Proactive Expert Stakeholder Panel
A meeting with the Expert Stakeholder Panel was organised on October 21, 2013 at Saipem’s headquarters. The aim was to give the Panel the opportunity to meet with Saipem’s business leaders and to discuss strategy and materiality prior to the drafting of the 2013 Sustainability Report. It was a unique opportunity for the Panel members to learn about Saipem’s reporting processes and the challenges the Company faces, and to provide the management team with constructive and thought-provoking feedback on Saipem’s reporting approach.
The meeting was opened with a welcoming address by Saipem’s CEO, Mr. Umberto Vergine, followed by an introduction to Saipem delivered by the then Deputy CEO, Mr. Hugh O’Donnell.
The Panel is designed to improve the impact and relevance of Saipem’s sustainability reporting by representing the Company’s diverse stakeholder groups. As is done every year, the Panel has been partially renewed by the replacement of three experts in order to maintain compliance with the following criteria:
- Category: must represent a major stakeholder including civil society, industry associations, academia and investors, in order to provide a mix of critical, advocacy-based stakeholders, mainstream stakeholders and expert stakeholders.
- Stake (Interest): must be able to provide perspectives and insights relevant to a specific theme included in the Saipem Sustainability Report.
- Independence: must be independent of significant personal or organisational contact with Saipem.
- Geography: must represent a major geographical area in which Saipem operates, with a preference for specialists with expertise in developing and emerging markets.
As independent experts, Panel members are required to express their own opinions, which do not necessarily represent those of their organisations. They analyse the full, final draft of the document and, for a specific topic falling within their specific fields of competence, provide comments on pertinence, impact, key strengths, weaknesses and opportunities for improvement. They also draft a final joint statement on Saipem’s reporting approach and content.
To maintain the objectivity and fairness of the Panel, an external organisation, BSR (Business for Social Responsibility), was again appointed to oversee the process. BSR facilitated in-person discussions between Saipem and the Panel, collated expert commentaries, verified that they were inserted into this Report without censorship or subjective editing, and facilitated the discussion and drafting of the Panel’s joint statement. At Saipem’s request, BSR gave the experts an ex-gratia payment in recognition of the time dedicated to providing advance input, and reviewing and commenting on the Report.
Joint Statement of Independent Experts
The Panel believes that Saipem’s 2013 Sustainability Report, like its predecessors, provides useful information on Saipem’s sustainability performance that is of relevance to its stakeholders. The Panel finds the overall design and layout adequate for the purpose and welcomes that Saipem heeded the 2012 Panel’s recommendation to re-establish a dedicated chapter on Local Content.
Thematically, the Panel commends Saipem for rightly identifying Human Rights as a significant issue, and the inclusion of several notable achievements deserves credit. The Panel would expect future reporting to more explicitly relate to the United Nations’ Guiding Principles on Business and Human Rights that today must be considered the benchmark for a business approach to human rights. The panel also praises Saipem for its industry-leading SELCE tool, which remains a world class approach to assessing the local economic and social impacts comprehensively covered in the Report. However, the Report would benefit from a number of structural changes. The Panel would welcome a more concise report focused on issues most material to Saipem.
For instance, on sections such as staff development or partnerships with local stakeholders, reducing the discourse to only key details and drafting the ‘Focus On’ sections to illustrate clearly related examples of impact. This requires rethinking Saipem’s materiality methodology and re-assessing the level of detail provided per issue. A strategic sustainability framework introduction to the Report would enable Saipem to articulate the key areas where it has made significant progress and where it demonstrates clear leadership. For instance, the Panel notes that performance areas such as Competency and People Management, Supply Chain and Human Rights could benefit from explicit cross-referencing to other supporting documents in order to make it easier for readers to find complementary information on these topics.
The Report could also be strengthened by reworking the balance between qualitative and quantitative reporting, providing clearer targets and key performance indicators directly alongside the current narrative. Finally, the Report would benefit from a more even representation of positive and negative performance; for example, being more forthcoming with the challenges faced in resolving 2012’s corruption investigation and addressing any remaining challenges for Saipem in 2014.
