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A Purpose Beyond Profit
by Tim Hearn |
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WHAT MAKES A BUSINESS ENTERPRISE a "good corporate citizen"? I have been reflecting on this question since reading a comment in a newspaper book review recently. "The sole and express purpose of a corporation is to make money," wrote the reviewer, as if this were a statement of fact. While I suppose this might be a commonly held view of corporations in some circles, it's one with which I cannot completely agree. Certainly, a fundamental objective of any business enterprise is to operate profitably. Corporations have a fiduciary responsibility to provide their shareholders with a return on their investment. The foundation of good corporate citizenship is doing our job well and profitably. It is, in fact, a necessary condition if a corporation is to fulfill society's expectations of it. And a corporation that ignores the many and varied expectations of society does so at its peril – a company that loses the confidence of any of its "publics" will likely not remain successful very long in today's highly competitive global marketplace. While corporate profits are sometimes the subject of scorn, the fact is they are of great benefit to society. They are essential to shareholders, which include the numerous pension funds that represent the many thousands of Canadian workers whose financial future is dependent on corporate performance. Profits enable corporations to employ people and to expand operations and thus to provide more jobs. They also make possible the advancement of technologies that enable resources to be developed and products to be manufactured, improved and distributed – in short, they fuel progress. Profitable corporations also spur the growth of ancillary and supporting industries, which in turn lead to increased prosperity and rising standards of living across the breadth of society. Without a profitable oil and gas industry, for example, Canada would not be the net exporter of energy it is today or, indeed, the prosperous and vital country it has become. Net energy exports in 2001 totalled about $37 billion, or more than half of Canada's merchandise trade surplus. And, of course, the greater the corporate profit, the greater the amount paid to governments in the form of taxes by both the company itself and by its employees. Taxes feed the hopper of social programs. The funds that support education, welfare programs, health care and other essential social services are distributed by governments, but before this wealth can be distributed, it must first be created. And in our free-enterprise system, which was proven to be the best system for raising standards of living, wealth is largely created by companies – thousands upon thousands of companies, big and small, competing in free and open markets. Corporations generate profits by providing products and services that people need and want. Imperial Oil, for example, supplies hydrocarbon fuels that generate the heat, light and motive power that Canadians use every day, as well as a multitude of hydrocarbon-related products that are essential to agriculture, food production, medicine, health care, storage and transportation, and many other fields. These products in and of themselves contribute to Canada's development and prosperity, helping to raise the standard of living of Canadians. And as our competitive, free-market system drives us to improve our products and services, consumers benefit further. At the same time, we recognize that in producing and transporting oil and gas and in manufacturing and distributing products, we have an overriding duty to conduct all our operations safely and in an environmentally responsible manner. Nothing is more important than ensuring the safety of our employees and contractors and protecting the public and the environment by preventing potentially hazardous incidents such as fires or product leaks or spills. Through a program known as the Operations Integrity Management System, we take a highly disciplined approach to operating facilities safely and reliably. As a result, our safety performance is consistently among the best in the Canadian petroleum product industry. However, we know that we cannot ever become satisfied or, worse, complacent in these vital areas. In case there should ever be a serious incident, we maintain an emergency response capability that is second to none and includes close cooperation with local communities and authorities. I am also proud of our track record in taking action when products or operations are shown to be harmful. Over the years, whenever any of the thousands of compounds that make up hydrocarbon fuels have been demonstrated to be harmful to the environment – such as lead-based additives and benzene – we have acted promptly to remove them. And currently, some $575 million is being invested in our four refineries to reduce the sulphur content of our gasolines, a necessary step if the new generation of automobile pollution-control technologies is to work effectively in removing smog-causing pollutants. Caring for the environment is an area where we all need to work together, and there are a number of instances in which members of the Canadian petroleum industry are clearly doing that. For example, cooperating with government and automobile manufacturers, industry members have worked together to reduce the volatility of gasoline sold during summer months, thereby helping to prevent smog formation. |
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We have consistently improved energy consumption in our own operations. Imperial's refineries today are about 40 percent more energy efficient than they were 30 years ago, and they continue to improve their efficiency by a rate of one percent a year. In our natural resource operations, we lead the industry in capturing natural gas associated with oil production, which would otherwise be flared or vented into the air, with a recovery rate of better than 99.7 percent. Corporations cannot lose by such efforts; energy conservation is good for the environment and it's good for the bottom line. It's also incumbent on an energy company to encourage the wise and efficient use of its products. At Imperial, among other initiatives, we support an anti-idling campaign and the Car Heaven program, which works to get older, higher-emission cars off the road. We also participate in the Canadian Transportation Fuel Cell Alliance, and in a worldwide research program focused on the development of new fuel and engine technologies – including fuel cell powered vehicles – that have the potential to reduce fuel consumption by orders of magnitude in the future. Ensuring that employees have the training and experience they require to do their jobs well is another important aspect of a corporation's social responsibility. Obviously a well-trained, motivated workforce benefits business, but it also benefits society in that we, as a nation, are better able to compete in the global marketplace. It is essential to provide people with challenge – challenge is the key to unlocking a person's full potential. Another fundamental duty of all corporations is that of conducting their affairs to the highest standards of ethics and integrity, which includes reporting financial and business results both honestly and transparently. In a recent Imperial Oil Review article, I wrote about this company's long record of ethical conduct and our determination to continue to meet the highest standards of integrity in all areas of our business. Society must be able to trust in the integrity not just of individual companies but of the system as a whole. Without this trust, corporations cannot succeed – and society cannot reap the benefits that flow from that success. When people think of corporate social responsibility, the first thing that often comes to mind is support for community groups. And for good reason. Corporate contributions play a key role in funding the multitude of non-profit organizations that provide needed services and enrich society. This is not simply a responsibility; it is a privilege. We exercise this privilege through the Imperial Oil Foundation – in recent times, to the tune of some $6.7 million a year. We focus our charitable donations on programs and organizations devoted to Canada's youth, especially in educational areas, paying particular attention to the communities where we operate. In my view, helping to ensure that young Canadians are equipped and prepared to compete with the best in the world is a priority. Non-profit groups need more than funding; they also need physical help. As a result, we work to encourage volunteerism among all our people – employees, retirees and Esso sales associates – by providing grants to the groups with which they are involved. Corporations also have a responsibility to contribute to the well-being of society by sharing their knowledge and by providing advice and counsel to governments in the formulation of public policy in areas where they have legitimate expertise and experience. This is particularly important when it comes to formulating fiscal and trade-related rules for an industry as complex and as important as ours. With virtually every region of the world competing for the vast amounts of investment capital needed to develop natural resources, it is essential that Canada maintain, and be seen to maintain, a business climate that is hospitable and attractive to both domestic and international investors. As a company with deep roots in Canada and many years of experience in natural resource development, Imperial has a great deal to contribute in this area and a responsibility to do so. • • • • • |
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| A GOOD CORPORATE CITIZEN, like any good citizen, cannot disregard its responsibilities to society and the environment. A corporation's "licence to operate," to use a currently fashionable term, depends on its meeting responsibilities and expectations that go beyond its duty to its shareholders. At Imperial, how we achieve results is as important as the results themselves. Good corporate citizenship is a cornerstone of our culture, and it has been for more than a century. We have served our shareholders well by remaining profitable throughout our long history, while at the same time keeping faith with Canada by contributing to society in many and varied ways – by fulfilling our many purposes. Tim Hearn is chairman, president and chief executive officer of Imperial Oil. |
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Illustration: Mark Tellok |
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