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Socioeconomic management

Simply stated, the term “socioeconomics” refers to the collective social and economic effects that our activities can have on the people and communities where we work.

Socioeconomic impacts and opportunities associated with the life cycle of projects can be wide-ranging and varied in their nature. The early identification of potential socioeconomic risks, coupled with comprehensive planning and the effective implementation of measures that avoid, reduce or remedy these risks are fundamental to the overall success of a project, as well as Upstream and Corporate success. Effectively managing socioeconomic risks and acting on opportunities can help to maintain project schedules, save costs, enhance our Corporate reputation and maintain our social license to operate.

Our approach to managing business risks and local community impacts is guided by several core elements, including:

adhering to Corporate policies and expectations, complying with applicable host-country regulatory requirements, being consistent with universally recognized principles, assessing risks and acting on opportunities, engaging with external stakeholders, and providing direct and indirect economic benefits such as local capacity development. Although there is a wide range of socioeconomic elements, the key components include community relations, cultural heritage and diversity, economic development, human rights, indigenous peoples, land use and resettlement, and transparency and the avoidance of corruption. These components are often times interconnected, and therefore they are best managed in a holistic and synergistic manner.

ExxonMobil’s Upstream Socioeconomic Management Standard outlines best management practices and minimum socioeconomic-related expectations for Upstream projects recognizing that each is unique and that there is not a “one-size-fits-all approach” to complying with this Standard. To support compliance, we have developed an organization whose job it is to focus on reducing business risk by proactively identifying and managing socioeconomic considerations. The Socioeconomic Management Center of Expertise (CoE) brings together over 100 years of global expertise and experience in this discipline; the team works cross-functionally to ensure the development and implementation of timely “fit-for-risk” and balanced solutions to socioeconomic elements during the entire Upstream asset life cycle.

Upstream Environmental, Socioeconomic and Health Management Process

We believe careful environmental management is an imperative for our business. To avoid or reduce impacts on the environment and communities and maximize shareholder value, we must understand the local setting, actively manage our environmental performance and maintain a relentless focus on operational excellence.

The Management of Non-Technical Risk

External evaluations have made the case that Non-Technical Risks (NTRs) have impacted 70-75% of major oil and gas projects (2009) in the form of project delays and cost overruns, lost deal opportunities, and a host of stakeholder-related issues.

  • Percentage of sample Top 190 Projects delays that were due to "above ground" or non-technical issues (e.g. politics or stakeholder engagement).

    Only 21% of delays are due to technical issues.

The investment community has begun to form a consistent assumption that the identification and early management of NTRs, such as community-related issues and sensitive environments can significantly improve Net Present Value (NPV) and a company’s ability to operate in critical areas of market growth.

Upstream Socioeconomic Management Standard

The Upstream Socioeconomic Management Standard is incorporated into ExxonMobil’s business systems and processes. The Standard is designed to ensure that ExxonMobil Upstream activities are:

  • Proactive: Identify potential socioeconomic issues and risks early in the life cycle of a project
  • Insightful and Agile: Develop and implement timely “fit for risk” balanced solutions that avoid/prevent (or enhance), control, mitigate, compensate and monitor measures related to managing socioeconomic risks and impacts throughout the life of a project
  • Positive Differentiators: Achieve superior business results that are cost-effective, protect our license to operate and enhance our corporate reputation across the life cycle through the stewardship of socioeconomic management as a key enabler

We seek to deliver sustainable economic growth, social development and environmental protection, so that actions today might enable future generations to meet their needs.

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