Petronas Gas (PGB)

Group Assignment SHELL AND PETRONAS GAS BERHAD

Name:

IRFAN HANDARU

I09002963

LAULIANA WIDYA

I08002297

PETER

I09003243

SHVETS ELENA

I09003362

ENSELM LIM

I09003104

LIM TUCK MING

I07006195

CHEAH WYETAR

I08001595

Section:

1K1

Course Code:

MKT408

Course Title:

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY

Program:

BMAUH

Lecturer:

HAIDER ALI MALIK

Due Date:

4 APRIL 2011

AKNOWL AKNOWLE

EMENT

We t ly and sincerely lik e t

thank the following people. Mr. Ha ider and Mr. Norman

ismail. Mr. Ha ider is our lecturer for M T408. It has been a grea t pleasure to attend to his lecture

ever y week . Dur ing his lectures, he introduced us to all int eresting facts about CSR programmes and the potentially benef icial impact of CSR activities on the companies¶ business opera tions. He a lso motivated us to mak e us of se lf ± learning; ever y week presentations were done b y the groups of s tudents. T hroughout these lectures and group presentations, we got a much clearer pincture of how to prepare the group projec t. We also would lik e to thank Mr. Norman Isma il, who is an Executive (Corpora te Communication) Public Affa irs & Genera l Service Dept. We were able to conduct int erview

(face ± to ± face) with him. He hel ped ped us to understand the involvement of PETR ONAS ONAS Gas Ber had in CSR activities.

The team compromising of Irfan Handaru, Lau liana Widya, Peter, Shvets Elena, Enselm Lim, Lim Tuck Ming and Cheah Wyetar have contr i bu buted through ext ensive research and hard wor k h k have been able to put together this group projec t.

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R SPONSIBILITY AND SUSTAINABILITY

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AKNOWL AKNOWLE

EMENT

We t ly and sincerely lik e t

thank the following people. Mr. Ha ider and Mr. Norman

ismail. Mr. Ha ider is our lecturer for M T408. It has been a grea t pleasure to attend to his lecture

ever y week . Dur ing his lectures, he introduced us to all int eresting facts about CSR programmes and the potentially benef icial impact of CSR activities on the companies¶ business opera tions. He a lso motivated us to mak e us of se lf ± learning; ever y week presentations were done b y the groups of s tudents. T hroughout these lectures and group presentations, we got a much clearer pincture of how to prepare the group projec t. We also would lik e to thank Mr. Norman Isma il, who is an Executive (Corpora te Communication) Public Affa irs & Genera l Service Dept. We were able to conduct int erview

(face ± to ± face) with him. He hel ped ped us to understand the involvement of PETR ONAS ONAS Gas Ber had in CSR activities.

The team compromising of Irfan Handaru, Lau liana Widya, Peter, Shvets Elena, Enselm Lim, Lim Tuck Ming and Cheah Wyetar have contr i bu buted through ext ensive research and hard wor k h k have been able to put together this group projec t.

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R SPONSIBILITY AND SUSTAINABILITY

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TABLE OF CONTE CONTEN NT

1.0 INTR ODU ODUCTION ............... ....................... ............... ......... .. ................ ....................... ............... .......... ............... ....................... ............... ......... .. .........4 .........4 2.0 SHELL, BEST CSR PR ACTICES WOR LDWIDE LDWIDE ............... ....................... ................ .......... ............... ....................... .......... 5 2.1 COMPANY¶S PR OFILE OFILE ............... ....................... ................ .......... ................ ........................ ............... ......... ............... ....................... ............. ..... 5 2.2 SHELL AND COR PO POR ATE ATE SOCIAL R ESPONSI ESPONSIBILITY (CSR ) .............................. ........................... ... 5 2.2.1 CSR IN THE MAR ETPLACE ............... ....................... ................ .......... ............... ...................... ............... .......... .. ..........6 ..........6 2.2.2 CSR IN THE WOR PLACE ............... ....................... ................ .......... ............... ....................... ............... ......... .. ...............7 ...............7 2.2.3 CSR IN THE ENVIR ON ONMENT ............... ....................... ............... ......... .. ............... ....................... ................ .......... ............7 ............7 2.2.4 CSR IN THE COMMUNITY UNITY ............... ....................... ................ .......... ................ ........................ ............... ......... .............. .............. 10 3.0 PETR ONAS ONAS GAS BER HAD, HAD, MALAYSIA ............... ....................... ................ .......... ............... ....................... ............... ......... .. ..11 3.1 COMPANY¶S PR OFILE OFILE ................ ........................ ............... ......... ............... ....................... ................ .......... ............... ...................... .............. ....... 11 3.2 PETR ONAS ONAS GAS AND COR PO POR ATE ATE SOCIAL R ESPONSI ESPONSIBILITY (CSR ) .............. 12 3.2.1 CSR IN THE MAR ETPLACE ................ ....................... ............... .......... ............... ....................... ................ .......... ............ ............ 12 3.2.2 CSR IN THE WOR PLACE ............... ....................... ................ .......... ............... ....................... ............... ......... .. ............. ............. 15 3.2.3 CSR IN THE ENVIR ON ONMENT............... ENT...................... ............... .......... .. ............... ....................... ................ .......... ........... ........... 18 3.2.4 CSR IN THE COMMUNITY UNITY ............... ....................... ................ .......... ................ ........................ ............... ......... ............... ............... 19 4.0 COMPAR ISON ISON OF SHELL AND PETR ONAS ONAS GAS BER HAD HAD ................................ .......................... ...... .22 5.0 CONCLUSION AND R ECOMMENDATION ENDATION ............... ....................... ............... ......... .. ................ ....................... .............. ....... 25 eferences ................ ........................ ............... ......... ............... ....................... ................ .......... ................ ........................ ............... ......... ............... ....................... ........... ... 27 R eferences Appendix ............... ....................... ................ .......... ................ ........................ ............... ......... ............... ....................... ................ .......... ............... ...................... ............. ...... 29

