How do we gear up for the next stage as countries start opening for business again? Do we try to go back to the way things were, or do we decide to evolve our strategies? Perhaps some are asking whether we are prepared for extensions of pandemic lockdowns or, worse, multiple waves of the disease. I prefer to ask whether we can reimagine what sustainability in our industry looks like. Is it possible to create strategies to restore our industry and bake-in our sustainability efforts in one set of integrated activities?
Because of the current state of emergency, we are collaborating with many different business, operations, health, safety, and environmental subject-matter experts, especially if we serve or support emergency-response teams. Can we convert our present experience into crafting new strategies to meet future uncertainty?
Perhaps. Let’s look at information technology (IT). If we did not have robust infrastructure in place before the pandemic, we certainly spent best efforts to get it in place so we could support our people working from home. The ease of ramping up was determined by the maturity of IT processes and systems. Was technology installed that was able to handle the increased demand? Did we have contracts in place to handle increased telecommunications requirements? Did we have security in place to ensure massive numbers of remote workers would not expose confidential and business-critical information? The more mature our systems and ability to handle new conditions are, the better we can navigate these areas.
As we gear up for the next phase, your business, department, or program will need to understand maturity levels to determine best strategies for what is to come. Plan to perform assessments to see how well your systems and processes handled the unexpected.
One of my clients is taking this time to think about how to integrate programs in health, safety, and environment (HSE) with the understanding that different disciplines often can be addressed by the same strategy, especially when outcomes are related. The following paper, “Performance Framework for Evolving Sustainability Strategies,” describes an approach to mapping maturity models to organizational capability and capacity. In the case of evolving sustainability strategies where the collective outcomes of HSE and other operational/business efforts are often siloed, an exercise using the proposed performance framework could highlight several areas where integrated approaches could advance sustainability results. The framework can be applied to almost any operational strategy.
The key takeaway from the paper: Use maturity models to help your organization better understand strategic possibilities given your level of maturity of key processes and functions. If you want to evolve your sustainability strategy, you must first assess what’s possible and plan from there.
Performance Framework for Evolving Sustainability Strategies
F. Moon, SPE, Expressworks, and S.O.P. Theys, Bureau VeritasAbstract
Evolutions of strategies require companywide commitment to obtain business objectives and targets. Integrating sustainability into business strategies can present challenges for execution because organizational capability beyond that necessary for usual operations is often required.
Organizational capability is at the root of successful realization of such goals but can be the weakest area for companies seeking to evolve sustainability performance. Here, a proposed performance framework for evolving sustainability strategies that is built upon several maturity models drawn from the oil and gas industry safety journey, value creation, and sustainability concepts is presented with examples that illustrate common practices in the industry and elsewhere. For the sustainability journey, a sustainability maturity model aimed toward cultural transformation is built upon multiple concepts discussed in the paper.
Introduction
Evolutions of strategies require companywide commitment to obtain business objectives and targets. Sustainability strategies, which are newer to the oil and gas industry, can present challenges for execution because they require organizational capability that is not commonly necessary for usual operations. This paper proposes a framework that relates the two main areas of performance activity—information gathering and performance monitoring—to several maturity models. This framework should help organizations identify potential roadblocks to performance.
The Design Safety Capability Maturity Model (DCMM) (Strutt et al. 2006) that was created in response to UK regulatory requirements in the past decade was mapped to sustainability goals and value creation to demonstrate the concept that maturity levels must closely correlate in order to derive greatest business benefit. The evolution of safety strategies in the oil and gas industry focused efforts on the maturation of organizational capability to create the safest operating environment in history. This safety journey can also provide useful reference points for companies seeking to operate more sustainably.
Method
We researched quality management literature looking for capability maturity models. The paper describing the DCMM provided a jumping-off point from which to view sustainability capability. Our assumption is that, like safety management, there is a progression through different levels of maturity to achieve sustainability.