These examples highlight the Panel’s underlying comment regarding the 2013 Sustainability Report. It is clear that Saipem remains committed to advancing its sustainability performance, and the Company demonstrates leadership in many areas, but the Report could be structured around a greater emphasis of most material issues in order to positively demonstrate this performance to stakeholders.
Comment on Process
The Panel convened three times, once via an in-person meeting and twice via teleconference. The meeting was held in Saipem’s headquarters with representatives from top management and main corporate functions to discuss the Company’s sustainability strategy, material issues and reporting process, while the teleconferences were conducted only among the Panel to guarantee the independent nature of this statement. Additional contacts were carried out on other occasions by e-mail.
The engagement process with the Experts was facilitated and conducted by an independent third-party, BSR (Business for Social Responsibility).
The expert review did not include verification of the performance data included in the Report, or the information on which the case studies in the Report were based. In addition to the above joint statement, Experts have provided separate comments on cross-sectional topics.
In recognition of their time and expertise, an honorarium was offered to the Experts or to their choice of charitable organisation.
The Report speaks to the materiality of the overall management of Saipem’s supply chain, acknowledging many of the risks involved, and outlining numerous mitigation measures. Given the thematic structure of the Report, these disclosures are dispersed, and a more detailed introductory discussion noting the location of examples and additional discussion would assist the reader. While detail is provided regarding the initial quality assurance process, more information on the methodology to select which vendors will be audited, and a disclosure of how supplier environmental and community impacts are audited, would be helpful. In the discussion on the Saipem Campaign for Vendor Social Responsibility, actual numbers, including trends, on the termination of vendor contracts due to non‐compliance with Saipem’s standards, or other breaches, would also be an interesting insight. A definition of ‘local’ regarding the 51% of goods and services procured should be included, as should historical trend reporting to enable readers’ to assess if progress is being made over time. It would also be interesting to understand how Saipem balances localisation with competing global cost and standardisation pressures. While the Report addresses the upholding of human right provisions in the management of its contract security, it would be useful to expand on what international frameworks are being drawn on in this regard; for example, if the Voluntary Principles on Security and Human Rights or other benchmarks are referenced.
Additionally, Saipem releases a number of supplementary reports, and greater connection between these documents would make access to information easier. A reader comparing the 2012 and 2013 reports would find no explicit response to prior panel recommendations to include reporting on supply chain sustainability themes considered at board level, nor the number of Frame Agreements which include specific provisions to increase sustainability performance. The Sustainability Report could link the reader directly to the ‘Expert Panel Comments and Implementation’ document, where this information can be found.
Paul Holleson is an independent consultant with over 18 years of international experience in the sustainability field. Key areas of expertise include the facilitation of multi-stakeholder dialogues, strategic and operational integration of the management of community and environmental issues, human rights and security, and mining’s contribution to society. Paul was previously Vice President: Environment and Community Affairs at AngloGold Ashanti, a South African domiciled multinational gold mining company.
Saipem operates as an oil and gas industry contractor in various countries worldwide and often in very demanding technical conditions. The Company simultaneously faces an intense level of competition and major challenges identified in its commitment to ‘developing long-term competitiveness’ (risks management, governance, business ethics, corruption, etc.).
The Report demonstrates that Saipem has understood these issues and challenges.
At Group level, Saipem has formulated commitments describing its approach to addressing these in its operations and in industrial responses to Client demands. Over 2013, the Group appears to have taken steps towards enhancing project risk assessments and internal controls and addressing reputational and corruption issues (at project level and oversight the branches).
On the one hand, the Report in itself is undoubtedly rich and offers plenty of information on sustainability issues and concerns that could be of interest from both the perspective of corporate communication and stakeholders.
On the other hand however, it is unfortunate the reader is not presented with a clear thread reflecting the Company’s strategy as it is revealed in its actions and commitments. The risk is that the Report could be regrettably perceived as a general annual recording exercise which does not convey the real dynamic of progress and commitment sustained by the Company, nor the difference Saipem is making among its peers in the oil services industry.