M T408: COR PO POR ATE ATE SOCIAL R ESPONSI ESPONSIBILITY AND SUSTAINABILITY

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1.0 INT ODUCTION

CSR is the process of assess ing an organization¶s impact on society and eva luating their

respons i bilities. CSR begins with an assessment of a bus iness and their customers, suppliers, environment, communities, and employees (Simply CSR , 2008). CSR is more than care t o environment, or so ca lled ³green´, but it is more to consider bigger picture of your internal business processes to your clients, taking in ever y step that your bus iness tak es dur ing da y-today operations (S imply CSR , 2008). T herefore in broaden def inition CSR is a long-term action to bus iness that emphas izing the needs of commun ities, people and the employers. CSR offers framewor ks for successfu l activity that is a lso benef icial with its environment. CSR is assured to be a bas ic philosop hy for bus iness¶ fundamental and integral par t of its

operation (Sr i Ur i p, 2010). In recent years, in Malaysia, the focus of CSR has increased rapidly. In 2006, the Malaysian governmen t has developed of new framewor ks for CSR implementation of CSR initiatives for the countr y¶s bus iness sector. Petronas Gas Ber had (PGB) is a Malaysian company that involves in oil and gas resources industr y. Petronas has grown to be a big int ernational oil

and gas company with business interests in 35 countr ies. CSR activities have become an integral par t of its bus iness, where it is stated in ther company¶s mission statement. Compared to SHELL, the company¶s involvement in CSR activities is signif icant, and, it covers a ll

major CSR dimensions, such as mar ke t place, wor k p lace, environment and community. And this has been strongly become company¶s bus iness strategy.

With lots of environmental problem issues ar ise these da ys, and bus iness enterpr ises have become more ³environmental-conscious´, this paper is prepared to examine how companies deal with the environmental problems and using CSR as their strategy to run a better business and benef icial to its surroundings. Interview has been conduc ted to PETR ONAS¶ representative in order to get valid information about PETR ONAS recent CSR activities and how they manage the environmental problems into a better bus iness practice.

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2.0

SHELL, BEST CSR PRACTICES WOR LDWIDE

2.1 COMPANY¶S PR OFILE R oyal Dutch Shell plc commonly k nown as Shell, it is a global oil and gas compan y headquar tered in T he Hague, Nether lands and with its registered off ice at the Shell Centre in

London, United K ingdom. It is the largest energy company and a lso the second ± largest company in the wor ld measured by revenues, and is one of the six oil and gas "super majors". It is ver tically integrated and is active in ever y area of the oil and gas industr y, including exploration and produc tion, ref ining, distr i bution and mar ke ting, petroc hemicals, power genera tion and trading. It also has major renewable energy activities, including in biofuels, hydrogen, solar and wind power (S hell, 2010).

The company operates in over 90 coun tr ies; with a total number of 93,000 employees; with 48% of company¶s production is natural gas; it produces around 3.3 million barrels of oil equivalent per da y and has 44,000 service stations wor ldwide. Shell Oil Company, its subsidiar y in the United States, is one of its largest businesses (S hell, 2010).

2.2 SHELL AND COR POR ATE SOCIAL R ESPONSIBILITY (CSR ) Toda y, the concept of Corpora te Social R espons i bility (CSR ) turned out to be a vital strategy for companies to survive in a ruthless mar ke t environment. In a cond ition where mar ke ts¶ shif t and customers¶ preferences become more unpred ictable and complex, adopting CSR strategy could be a powerful tool for survival. It is a concept whereby companies integrat e social and environmental concerns in their bus iness opera tions. Many companies a ll over the wor ld are now star ting to see the benef it of practicing CSR in their bottom lines. European countr ies are now ser iously engaged in this concept on different levels and even in interpretation of how the concept wor ks .

Therefore, S hell believes that people matter to your Company. So, company¶s sense of economic, social and environmental respons i bility is ref lected in its commit ment to meeting today¶s needs without compromising the ability of future generations to meet their needs.

