Case study: How Hess creates economic value for its stakeholders
Hess is a leading global independent energy company, engaged in the exploration and production of crude oil and natural gas. Hess seeks to create value for the benefit of all its stakeholders Tweet This! – its shareholders and business partners, employees, the local communities and economies where it operates – which, in turn, benefits society at large.
This case study is based on the 2020 Sustainability Report by Hess, prepared in accordance with the GRI Standards, that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
Hess’ purpose is to be the world’s most trusted energy partner. Accordingly, delivering value for its stakeholders is a top priority. In order to create economic value for its stakeholders Hess took action to:
- create economic value for employees and suppliers
- create economic value for shareholders
- support communities
- create economic value for society
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With this case study you will see:
- Which are the most important impacts (material issues) Hess has identified;
- How Hess proceeded with stakeholder engagement, and
- What actions were taken by Hess to create economic value for its stakeholders
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What are the material issues the company has identified?
In its 2020 Sustainability Report Hess identified a range of material issues, such as climate related risk and greenhouse gas (GHG) emissions, diversity, equality and inclusion, emergency preparedness and response, water management. Among these, creating economic value for its stakeholders stands out as a key material issue for Hess.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups Hess engages with:
| Stakeholder Group |
| Land Users/Landowners: Residents, landowners, commercial land interests, farmers, ranchers |
| Resources Users/Rights Holders: Mineral rights owners, water rights owners and users, hunters, fishers, gatherers |
| Governments: Local, regional and national authorities; national militaries; international governing authorities |
| Parties with Direct Economic Interests: Investors, vendors and suppliers, contractors, unions, shareholders |
| Parties with External Business Interests: Chambers of commerce, industry organisations, local businesses, sustainability initiatives |
| Special Interest Groups: Nongovernmental organisations, religious groups, cause oriented nonprofits, community groups |
| Community Services: Police, fire and emergency medical services; health care services; education; human service agencies |
| Indigenous Groups: Formally recognised groups, tribal coalitions, government supporting agencies, indigenous advocacy groups |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics Hess conducted an internal stakeholder survey and workshop and also interviewed external stakeholders, who included nongovernmental organisations and industry associations, as well as one of its key suppliers.
What actions were taken by Hess to create economic value for its stakeholders?
In its 2020 Sustainability Report Hess reports that it took the following actions for creating economic value for its stakeholders:
- Creating economic value for employees and suppliers
- In 2020, Hess spent:
- $591 million in employee wages and benefits (U.S.)
- $2,800 million in total supplier spend across 3,400 suppliers
- Creating economic value for shareholders
- Hess is committed to delivering long term value to its shareholders and continues to successfully execute its long-term strategy of disciplined capital allocation. In 2020, Hess spent $309 million in dividends paid to investors.
- Supporting communities
- Hess’ community investments are designed to make long lasting, positive impacts on the communities where it operates. Hess seeks to develop the local workforce to enable upward mobility into higher paying jobs in its industry and supply chain. In 2020, Hess spent:
- $5 million in social investments directed toward communities in Louisiana, North Dakota and Texas
- $3 million by its joint venture in support of capacity building initiatives in Guyana
- Creating economic value for society
- Hess contributes value to society at large through the direct economic value it generates, the affordable energy it produces and its commitment to operate responsibly and advance sustainable development. In 2020, Hess spent:
- $2,039 million in capital and exploration expenditures
- $388 million in royalties and other payments
- $11 million in social investments, including $5 million going toward the Salk Institute’s Harnessing Plants Initiative research and development programme
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standard addressed in this case is: Disclosure 201-1 Direct economic value generated and distributed
Disclosure 201-1 Direct economic value generated and distributed corresponds to:
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.1, 8.2
- Sustainable Development Goal (SDG) 9: Industry, Innovation and Infrastructure
- Targets: 9.1, 9.4, 9.5
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References:
This case study is based on published information by Hess, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:
https://www.hess.com/docs/default-source/sustainability/hess-2020-sustainability-report.pdf
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