Introduction

Sectoral Sustainability Strategy

The initial impetus arose in 1999 in discussions with government (particularly DTI and DEFRA, see "A Better Quality of Life, May 1999"), which resulted in the government and oil and gas industry task force (OGITF, now PILOT) proposing the establishment of a sustainable development strategy for the sector. This was part of a strategy to promote improved business performance and encourage "triple bottom line" reporting.

UKOOA took up the challenge and published a strategy entitled "Striking a Balance" in 2001, being one of the first produced within the pioneers group of key UK industrial sectors. In that report it was stated that the essence of our industry's contribution to sustainable development was "to find a way to balance the considerable economic and social benefits with good stewardship of the world's natural resources and environmental care."

It was intended that this should be a living document, with regular reviews and updates. The strategy was reviewed in 2003 with the introduction of the "sustainable development indicator wheel". 2002 and 2004 saw interim reporting statistics updated. This 2005 report again includes a review of the strategy, with past performance reviewed and future challenges restated.

Sustainable Development was defined by the Brundtland commission as "development which meets the needs of the present without compromising the ability of future generations to meet their own needs". Within the context of this report this is translated into three basic elements, environment, social and economic against which performance indicators have been assigned.

Figure 1: Elements of Sustainable Development

In recent years, corporate reporting of sustainable development indicators has increased and IPIECA, the International Petroleum Industry Environmental Conservation Association (along with the American Petroleum Institute, API and International Association of Oil and Gas Producers, OGP) have recently launched the Oil & Gas Industry Guidance on Voluntary Sustainability Reporting, to help improve quality, scope and consistency. This builds on recommendations developed by the Global Reporting Initiative, GRI, but specifically relating to oil and gas. This reporting of "non-financial" or "sustainability" data and issues are variously included by companies under the terms of: "sustainable development", "social responsibility" and "corporate citizenship". It is becoming increasingly important for a number of reasons:

• Enhancing business value – by building investor confidence that the company is managing risks and positioning itself to address emerging opportunities
• Improving internal operations – by deepening understanding of how the company is performing and providing information to improve decision making
• Strengthening relationships – by demonstrating to local communities, regulators, etc that behaviours are environmentally and socially responsible
• Being an important accountability mechanism – by establishing constraints, challenges and reporting on progress

The intent of this report is not to duplicate individual corporate reports, but to give a broader sectoral picture for context and perspective, where an aggregate view is meaningful.

The boundary conditions to this sectoral strategy and report are therefore:

• UK offshore, upstream exploration and production of oil and gas (although within a wider UK primary energy producer context)
• Aggregate sectoral view, not involving individual or inter-company commercial issues

The development of the industry's approach to sustainable development is a journey which has moved a long way. Initially there was a strong measure of justifying our actions against external challenge and demonstrating compliance with regulatory controls. Then it developed into a managerial exercise to expand our societal licence-to-operate and benchmark our performance. More recently sustainable development, SD, has emerged as a strategic driver, where the needs of society and companies are aligned. The changes in this report reflect challenges, goals and measures which are relevant to the current stage of this journey.