The Sustainability Assessment Model (SAM)

Abstract

Abstract Business has a fundamental role to play in delivering Sustainable Development - the process needed to achieve a sustainable society. Sustainable Development is becoming an important issue for the oil and gas industry to address. There is, however, a lack of tools for improving decision making in this area. The paper outlines a tool (the Sustainability Assessment Model - SAM) which has been developed to assess whether or not a project can be said to be "sustainable". A project focus has been adopted in developing the tool because we believe that greater control over impacts can be achieved at this level. However, the tool can be used to aid specific design decisions (eg development scheme selection or concept selection) and also to assess an organisation's overall performance. The SAM assesses the social, environmental, economic and resource usage impacts of a project over its full life cycle. In the case of a hydrocarbon development this includes the design, construction, installation and commissioning of the facilities, the production of oil and gas and the eventual decommissioning of the facilities. This part of an oil and gas development is (usually) within the control of the operator. The SAM, however, extends the analysis beyond exploration and production and also assesses impacts from hydrocarbon refining, the manufacture of products and the eventual product use. It also addresses the possibility of remediation and restoration options. The SAM monetises all the impacts so that they can be compared on a like-for-like basis. This also allows the impacts to be combined into a single measure (which we have called the SAMi, or Sustainability Assessment Model indicator) which reflects overall whether a project is "sustainable" or not. Introduction This paper addresses three key issues. First, the paper sets out a case as to why externalities of business decisions should be addressed. In brief, the paper demonstrates that externalities are significant in amount and impact. Second, the paper introduces the SAM, which is a way of modelling the impacts of a particular project, including both the internal and external impacts. Impacts are identified and turned into a common measurement unit (in this case a monetary amount). The SAM creates a signature of sustainable development impacts over the categories of economic, resource, environmental and social elements. This signature can be expressed in the form of an index (which we call the SAMi,). Finally, we suggest that this way of modelling sustainable development related impacts could be used in a wide variety of different contexts. Background It is becoming widely accepted that conventional accounting numbers do not tell the ‘full story’ of how a business impacts upon its environment (in its broadest sense). In particular, all business decisions have economic, resource, environmental and social impacts. Furthermore, these impacts are incompletely captured by conventional accounting and reporting mechanisms. As a result, managing the diverse impacts of business decisions is difficult because conventional accounting decision making tools do not usually recognise their existence. The consequences of the partial nature of business control systems are obvious - important economic and business decisions are made without information about the external impacts those decisions will have. It is therefore likely that decisions will be made, and activities will be undertaken, which may well maximise a company's economic and financial benefits but which may also create social and environmental costs. Indeed, the cumulative effect of these processes can be seen in the economic, resource, environmental and social stresses which our society currently experiences. The idea of pursuing sustainable development (however defined) has emerged in response to these stresses. This paper outlines a tool for identifying the external impacts of business decisions. The tool is called the SAM. Before the model is outlined, however, the idea of externalities and full cost accounting should be introduced.