Society

We work to ensure that neighbouring communities benefit from our presence on an enduring basis.
We listen to neighbouring communities and take account of their interests.
We support human rights within our areas of influence.

Global companies are encountering rising expectations, increased scrutiny and higher reporting requirements in the social arena. The desire for greater corporate clarity and performance is shared by many stakeholders, from governments and host communities to NGOs and financial institutions. Their perspectives encompass concerns such as human rights, the rights of indigenous peoples, revenue and operating transparency and the sharing of economic benefits.

In recent years, BG Group’s global portfolio has expanded and diversified; in 2003 the Group had interests in 20 countries, by 2007 this had increased to 27 countries. Several of the countries in which the Group operates face complex social and developmental challenges.

In response to these increased external expectations – combined with the Group’s expansion – we are implementing a strategy which aims to ensure a more systematic approach to Social Performance. We have increased our capacity by recruiting additional experienced Social Performance specialists, and have begun to roll out a Social Performance Governance Framework which combines the Group’s existing experience with external best practice models. The Framework is designed to establish Social Performance management processes that we believe will be robust, consistent, effective and responsive to the interests of stakeholders. A key part of the Framework is a Social Performance Standard, which the Group Executive and the Corporate Responsibility Committee (CRC) approved in the second half of 2007.

The Framework seeks to meet three critical objectives:

establishing and maintaining effective relationships with interested and affected stakeholders;
avoiding or minimising the negative impacts of our activities; and
creating and delivering on opportunities to enhance benefits to society.

In addition, the Group has created a separate Social Performance function in order to support the Group’s business objectives by helping to manage operational risks and secure alignment with host community and host government objectives. Through this function, we aim to contribute to the socio-economic aspects of the broader sustainable development agenda in societies in which we operate.

In parallel, the Group is seeking to educate employees worldwide as to the nature of the challenge and the important role played by Social Performance in the sustainable delivery of long-term Group objectives. The intention is to build the same institutional rigour into the process of assessing the Social Performance aspects of a development that the Group brings to other aspects of our business. Accordingly, we have held two training sessions for staff from a variety of functions and country operations on the International Finance Corporation’s (IFC) Performance Standards and application of the new BG Group Standard.

The Social Performance Governance Framework will be implemented in all assets over a three year period, starting in 2008, and we will report on our progress in subsequent CR Reports.

Social Performance Governance Framework

In 2007, we developed a new Social Performance Governance Framework, drawing on BG Group’s growing expertise in the management of social issues as wel as lessons from elsewhere and international good practice guidance. The Framework is a Group Core Control, and consists of:

a Policy statement;
a Standard - mandatory for all assets;
Guidelines and tools to assist assets to meet the requirements of the Standard; and
an assurance process.

The Standard is based on the key elements of the 2006 International Finance Corporation (IFC) Policy and Performance Standards on Social and Environmental Sustainability. It covers nine elements, including:

effective consultation;
the management of high-risk issues such as involuntary resettlement, economic displacement, indigenous people and cultural heritage; and
value-adding elements of social performance through social investment, and alignment of business and community priorities.

The Framework also sets out key management requirements, including the need for strategic planning, effective management processes, suitable resourcing and key performance indicators.

As the Framework is rolled out across the Group, performance against the Standard will be assessed by both corporate and asset staff using specific metrics and indicators. The rollout of the Governance Framework will focus on priority assets in 2008, with a view to establishing full compliance against the Standard in all assets by the end of 2010.

Support for business objectives

Effective delivery of Social Performance objectives, in line with growing external expectations, will be a key determinant of the achievement of BG Group’s ambitions in this area. Over the last few years, the Group has made progress towards meeting this challenge through the development of Community Relations Plans in key assets.

These plans are designed to build relationships and address local development priorities and concerns.

Recent examples of specific community relations activities carried out in support of our business include:

Nigeria, where we have carried out socio-economic baseline studies, established relationships with local stakeholders and implemented social investment projects. The consortium developing the planned Olokola LNG export facility (OKLNG), in which BG Group has a 14.25% stake, faces the challenge of resettling local communities. During 2007, OKLNG, in partnership with the Nigerian Government, continued planning and consultation with the affected communities, in order to develop a Resettlement Action Plan (RAP) to international standards;
Chile, where the Quintero LNG consortium (in which BG Group has a 40% stake) has been engaging with the community on issues such as noise generation and expectations for local jobs in connection with the construction phase of the regasification plan;
Tunisia, where we have created provisions for local hire, enhanced social investment, carried out new baseline studies, and established a Community Liaison Office on-site (see case study below ), as we continue to prepare for the Hasdrubal plant expansion. In addition, we have progressed work on the RAP for 12 households situated near the site of expansion;
Kazakhstan, where a detailed Environmental and Social Impact Assessment (ESIA) is being carried out to international standards as the Group and its partners plan for the phase III expansion of the Karachaganak field; and
Bolivia, where we have engaged with the local Weenhayek indigenous community in the La Vertiente area to reach agreement over social development plans in the context of a new social and political environment in the country.