The relevance of topics and actions underpinning the Group strategy should be outlined more clearly and presented in a manner that is understandable for all stakeholders. Specifically, the Report could highlight how Saipem addresses different CSR issues by distinguishing what concerns maintaining a license to operate within the industry (expertise and know‐how, safety, environmental performance, risk and performance assessment at project level, anti‐corruption measures, legal compliance) and what has a bearing on key factors of success and factors of differentiation for Saipem compared to its competitors (local communities, procurement and local content, vendor qualification process and analysis). Such an approach could considerably enhance the value and relevance of the 2013 Report and the year of efforts made at Group level.
Stephane Prevost is General Manager of an asset management company which he created in 2007. The company aims to manage assets using a Socially Responsible Investment approach for European equity markets with a specialisation in growth stock picking. Prior to creating this company, Stephane began his career in 1995 as a consultant in social business at the head office of the Caisse des Depots et Consignations. He became a financial analyst at France Active (Caisse des Depots group) before heading the department, and in 1998 took on the role of project manager working on equity capital contributions for solidarity structures. In 2001, he joined Ixis Asset Management as European equity analyst and became portfolio manager specialising in SRI.
The Report demonstrates that Saipem understands the importance of developing Local Content as part of its commitment ‘to creating long‐term value and sharing it’ with all its stakeholders (and in this instance, the local communities). Saipem’s commitment to ‘partnering with local communities’ is also well articulated.
Some of the offered evidence would be stronger if illustrated by more examples of actual partnerships rather than by underscoring unilateral actions taken by Saipem. The Report is clear about the business and sustainability significance of building individual capacities (local manpower); however, the efforts being deployed by Saipem to permanently enhance the capacities of local educational institutions (training‐the‐trainers) is not explicit enough.
There is little or no mention of engagement between Saipem and local governmental institutions towards ensuring that responsibilities almost wholly assumed by Saipem at a given point in time, such as manpower training, be eventually assumed gradually and more wholly by their rightful holders: local governmental institutions.
The reported application of Saipem’s own Externalities Local Content Evaluation (SELCE) to four countries (Australia, Nigeria, Saudi Arabia and Indonesia) demonstrates that Saipem has developed yet another field of expertise: social engineering. Beyond evaluating the economic impacts, it would be very useful if SELCE could apply to other elements of the Human Development Index (e.g., employment and education levels, etc.).
The Report would benefit from clarifying how lessons learnt from delivering programmes and projects in many parts of the world are shared across the Saipem corporation, e.g. is there a hub for sharing that knowledge? To this effect, there are useful learnings from Saipem’s accomplishments over the years as reported in the Health and Safety chapter in the 2013 Sustainability Report.
Finally, the statistics provided on Local Content and community, by and large, do not convey a sense of progress or even a pattern. Comparative figures with past year(s) should be provided to show progress preferably in a dashboard presentation. This would considerably enhance the value and relevance of the Report on a prolific year.
Louis Guay, a former Canadian Diplomat, is currently a Senior Fellow at St. Paul University as well as a Consultant. He also serves on the Board of an NGO devoted to Community Development (SOPAR) and belongs to the Environmental and Social Responsibility Society of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM). Prior to this, Mr. Guay was Canada’s Ambassador to Gabon and Equatorial Guinea. With the Canadian Department of Foreign Affairs, he was involved in trade policy and conflict management initiatives, including in Sudan, Sierra Leone, Haiti and Niger. He was Special Assistant to the United Nations Envoy of the Secretary General to Niger (2008-2009). His last assignment as a Public Official was as Coordinator for Corporate Social Responsibility for the Americas (2009-2011).
Saipem’s 2013 Sustainability Report includes some notable achievements relating to human rights and labour standards. Saipem is committed to human rights clauses in security contracts, termination of contracts for non‐compliance, and training of law enforcers and subcontractors in relation to security (p. 36). In 2013, the certification of applicable vessels to the Maritime Labour Convention 2006 relating to fair labour standards was a significant milestone (p. 38).
