant ar­eas of risk, but un­less we do some­thing about them, so­ci­ety has ev­ery right to turn to us and say: “So what?”

THE CHAL­LENGE

When it comes to cli­mate change, the courts have cer­tainly be­come very ac­tive. There are now many cases that raise cli­mate is­sues pend­ing world­wide, the ma­jor­ity in the US. We, at Shell, be­lieve that cli­mate change is a com­plex chal­lenge that should be ad­dressed through sound pol­icy and cul­tural change, not through the courts, but we must be pre­pared for this con­tin­u­ing shift.

So, what are we do­ing as a le­gal team?

Take the pos­si­ble con­se­quences of a so­cial me­dia cam­paign such as #shel­lknew. It is based on the no­tion that Shell was aware of cli­mate change risks but failed to dis­close what we knew or some­how tried to dis­credit the science. We can use the facts to con­test this claim, we can chal­lenge the strength of the ar­gu­ment, but we need to do more than this.

We need to see the big­ger pic­ture. There is no safety in prece­dent in an era of dis­rup­tion and dis­con­ti­nu­ity. In this in­stance, it is a cam­paign that seeks to mo­bilise dis­parate groups with one emo­tive idea. A no­tion of neg­a­tive be­hav­iour that can grow far beyond the ini­tial claims and take on a life of its own in pub­lic dis­course. The le­gal team’s role is vi­tal in iden­ti­fy­ing such ar­eas of risk, be­cause we need to cre­ate a bridge be­tween the le­gal ar­gu­ments and what Shell is ac­tu­ally do­ing. Words and ac­tions. It is about how we as a com­pany per­form, how we be­have and how we com­mu­ni­cate. It is about win­ning in the court of pub­lic opin­ion as well as the court of law.

So, what are we do­ing as a com­pany? We are tak­ing ac­tions big and small. From the fun­da­men­tals of re­struc­tur­ing our port­fo­lio, to the step, last month, of ap­point­ing our first lawyer ded­i­cated to en­ergy tran­si­tion is­sues.

Shell takes cli­mate change se­ri­ously, and sup­ports the goals set by the Paris agree­ment. We are tak­ing sig­nif­i­cant steps now and in the long term. In 2016, we set up our New En­er­gies busi­ness, which con­cen­trates on new fu­els and elec­tric­ity, and we will in­vest up to $2 bil­lion a year in it un­til 2020.

Last year, we an­nounced our am­bi­tion to halve the net car­bon foot­print of our en­ergy prod­ucts by 2050 – in­clud­ing emis­sions caused by the con­sump­tion of our prod­ucts. No other com­pany in our in­dus­try is do­ing this.

This is what we are do­ing at Shell – and what we all do now mat­ters.

THE PRESENT

This brings me back to where I started: the present. Our un­cer­tain time. Just think of those com­muters, and how dis­rup­tion be­came an op­por­tu­nity. The global le­gal team has a new dis­ci­pline. A way of think­ing more broadly, more cre­atively. Where once de­tail and prece­dent were our guides, now we look into the fu­ture too.

The mi­cro view and the macro. Risks – and op­por­tu­ni­ties.

We must learn to ab­sorb dif­fer­ent per­spec­tives within our com­pa­nies … our in­dus­tries … from other in­dus­tries… and in the wider world. This un­cer­tain time is our time to learn, to change and to find a bet­ter way.

Op­por­tu­ni­ties in Un­cer­tain Times

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