In 2008 , we aim to build on these foundations with our enhanced Social Performance function in support of our business objectives and in response to our stakeholders’ needs.

Principle: We work to ensure that neighbouring communities benefit from our presence on an enduring basis

BG Group’s business activities and widespread investments around the world create ongoing opportunities to advance local sustainable development initiatives. One of our priorities is to work in partnership with governments and communities to deliver on the potential for increased employment and economic growth as well as to make voluntary social investments aimed at improving the lives of those with whom we come into contact.

Sustainable development

BG Group seeks to ensure its operations deliver positive and enduring benefits to host countries and communities, whilst working responsibly in line with our Business Principles. The Group’s commitment to sustainable development is delivered through:

an environmental policy that is based on going beyond compliance with local regulations to meet internationally accepted best practice;
the creation of a new Social Performance Governance Framework (see case study above); and
the aim of working with host governments to maximise the economic benefits of Group investments to host country economies.

The Group has commissioned two independent institutes (in Egypt and India) to conduct detailed studies to identify the direct, indirect and induced economic effects of the Group’s operations on employment and income and their linkages with the rest of the economy. These analyses are being supplemented by social studies, to explore how the Group’s activities can be integrated into sustainable development strategies in those countries. A third study will be commissioned for Kazakhstan in 2008.

In sixteen villages in Gujarat, India, fieldwork has started on a detailed socio-economic baseline survey which aims to link BG Group activities with local development priorities and to explore the potential for partnerships to enhance our social investment strategy. The survey is based on the results of the economic analysis finalised early in 2007. Ongoing engagement with the district administration and state government continues, as we seek a better understanding of stakeholder priorities and expectations of Gujarat Gas Company Limited in the social sector.
In Egypt, we are developing the socio-economic analysis into an integrated social performance strategy, with renewed focus on community relations near the LNG plant in Idku, social baseline assessments in our exploration areas in the Nile Delta, and a detailed plan to enhance local sourcing of goods and services.

In addition to these pilot programmes, in Libya we hosted a Sustainable Development forum for Government and industry stakeholders focused on the role of the oil and gas sector in local content development and training and education.

The creation of local employment opportunities is another area in which BG Group contributes to the sustainable development priorities of host societies. The Group has worked hard to address community requests to maximise appropriate local employment opportunities during the construction phase of projects in Tunisia and Chile. In cooperation with contractors on the Hasdrubal project in Tunisia, more than 350 local jobs were created at peak construction in the local Mahres and Agareb administrative areas. In Chile, where local employment creation has been carried out by our Quintero LNG joint venture, around 60% of the current construction workforce has been sourced from neighbouring municipalities.

Social investment

See Description 2007 voluntary social investment by category (%)

See Description 2007 voluntary social investment by region (%)

See Description

In addition to economic opportunities directly arising from our operations, BG Group engages in a wide range of voluntary social investments ranging from small charitable donations to major initiatives. These investments are often undertaken in partnership with implementing organisations (such as NGOs) with experience and expertise in creating solutions to local concerns. The investments are aimed at addressing community and regional development priorities.

As part of the rollout of the new Social Performance Framework, we have launched an internal survey of social investment practice across the Group. We hope to use the results of this survey, together with outcomes from other initiatives, to measure more effectively and maximise the return on our social investments, both in terms of socio-economic outcomes for target groups and the Group’s business objectives.