“The main purpose of the DCMM model is to assess the capability of an organization to perform a set of processes representing different perspectives of design. Establishing these processes is a core activity in the development of the model. These need to capture the activities that are required to deliver a safe design, and they result from discussions with a team of experts across multiple disciplines. Each process is given a score reflecting the capability and maturity of the organization in undertaking that particular process. The group of processes and scores, when taken together, define the organization’s capability to achieve design safety strategies and its goals.”
We identified two additional models to enable us to show potential correlation between organizational maturity, sustainability objectives, and business benefit.
Table 1 shows our mapping of the safety capability, Accenture’s value creation, and Bob Willard’s sustainability models.
Once we mapped the maturity models, we sought answers to the question, “What mix of organizational capability, information analysis, and outcome/impact measurements are needed to realize sustainability goals?” We came up with the proposed framework and focus areas that we believe will help organizations answer this question.
Performance Framework for Sustainability
While most of the industry is already at Stage 2, the move to Stage 3 (Beyond Compliance) represents a step change that must be facilitated by different processes representing the different dimensions of sustainability. Every move up in stage will require the need for a change management, at a minimum, and management of transformational culture change at the later stages. We created the following framework with three focal areas that should be useful in understanding and guiding progress toward sustainability goals. The framework should be applied iteratively. We use the move from Stage 2 to Stage 3 for the purpose of the following discussion.
The framework, as shown in Fig. 1, consists of three parts that are key to evolving strategies once new objectives and strategies are created:
- Organizational capability
- Information needed for analysis
- Indicators used for measuring outcomes and impacts.
for evolving sustainability strategies.
Information for Analysis
In the move to Stage 3, three questions must be answered: What information do I need to capture (inputs)? How will the information be handled (actions)? How will it be shared (outputs)? This is often an iterative cycle that should occur as requirements for information evolve. Depending on organizational structure, information requirements can be collected for enterprise departments, operating companies, regions, lines of business, or products. As information is analyzed, there is sometimes the need for more granularity—visibility by asset, plant, or rig, for example. Information that needs to scale from most granular to enterprise level is often not designed this way initially. Continual assessment of information needs and documentation of required adjustments to organizational capability to collect, handle, and share this information should become part of the roadmap that will guide activities.
Ability to analyze information is contingent on organizational capability. Viewed through a maturity lens, make sure the choice of output is mapped to the type of outcome you want to measure. Leading indicators and indices require different organizational capability because of the complexities of statistical modeling than data collection or life cycle analysis (LCA).
Fig. 2 summarizes a maturity model for indicators.
- Data—Most companies are adept at gathering data.
- Dimensions are areas of sustainability focus (social, environmental, economic) tied to business objectives. Life cycle assessments use dimensional views of data for analysis. While the LCA (environmental and economic dimensions) is an industry practice, it is not yet common to conduct life cycle assessments that encompass social dimensions.
- Leading indicators are statistically actionable. For instance, many industries rely on leading indicators in process safety because they are statistically predictive of specific types of process-safety incidents.
- An index is an aggregate of indicators used as measures for systemic impact. For instance, the Organization for Economic Cooperation and Development has created a Better Life Index.
(adapted from Glavic and Krajnc 2005).
Capability Baseline
A business objective for Stage 3 will first require answering the question “What does ‘beyond compliance’ mean?” Once this has been defined, the information needed for analysis will need to be determined and the process for performance monitoring will need to be designed.
Assess the company’s organizational capability in the dimensions of focus and other requirements for information analysis. Identify the maturity level needed for the desired state. The company will have then a baseline and a next state to construct a manageable change roadmap. The roadmap also will need to account for robust change management, especially as companies first embark on moving from one stage to the next. Such movement is often accompanied by the need for cultural transformation (Bertels et al. 2010).
Performance Monitoring
Outcomes. Outcomes measure the change that has occurred but may not be seen immediately because of the frequent need for multiple information analysis cycles. For example, assume that a company objective is to identify and improve the most sustainable process of four different options for the base year 2009. Table 2 displays the initial baseline measures.
The spider diagram in Fig. 3 shows relative positions of sustainability dimensions and visual contrasts for each process. Process A scores the highest across most dimensions.
