Extractives roundtable report

Two Tomorrows event examines how business sustainability environment has changed for extractives companies post Deepwater Horizon

Representatives of leading global extractives companies came together at a recent roundtable hosted by Two Tomorrows to discuss how events in 2010 have changed the business sustainability environment. There was particular focus on governance and risk and supply chain management.

Held in London, the event was attended by companies and industry bodies including BP, Rio Tinto, IPIECA, ICMM, Tullow Oil, Arcelor Mittal and BG Group.

It was clear that every company represented was on a journey – one which has been impacted by events in 2010. So what has changed, and how will these affect extractive companies in the near future?

• Companies need to be even more transparent, especially around approaches to dealing with key risks and how systems for managing risks and other issues are implemented.
• Investors are taking a greater interest and companies need to respond directly. Care must be taken to ensure that the short-term focus of most investors and the reactive nature of their expectations does not distract from managing other risks which aren’t currently hitting the headlines. One idea put forward was to form a stronger industry voice to engage with the investment community.
• Tomorrow's Value Rating research indicates that the extractives industry, which has historically been a leader, is slipping behind other sectors in a number of key areas, including engagement, innovation and value chain.
• Governance needs attention, especially around competence of board members, linkage between board and executive oversight and integration of non-financial issues into governance processes.
• Risk is dynamic; this point needs to be appreciated more now than in previous years. It will always be a challenge to identify and deal with high consequence-low probability risks, but events in 2010 mean that companies will need to find new ways to demonstrate effective controls.
• Systems for managing key risks and issues are generally strong in the extractives sector, but new questions are being asked about how well they are embedded and being ‘lived’ by the organisation.
• Systems also cover supply chain management, but need updating and deepening to take into account raised concerns, and higher reputational exposure.
• Joint ventures and contractors are key areas where risks need to be further managed.

Two Tomorrows is reflecting on the topics raised during the roundtable and using it to inform current and future projects in the extractives sector.

Find out more

For a full report on discussions during the event, including details of the key issues and ways some companies have addressed them, email rob.pearson@twotomorrows.com.