Noteworthy social investment initiatives from 2007 include:

‘The First Step in Your Professional Development’ - a trainee development programme supported by BG Bolivia, which has enabled 55 undergraduates drawn from eight faculties across four different universities to undertake work experience relevant to their field of study at either BG Group’s Santa Cruz office or La Vertiente plant;
the completion of a project by BG Tunisia to connect 172 households and a primary school from the local community to the running water network. This project will also include a US$450 000 contribution to UNICEF to carry out a three-year development programme in the Sfax South region, which will provide for basic education, infant and maternal healthcare and youth training and development;
the development by Comgas (Brazil’s largest gas distribution company in which BG Group has a controlling interest) of the Comgas Apprentice Programme in partnership with a local NGO based in São Paulo. The programme focuses on adolescents aged 14 to 17, teaching them to design, plan and implement social projects in their communities. In addition, Comgas Environmental Education works with children aged nine to ten in state schools in São Paulo State to raise environmental awareness and build closer links between the company and the communities in which it operates;
ongoing work with the Population and Community Development Association in Thailand to monitor the post-Tsunami rehabilitation project that BG Group has supported since 2005. To date, the project has helped 490 households from four villages with emergency support and sustainable livelihood restoration initiatives, and is on course to meet its goal of ensuring the long-term continuation of the initiatives after BG Group funding comes to a close in 2008; and
the successful partnership with Pro Social in Brazil aimed at entrepreneur development. BG Brazil anticipates expanding its social investment activities beyond this initiative, which in 2007 assisted 15 women in developing their business skills and marketing their craftwork through the respected ‘Toque de Mão’ trademark.

Case Study: Tunisia Community Liaison Office opens

BG Tunisia encountered a number of community protests in late 2006, coinciding with early works on the Hasdrubal expansion. Through engagement with these communities we learned that these protests were primarily about employment, specifically:

the types of jobs to be made available for local people; and
the proportion of jobs going to neighbouring communities, rather than to Sfax (the nearest large town).

Following this, BG Tunisia improved its approach to consultation, in particular providing better opportunities for local communities to air their concerns with BG Tunisia without needing to resort to protests.

In June 2007, BG Tunisia established a Community Liaison Office (CLO) in Nakta (1.5km from BG Tunisia’s operations), which provides a focal point for local stakeholders, including job seekers and local residents, to engage with the Company.

The CLO receives on average more than one hundred visits per month, with issues focusing mainly on employment opportunities, the impact of the Hasdrubal construction and the socio-economic baseline studies that BG Tunisia is carrying out. The CLO is also the place for residents to air grievances as part of the formal grievance mechanism established for the plant.

Principle: We listen to neighbouring communities and take account of their interests

In all of our areas of operation, BG Group works hard to identify community stakeholders and to engage with them to understand better their key priorities and concerns. We see this as an essential part of project management; this approach enables us to respond to issues as soon as they emerge and to develop opportunities which benefit both BG Group and our neighbouring communities.

In Bolivia, BG Group has established a relationship with the Public University of El Alto, near La Paz, to help us to engage more widely with national-level stakeholders.

In Chile, our Quintero LNG joint venture (GNLQ) is constructing a 2.5 mtpa regasification terminal in a heavily industrialised zone in Quintero, 110km northwest of Santiago. The area has suffered from air pollution and other impacts of industrial development since the 1960s. As a new entrant to the area, GNLQ has engaged with local authorities and a variety of community organisations representing fishermen, environmental interests, rural workers and labour groups to listen to concerns and views about the project and its wider context. These exchanges have allowed GNLQ to develop more effective plans for managing construction issues including noise and increased traffic, as well as local employment. GNLQ is building on these relationships to develop a long-term programme of social investment with the active participation of the community.

In support of our exploration programmes in new countries, such as Libya, Oman and Algeria, we have established relationships with local communities to understand better development priorities, concerns and issues – whilst not over-committing until we are sure of a long-term presence in the area.

In Oman, for example, we regularly meet with the local Walis of Hima and Ibri to discuss our exploration activities and opportunities for local benefits.

Principle: We support human rights within our areas of influence

BG Group’s support for human rights is based on recognition of the principles in the Universal Declaration of Human Rights and core International Labour Organisation conventions on equality, freedom of association and abolition of forced and child labour. We are a signatory of the United Nations Global Compact and support its six Principles relating to human rights.

We incorporate our commitment to protecting human rights in the workplace into our policies relating to equal opportunity and non-discriminatory treatment, security and labour standards. We also require key contracts to include the expectation that contractors will operate according to our Business Principles or their equivalent, including those relating to human rights.

During 2007, we revised our guidance on implementing our Human Rights Policy in the light of emerging standards and tools, and developed a human rights management system. All assets will be required to nominate a member of the management team to be responsible for managing human rights performance and, from 2008, to carry out human rights risk screening. Where this screening identifies significant risks to the Company, our staff or those affected by our operations, a more detailed human rights assessment will be conducted, using external specialist assistance where appropriate.

