On diversity, and climate change - Incoming President Malcolm Brown speaks to the 2015 Petroleum Group Annual Dinner.
Good evening and welcome to the 26th Annual Dinner. In my speech last year I reflected on the history of the oil business and the important role UK companies played in it. This year I want to talk about the future.
I want to talk about two areas, both of which need change and positive action from the industry and from us all personally. The first is diversity and the second is climate change, both may seem unusual things for the Chairman of the Petroleum Group to be talking about – but I think both are very important.
Diversity
On diversity, I’d like to focus on female representation in our industry, rather than ethnic mix.
So, let me start with some BG data. In our G&G graduates, we’ve hired an approximate 50/50% mix for many years. Some years it has been 100% female, because they were the best candidates. Our mix of employees with 10 years’ experience shows 28% are women, but looking at those with 15 – 20 years of experience or to Exploration Manager level, we have approximately 12% women. For completeness, in our Corporate Executive Team and Board over 20% are women, versus a worldwide average of 11.6% for oil and gas companies, or 15.6% for the Fortune 500 – a little better.
There are many advocates for change, from the UN HeforShe initiative, to the UK government or groups such as Powerful Women and the “30 per cent club”, who all have targets for increasing female representation in middle management and Board level.
However, we have a long way yet to go.
I could give more industry survey data, however, it is very similar. Instead, let me give you just 3 outcomes from recent surveys. Firstly, there are more women coming into the industry and the majority are satisfied with their roles. Secondly, most women think that their gender negatively affects their progression chances, whilst most men think everything is equal! And lastly, twice as many women as men think they are paid less, although over 40% thought they were equally paid.
I thought it useful to touch more on individual feedback from women I spoke to in BG and other companies.
- A frequent comment was that men and women are ‘wired differently’ – nothing wrong with that. In many ways we all know this, but then forget it when we go to work and expect the same behaviours. For example, many women will tend to say they can do something, when they are 90% certain they can. Men feel much less encumbered and may put their hands up more often – but maybe we shouldn’t always believe them.
- Following on from this, was the lack of role models or mentors within organisations. Those who might encourage women they have the skills and ability to perform in a management role and give them the confidence to apply for a role that they may have written off, as being beyond their current skill set. Being wired differently needs a different kind of encouragement.
- An interesting theme was around different ways that behaviours are perceived. So one example I had was, a man may be described as ‘strong and decisive’, whereas similar behaviour from a women might be perceived as ‘stroppy and demanding’. Does this also impact company’s hiring policies – are men more likely to hire ‘less demanding women’? And if so, have you hired the best and if not, does that lead to a smaller talent pool?
- One thing I thought would be a deterrent to management roles for women with a young family was the ever present Blackberry or IPhone, eating into home life. Instead it was viewed by some as a positive way of managing home and work life. It gave the flexibility to reply once the kids were off to bed, rather than staying longer at the office.
- The external world gives an ongoing challenge. It seems ‘normal’ for Dad not to be there at a midweek sports or music event, but absent mums can be seen as ‘unsupportive’. And this from a school that believes it’s nurturing the next generation of female leaders
- It’s important to not subconsciously write women off too early, if they haven’t followed the company progression ideal. They may have, or be thinking of a family - and this is quite enough for now – but keep the dialogue open for the future. But - at the same time, ladies, as Sheryl Sandberg from Facebook says, ‘don’t stop progressing until you start your maternity leave’.
- And finally, this is not just about women who have children; the same challenges were expressed by some who didn’t.
So where does that leave us? Very simply – it’s complicated. Most companies have good and appropriate policies in place, but no doubt there is cognitive bias which drives some behaviours. And that means going the extra mile to ensure we pay and promote equally – it’s about managers ‘making a role work for you and the company’. Good businesses want the best people, so finding ways to make this happen is a key challenge to running a successful business.
To conclude this section, I’m happy to report that the Petroleum Group Committee has 30% women and a new female Chair for next year. And we all get paid equally zero for our efforts, so we’re leading from the front!