As the company seeks to improve performance, it would determine targets (objectives) for each of the dimensions and prepare a strategy over a period of 5 years. Specific actions are defined to improve outputs of each dimension. Outcomes are monitored and mapped on a yearly basis.
Impacts. Impacts are the broader changes that occur within the community, organization, society, or environment. The industry regularly calculates economic impact.
Fig. 4 illustrates the impacts of Option A targeted for process and performance improvements from 2010 to 2015. The improvement of the local content dimension was the primary focus of activities. By 2015, targets have been met for pollutants, emissions, health, safety, business and transparency, local content, cost per unit of product, and material. Human rights and toxics targets remained unchanged. Community and society targets have improved between 2014 and 2015. Results for energy, water, profit per unit of product, and added value remain mixed. No targets were set for improving labor practices during this period.
of selected hypothetical Process A over time.
Local content impacts (Fig. 5), for instance, are usually defined by contractual agreement between host country and operating company. Direct, indirect, and induced benefits for host country economies are impacts regularly found in reports by organizations such as the American Petroleum Institute (API 2013).
in the oil and gas sector (Tordo et al. 2013).
A desire to change impact will have major consequences and will affect the entire framework; a change of impact most likely will require a redefinition of business objectives and strategies because the time frames to realize impacts can be many years.
Conclusion
The safety journey was one of cultural transformation and took about a decade. Embedding sustainability in the oil and gas industry will require no less focus and effort. A series of maturity progressions are built into every part of the sustainability journey—organizational capability, ability to match statistical significance to performance goals, progressing cultural systems. If the industry wants to become just as effective in sustainability as they are for safety and all the while continue to create value for their companies, this sustainability maturity model (Fig. 6) may be useful. While maturity assessments may be useful starting points, companies still need to create objectives that drive sustainability.
Sustainability Maturity
Evolution of sustainability strategies can also be viewed as a maturation process. Organizational capability to execute integrated, multidimensional sustainability programs that can be measured and tracked for impact is inconsistent across companies and is often siloed. The key to progressing sustainability strategies is to connect the different sustainability actors across the business to an integrated roadmap with common objectives. We must remember that part of the larger goal is to embed sustainability in company culture. The oil and gas industry has already seen the success of its safety culture transformation. It is time to embark on the sustainability culture transformation.
References
API 2013. Economic Impacts of the Oil and Natural Gas Industry on the US Economy in 2011. Houston, TX: American Petroleum Institute.
Bertels, S., Papania, L. and Papania, D. 2010. Embedding Sustainability in Organizational Culture: A Systematic Review of the Body of Knowledge. London, Ontario: Network for Business Sustainability.
Glavic, P. and Krajnc, D. 2005. A Model for Integrated Assessment of Sustainable Development. Resources, Conservation and Recycling 43 (5): 189–208. http://dx.doi.org/10.1016/j.resconrec.2004.06.002
Holst, A. 2015. Sustainability Value Management: Stronger Metrics To Drive Differentiation and Growth. Accenture.
Organization for Economic Cooperation and Development 2016. OECD Better Life Index, http://www.oecdbetterlifeindex.org (accessed 7 April 2020).
Strutt, J.E., Sharp, J.V., Terry, E., et al. 2006. Capability Maturity Models for Offshore Organizational Management. Environment International 32 (8): 1094–1105. http://dx.doi.org/10.1016/j.envint.2006.06.016.
Tordo, S., Warner, M., Manzano, et al. 2013. Local Content Policies in the Oil and Gas Sector. Washington, DC: World Bank. http://dx.doi.org/10.1596/978-0-8213-9931-6.
Willard, B. 2009. The Sustainability Champion’s Guidebook: How To Transform Your Company, 1st Edition. Gabriola Island, BC, Canada: New Society Publishers.
Paper SPE 184447, “Performance Framework for Evolving Sustainability Strategies,” by F. Moon, SPE, Expressworks, and S.O.P. Theys, Bureau Veritas, was prepared for the 2017 SPE Health, Safety, Security, Environment, and Social Responsibility Conference—North America, New Orleans, 18–20 April. The paper has not been peer reviewed.