BG Group remains committed to the Voluntary Principles on Security and Human Rights and developed a guideline for their implementation that was rolled out to all asset security representatives at a BG Group Security Workshop in November 2007. The guideline provides practical advice and programmes aimed at ensuring that security operations comply with the Voluntary Principles and protect the rights of both employees and citizens of our host countries.

The Group has also undertaken an assessment of which countries are subject to Voluntary Principles implementation, on the ‘Watch’ list, or currently exempt from implementation. In 2008, Group Security will be working with high-risk countries (as appropriate for the stage of BG Group activities in these countries) to incorporate the Voluntary Principles into the business process.

The role of business in supporting human rights continues to be subject to international review and discussion by governments, non-government organisations and businesses. During 2007, BG Group participated in meetings with Professor John Ruggie, Special Representative of the UN Secretary General, as he proceeded with his examination of the role of business in addressing the human rights challenge.

Case Study: Bonded Labour

BG Group expects our contractors and sub-contractors to adhere to the labour practices defined in our Business Principles and Human Rights Policy or their equivalent. Our Summary of Performance and the GEC objectives set out within the Conduct section reflect the commitment of the Group to this issue.

In 2007, BG Group received an anonymous e-mail claiming that a sub-contractor was underpaying its employees, providing irregular salary payments, withholding employee passports and original qualification certificates and had used threatening behaviour towards its employees. The bonded labour and other concerns, if substantiated, would clearly violate the human rights of the employees in question and would also constitute a breach of our Business Principles and Human Rights Policy.

BG Group treated the email as a whistleblowing case, immediately engaged an external independent consultancy firm to investigate the allegations, and replied to the email stating that a full investigation would be conducted. The findings of the investigation, which confirmed that the concerns were genuine and could be substantiated, were then shared with the asset management team.

Following the findings, the Group initally wanted to work with the primary contractor and sub-contractor to improve the employees’ working conditions. However, it became clear that the sub-contractor would not meet the requirements of our Business Principles, and the contract was therefore terminated. BG Group also decided not to renew the contract with the primary contractor, as it became clear that it was also not prepared to address the issues raised, nor to guarantee future compliance with the Group’s Business Principles.

Following this case, the BG Group asset management team undertook a review of its other suppliers and contractors to ensure that they conformed to our Business Principles. A number of recommendations emerged for ensuring compliance with the Business Principles, including the implementation of Compliance Letters confirming adherence to the Group’s Business Principles and compliance with specific employment practices. All identified contractors and sub-contractors have accepted the Compliance Letters.

These findings have been shared with Group Contracts and Procurement who will oversee contractor compliance in future.

Stakeholder Commentary

“It is estimated that over two billion people have no access to modern energy services. As a major producer of energy and power, what contribution do you believe that BG Group can make to increasing access within the communities in which it operates?”

Adrian Hodges, Managing Director,
International Business Leaders Forum

Access to energy resources and modern energy sources is a key requirement for both development and economic growth. Without this, emerging nations have difficulty building industries, establishing core infrastructure and connecting goods and services to markets. Communities also need reliable energy sources for basic services such as heating, lighting and cooking.

The provision of energy services must be sustainable. Supplies need to be reliable, predictable, affordable, straightforward to maintain and available for the long term. With present technology, under most circumstances providing energy from centralised services – national and regional gas and electricity grids – is the most cost-efficient means of meeting communities’ needs.

In 2007, BG Group subsidiaries connected more than 150 000 new households to gas networks in Brazil, India and Argentina. These connections provide direct access to modern energy supplies as part of our core business – they are an extension of our existing facilities and represent households who did not previously have access to gas networks.

The Group also connected a number of commercial and industrial facilities to gas for the first time, making more than 200 000 new connections in total.

Additionally, in a number of our assets (such as Kazakhstan), we provide electricity for local communities from the power plants within our facilities.

Ernst & Young remarks

“During our visit to Tunisia we visited the Community Liaison Office and discussed how staff engage with local communities and officials over sensitive issues such as resettlement. We saw evidence that BG Group was using outputs from this engagement to develop projects designed to address local needs. In Oman we discussed how accountabilities for managing relationships with local officials had been assigned to the leadership team and how engagement with these key stakeholders is recorded and tracked.”

Corporate Responsibility Report 2007

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