An analysis of Saipem’s community- or worker‐related grievance mechanisms would be a valuable addition to the Report, as these mechanisms are essential for responding to concerns and monitoring performance on labour standards and human rights. The Report could be made stronger with more coverage of Saipem’s country risk assessments and human rights risks assessments relating to countries with particular ongoing human rights risks, such as Azerbaijan and Nigeria. In future reports, Saipem might also want to consider specific topical human rights issues that might affect their operations, for example the recent disputes between First Nations and the government over land rights in Northern Alberta.
Saipem’s Campaign for Vendor Social Responsibility to address labour standards in the supply chain is welcome, although p. 28 could provide greater detail or illustrative examples of how the programme has addressed issues in specific locations, and the programme’s impact. For a future Sustainability Report, Saipem might also track the progress of Venezuela’s Vendor Forums on labour standards and provide stakeholders with a sense of the impact of these forums over time. Human rights risks related to security are adequately covered on p. 36. However, Saipem’s framework for communicating its human rights efforts could be further detailed. Saipem’s Code of Ethics, which is a guiding document for all Saipem operations, refers to the UN Guiding Principles on Business and Human Rights.
Future sustainability reports could explain how the Company explicitly engages with the UN Guiding Principles as a broader framework for understanding and addressing human rights issues throughout their operations, including due diligence, labour standards, indigenous rights, meaningful consultation and access to remedy in case of human rights violations. Saipem needs to consider the full range of its stakeholders who may read this Report because of their interest in human rights issues (p. 5). While country/project reports are aimed at local communities, some local civil society groups may also want to read this Report. Others who might be interested in human rights, such as international and national NGOs, researchers and the media are not mentioned.
Dr. Emma Wilson is a principal researcher and Energy Team leader at the International Institute for Environment and Development (IIED) – a non-profit policy research institute in London. Emma has over 16 years’ experience of working on the energy sector and sustainable development. Her research focuses on how investment and business models can be targeted towards sustainable use of energy. This includes corporate responsibility, transparency, conflict and company-community relations in the Oil&Gas sector; and community-based decision-making. Emma has worked on the Oil&Gas sector and community development in the Russian North and Far East, Nigeria, Azerbaijan, Kazakhstan and Qatar.
As the CEO acknowledges in his introduction, one of the Company’s key resources is Saipem people.
The Company’s declared strategic focus on the toughest and most technologically challenging projects means it must be exceptionally capable of maximising the business value of its people through the provision of a safe and healthy operating environment, continuous professional training and effective recruitment and development of local staff.
The safety performance, tragically marred by the six fatalities during the year, achieved the low end of the Company’s declared target range.
This is worse than last year’s performance with an increase in minor accidents cited as the cause, which could indicate a worrying loss of focus. However, application of the exemplary risk‐based safety management system (well described on p. 48), the relentless focus on Safety Leadership and culture (LiHS), periodic safety campaigns such as Hand Injuries Prevention and above all HSE training for all staff and contractors should drive improved performance in coming years. Saipem’s commitment to the good health of all its people is demonstrated through the programmes described. Of particular note is the impact of the telehealth monitoring programme (CVDPP) on heart disease especially given the locus of Company operations. Saipem is also active in aggressively tackling Malaria both in its workforce and in affected communities with generally positive results although the rising (if numerically small) trend in case rate in the Congo should be explained. The Company’s deep commitment to competency development is amply demonstrated in the chapter devoted to this topic. I would recommend incorporating an introductory description about overall approach to better grasp the key challenges, priority objectives and performance targets and provide context against which the focus areas can be judged.
Graham Baxter is an independent consultant working with major international companies and NGOs on sustainability challenges. Graham worked in the Oil&Gas sector for over 30 years mostly with BP Plc in roles including geologist, commercial and strategy analyst, Business Manager in the North Sea and regional adviser in the Global Gas business. In 1999, he joined BP Solar where he ultimately became VP of Solar Solutions. From 2003 he became BP Group Vice-President for Corporate Responsibility, developing a comprehensive corporate responsibility framework for the organisation. During this period, Graham was also a founding Board member of the Extractive Industries Transparency Initiative. From 2007 until 2013 he was a Senior Advisor at IBLF where he focused on Inclusive Business models and Sustainability Leadership agendas.