Climate change
My second theme is climate change, which is a critical challenge for our world. It is also where the industry is invariably cast as ‘the problem’. There is recognition by almost all major energy companies that anthropogenic greenhouse gas emissions, including from burning fossil fuels, is a major contributor to climate change. As geologists, we may have personally shared those views for longer. The issue is particularly topical at present, with governments publicly pledging their long-term targets to reduce emissions in the run up to the UN Framework Convention on Climate Change -COP 21- meeting in Paris in December.
The dilemma is, the world has an increasing demand for energy and the alternatives to provide this all have challenges. Even in the IEA 2 degree scenario, demand for oil and gas is about the same in 2040 as it is today. This is not based on preference, but on the reality of providing the world with the energy it demands. The challenge is – how does the Oil and Gas industry make itself part of the solution, rather than just be perceived as the problem?
Two weeks ago, at the World Gas Conference in Paris, six major companies took a major step. BG Group, BP, ENI, Shell, Statoil and Total announced their call to governments and to the United Nations to introduce carbon pricing systems and create clear, stable, ambitious policy frameworks, that could eventually connect national systems. The 6 companies set out their position in a joint letter from their chief executives to the UN and the President of COP21, with the offer to open a dialogue and engage constructively in the policy debate. A letter was also sent to selected international newspapers.
Let me read you some parts of the text.
As a group of business people, we are united in our concern about the challenge – and the threat – posed by climate change. We urge governments to take decisive action at the UN climate change summit in December. We are also united in believing such action should recognise the vital roles of natural gas and carbon pricing in helping to meet the world’s demand for energy more sustainably.
Renewable energy has an increasing role to play – our companies have significant investments in renewable energy too. However, the need to cut emissions is so essential that we have to pursue all options to lower carbon while providing the energy the world needs to meet demand from a growing population seeking better living standards. Natural gas can help deliver this.
For natural gas, the case is simple: when burned to make electricity, it typically generates around half the carbon emissions of coal. In addition, gas can provide the electricity baseload that is required and can be a flexible partner to renewables, as efforts continue to improve the storage of electricity produced by intermittent wind or solar. This benefit is enhanced when natural gas emissions all along the value chain are controlled and reduced, a matter we are actively addressing with peers.
However, our request to policy makers as they prepare for the UN talks, is not to ask for special treatment of any resource, including natural gas, or any route to a lower carbon future. It is rather to ensure that the outcome of these talks, leads to widespread carbon pricing in all countries.
Carbon pricing policies will stimulate all forms of low carbon technologies. It will drive energy efficiency, as rapid urbanisation increases demand from our cities. It will benefit all sectors including power, mobility, heating and energy intensive industries along with renewable energy and natural gas. Market forces will operate to favour the least expensive and most efficient ways of reducing carbon in each country or region. Carbon pricing obviously adds a cost to our production and our products – but a stable, long term, global carbon pricing framework would provide businesses and stakeholders with a clear roadmap for future investments, and a clear role in securing a more sustainable future.
This initiative hasn’t been supported by all companies. The press, on the whole supportive, has portrayed this as a US – Europe divide, but this is just the start and more companies will join, indeed Repsol signed up last week. It starts to put us on the front foot of what will be a debate that will last for decades and one that is crucial for mankind. But it can’t just be rhetoric; this initiative must be underpinned by improved performance.
Conclusion
To conclude, in my years in the business I am proud of many industry achievements, but more could have been done in two areas. On diversity, progress is being made, but … really … we should be further along this journey than we are. In an industry where we have a challenge to recruit the best talent of any gender, we should embrace all those who enjoy working in this sector and treat them absolutely fairly, recognising and celebrating the differences, which can enhance and develop our businesses.
On climate change, I don’t subscribe to the view that it is simplistically ‘our fault’. However, we must be part of the solution. Without our collective commitment to tackle climate change via engagement, improved emission performance and technological advances, then decisions may be taken for us.
The recent industry letter represents a good step forward and I hope other companies will join us. Our role in this room is to spread the word that carbon pricing is the way forward to penalise higher carbon energy users and reward lower-carbon options. A stable, global carbon pricing framework will provide industry with the certainty it needs to continue investing and provide the energy the world needs.
Thank you for your attention.
Malcolm Brown
Executive Vice President, Exploration, BG Group and Chairman of the Petroleum Group