Sustainable Supply and Procurement for Exxon and Chevron Corporations

SustainableSupply and Procurement for Exxon and Chevron Corporations

SustainableSupply and Procurement for Exxon and Chevron Corporations

ConceptualFramework

Thecurrent environmental performance index (EPI) measures the trends andprogress the world is making towards environmental sustainability.The outcomes of the data indicated below relates to policy goals. Theperformance index comprises of indicators as described in the databelow:

Thenumber of monitoring stations in developed and developing countries

Source:Socioeconomic Data and Applications Center, 2014

Thesupply chains and the impact they have on the environment are related(Benn,Dunphy, and Griffiths, 2014 Benn, Dunphy, and Griffiths, 2012). The complexity of supply chains impacts on the efficiency and theoptimization of planning capabilities, which have strategicsignificance. The environmental impact of supply chain andprocurement is one of the main concerns of many oil corporations suchas ExxonMobil and Chevron. For instance, the Carbon DisclosureProject (CDP) is focused on reducing the amount of carbon dioxideproduced on its supply chain (Duand Vieira, 2012 Domenec, 2012 Epstein and Buhovac, 2014 Doppelt,2009).All multinationals are also focused on sustainable operations intheir supply chains. The choice of the Exxon and Chevron is due totheir unfavorable sustainability perception that was caused by theoil spill disaster in the past. Exxon faced a disastrous oil spillin 1989 in which over 250, 000 barrels of oil spilled into theAlaskan coastal waters. The spill caused widespread pollution of anestimated 1,300 miles along the coastline (Fonseca,McAllister, and Fitzpatrick, 2014 Ioannou and Serafeim, 2014).(Olsthoornet al., 2001 Benn et al., 2014).Kolkand Levy (2001) and Olsthoorn et al. (2001) assert that thedisasters caused a drop in Exxon’s financial performance hence,caused an increased on the sustainability practices of the company ofoil companies.

Thefollowing graphical representations show the sustainabilityperformance of Exon Corporation in different countries.

Exxonand its subsidiaries have some of the most all-encompassing admissionto governments of all the corporations in the global oil and gasindustry, with some sectors dedicated to government affairs,particularly in Europe and the US. Exxon supplies oil and gas inalmost 80 countries, establishing contacts with various levels ofadministrations and bureaucracies, legal frameworks, and security.It has also has advanced massive capabilities and understanding indealing with different national governments in oil and gas producingcountries, which is particularly valuable when it comes tosimplifying relationships with different governments and authorities.Exxon’s affiliates have the some of the best access to governmentsof countries that produce oil in large amounts of oil and gas(Oshionebo,2009).Exxon also has access to different departments that carry differentroles in government.

ChevronCorporation’s sustainability profile

Chevronis among the biggest integrated companies in the world ((Domenec,2012 Gardner, 2014 Tench, Sun, and Jones, 2012 Manna et al.,2014).The sustainable environmental practices at Chevron are based oninnovative technologies and taking advantage of growth opportunities.The following tables a fact file of Chevron’s environmentalsustainability practices in its supply chain.

Code

Sustainability indicator

Status

E1

Green House gas releases

Illustrates the amount of carbon dioxide emitted

Full

E2

Energy use

Compiles annual reports amount the total quantity of energy consumed in oil and gas throughout its business operations

Full

E3

Use of alternative sources of energy

Provides qualitative research about research, plans, and current actions related to its adoption of renewable sources of energy

Full

E4

Flared gas

Submits reports about the amount of the hydrocarbon gas the company flares to the atmosphere through its day to day operations

Full

E5

Biodiversity and ecosystem services

The company submits qualitative descriptions of the methods its uses to address company risks and opportunities related to biodiversity and or ecosystem services (Manna et al., 2014)

E6

Freshwater

Submits reports of the quantity of water withdrawn or consumed through its oil and gas operations (Brockett and Rezaee, 2013)

Full

E7

Other emissions

Submits reports about other emissions released into the atmosphere

Full

E8

Spill to the environment

Hands reports to the Environment Protection Agency (EPA) and other agencies abroad that have specific quantities of the spills to the environment as a result of operations and the response measures to that effect

Full

E9

Discharges to water

The company quantifies its hydrocarbon discharges to water resources in its environs from its oil and gas operations

Full

E9

Waste

Discloses quantities of waste disposed of from its oil and gas operations

Full

Chevron’sSupply Chain Sustainability Environmental performance for the lastThree years

Environmental performance

2012

2013

2014

Petroleum spills to land and water

170

213

838

Total recovered

1212

1378

396

Petroleum spills to land and water

146

133

79

Freshwater was withdrawn (million in sq. metric tons )

88

93

85

Non-fresh water withdrew (million sq. metric tons)

35

37

41

On-site recycled water (Million sq. metric tons

80

85

91

Average concentration ( parts per million cubics)

Upstream

10

10

9

Downstream and chemicals

3

2

1

53

52

+1

Total greenhouse (GHG) emissions (million metric tons of CO2 equivalent )

57

57

56

Bysource:

Combustion 38 38 37

Flaring 9 76

Venting 2 2 3

Other 8 810

GHSemissions from combustion of CHEVRON products

(millionmetric tons) 364 363 358

UpstreamGHG emissions intensity 35 34 34

Chevron’sEnvironmental performance cont’d

Total volatile organic compounds (VOCs) emitted

(In thousand tons )

2012

2013

2014

Upstream

159

147

135

Chemicals and Downstream

227

243

115

Smoke and Midway

23

19

18

202

210

-8

Overall Sulfur dioxide released

upstream

100

118 93

Chemicals and Downstream

3

11 8

Smoke and Midway

14

14 13

998

908

90

Source:Yale University, 2015 and HAVI Global Solutions, 2015

Evaluationof Exxon’ and chevron’s supply chain sustainability performance

Bothcorporations have a strict adherence policy. Non-adherence hasfar-reaching implications for company operations. Both companies havea history environmental disaster caused by disasters hence,following the regulatory framework of the EPA and other institutionscharged with overseeing sustainability practices is engraved incorporate responsibility policies. Chevron has a comprehensive andimpressive Supply Chain sustainability report (Manna et al., 2014Petrini and Pozzebon, 2009). All the components that constitute itssustainability report indicate that the rate of emissions anddischarge of harmful substances have been on the decline for the lastthree years.

Recommendations

  • Exxon and Chevron need to improve the sustainability practices across their supply chains by re-assessing internal processes first and identify the associated risks

  • Weiss (2009), Brockett and Rezaee (2013), Tench et al. (2012), and Smeets and Weterings (2011) suggest that such companies should map out specific aspects of the supply chains and how the components affect specific risks caused by non-adherence to environmental policy frameworks and legislation.

Entrenchsustainability as part of the companies’ strategic positioning inthe market

  • The companies need to identify and adopt quantifying tools that would enable them to project emissions cuts before official measurements by regulators.

  • Obtain a conformity approach that aligned with United Nations Environment program. All UNEP member countries have a harmonized approach that seeks to create a universal policy framework for companies in different industries

Bibliography

RawData References

Brockett,A., and Rezaee, Z. (2013) Corporatesustainability: Integrating performance and reporting.Hoboken, N.J: Wiley.

HAVIGlobal Solutions (2015).SupplyChain &amp Environmental Impact [online]. Available from:http://www.havigs.com/en/sustainability/supply-chain-environmental-impact[Accessed 2015]

Smeets,E., &amp Weterings, R. (2011). Environmental indicators: Typologyand overview (p. 19). Copenhagen: European Environment Agency.

SocioeconomicData and Applications Centre (2014). EnvironmentalPerformance Index (EPI)[online]. Available from:http://sedac.ciesin.columbia.edu/data/set/epi-environmental-performance-index-2014/data-download[Accessed 2015]

YaleUniversity (2015). Environmental performance index. [online].Available from: http://epi.yale.edu/epi [Accessed 2015]

Academicreferences

Benn,S., Dunphy, D., and Griffiths, A. (2014) Organizationalchange for corporate sustainability.Routledge.

Benn,S., Dunphy, D., and Griffiths, A. (2012) “Enabling change forcorporate sustainability: An integrated perspective”, AustralasianJournal of Environmental Management,13(3), 156-165.

Domenec,F. (2012) “The “greening” of the annual letters published byExxon, Chevron and BP between 2003 and 2009,” Journalof Communication Management,16(3), 296-311.

Doppelt,B. (2009) LeadingChange Toward Sustainability-: A Change-Management Guide forBusiness,Government and Civil Society. Greenleaf Publishing.

Du,S., and Vieira Jr, E. T. (2012) “Striving for legitimacy throughcorporate social responsibility: Insights from oil companies,”Journalof Business Ethics,110(4), 413-427.

Epstein,M. J., and Buhovac, A. R. (2014) Makingsustainability work: Best practices in managing and measuringcorporate social, environmental, and economic impacts.Berrett-Koehler Publishers.

Fonseca,A., McAllister, M. L., and Fitzpatrick, P. (2014) “Sustainabilityreporting among mining corporations: a constructive critique of theGRI approach,” Journalof Cleaner Production,84, 70-83.

Gardner,L. G. (2014) TheAcquisition of SM Energy as a Proposed Strategy of Growth for ChevronCorporation.

Ioannou,I., and Serafeim, G. (2014) “The consequences of mandatorycorporate sustainability reporting: evidence from four countries,”HarvardBusiness School Research Working Paper,(11-100).

Tench,R., Sun, W., and Jones, B. (2012) Corporatesocial irresponsibility: A challenging concept.

Kolk,A., and Levy, D. (2001) “Winds of Change:: Corporate Strategy,Climate change and Oil Multinationals,” EuropeanManagement Journal,19(5), 501-509.

Manna,D. R., Marco, G., Letterman, D., and Mullen, J. (2014) “SustainableCase Study: Chevron Corporation,” Journalof Sustainability Management(JSM), 2(1), 31-34.

Olsthoorn,X., Tyteca, D., Wehrmeyer, W., and Wagner, M. (2001) “Environmentalindicators for business: a review of the literature andstandardisation methods,” Journalof Cleaner Production,9(5), 453-463.

Oshionebo,E. (2009) Regulatingtransnational corporations in domestic and international regimes: AnAfrican case study.Toronto: University of Toronto Press.

Petrini,M., and Pozzebon, M. (2009) “Managing sustainability with thesupport of business intelligence: Integrating socio-environmentalindicators and organisational context,” TheJournal of Strategic Information Systems,18(4), 178-191.

Weiss,J. W. (2009) Businessethics: A stakeholders and issues management approach. Australia:South-Western Cengage Learning.