Fur thermore, in nowada ys sustainable development does not just involve environmental preservation and social concern; it must also tak e into account economic performance. In

M T408: COR POR ATE SOCIAL R ESPONSIBILITY AND SUSTAINABILITY

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order to sustain a healthy bottom ± line, we must exhi bit strong environmental and social performance.

2.2.1 CSR IN THE MAR KETPLACE Shell has been prominent in the development and promotion of CSR activities, having made signif icant invest ments in initiatives that address var ious social issues. S hell repor ted expenditures of USD 96 million in 2006 on bus iness integr ity programs, while social invest ment topped USD 140 million. In the same year, the company shelled out USD 37

million for employees and contractors' health and safety benef its. The Summit has been designed to facilitate the development of CSR in different organizations by providing the r ight tools for var ious business needs, hel ping trac k new trends and setting up benc hmar ks in effective CSR program management. With its global

par tici pation, the event will also hel p position CSR in the mar ke t and highlight how CSR activities can bes t contr i bute to the community and environment, par ticular ly on issues related to global warming and climat e c hange. Other topics of the Summit are CSR 's impact on bus iness, building credi bility through effective CSR repor ting, implementing CSR strategy, and the correlation between CSR and f inancial performance. "The long ± term economic benef its of inves ting in CSR initiatives are now widely appreciated and practiced in d ifferent sectors. Top execu tives and corpora tions have realized that creating a culture of social and environmental responsi bility withi n the organization can

enhance credi bility, s trengthen c lient loyalty and a ttract new customers or investors. S hell is proud to be a leading international f igure in this aspect in the Middle East and other par ts of the wor ld. It has been Shell¶s mission to continue to innovat e and f ine tune our CSR

programmes being a concerned and proactive member of the society," sa id Al Qurashi (nd). Studies showed that about 94 percent of company executives believe that development of CSR can deliver rea l business benef its, even as one of three international executives think s that social responsi bility initiatives increase sa les performance. Also, 71 percent of CEOs

said that they are willing to sacr if ice shor t ± term prof itability for long ± term share holder value when implementi ng sustainability programs.

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2.2.2 CSR IN THE WOR KPLACE Shell, undoubt edly, has contr i buted immensely to the economic growth of Niger ia and contr i buted to the development of local communities in its areas of opera tion. As a major employer of labour, about 12,000 persons (s killed and uns killed) are employed in Shell¶s activities. Per haps the greatest evidence of S hell¶s CSR activities is in its community development programmes in the local development programmes, S hell contr i butes to the development of education. It does so by giving scholarshi ps (pr imar y, post ± pr imar y and uni versity) to local people, building c lassrooms, providing equi pment and someti mes paying the allowances of pos t ± pr imar y school teachers. For some commun ities, training in basic

skills ± craf tsmans hi p, joiner y, mechanics, tailor ing, etc ± for indigenes is provided or sponsored by Shell (Shell, nd). Shell Bulgar ia has biannual Shell People Survey to measure employees¶ attitude and satisfaction. T here is a policy of open internal re ± sourc ing that gives oppor tunity to ever y employee to apply for jobs within the Shell Group of Companies for a ll businesses across the wor ld, based only on competency requirements (Shell, nd). There are different programs focused on upgrad ing individual skills ± for example, people management skills, change management, recognizing and encouraging a culture of appreciation and enabling individual effectiveness. Shell Bulgar ia offers oppor tunities for its employees, both from head off ices and its retail networ k sites for training and development.Shell Bulgar ia also implements new and contemporar y ways of wor king, such as f lexi ble wor king hours, home based wor k and vir tual team wor k.

2.2.3 CSR IN THE ENVIR ONMENT Cleaner Air: It is a k nown fact that burning fuels cause air pollution. Shell is tr ying their best to reduce the emissions of local pollutants from their factor y opera tions and hel p their

customers t o reduce emissions by offer ing cleaner transpor t fuels, lubr icants and cleaner fuels and innovative t echnologies for electr icity generation (S hell, nd).


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Based on improved t echnology and tougher regulations,the company has managed to reduce local pollution in the past 20 years. But fur ther reductions aredespera tely needed in the future,

especially in congest ed cities of the developing wor ld (Shell, nd). It is a must to reduce the emissions of local pollutants ± lik e nitrous oxide (NOx), sul phur dioxide (SO2) and volatile organic compounds (VOCs) ± from compan y¶s factor y operations. Shell has invested heavily to improve their facilities, factor ies, installed cleaner ± burning equi pment and SO2 capture technology, for example: y

Air monitor ing at Motiva Enterpr ises, LCC in USA (Shell joint venture with Saudi R ef ining Inc that ref ines distr i butes, and mar ke ts oil products in the eastern and

southern USA). y

Emissions update if SAPR EF ref iner y at South Afr ica (50/50 joint venture between Shell SA Energy and BP Southern Afr ica) (Shell, nd).

By this action, S hell f inally reduced their total SO2 emissions from opera tions by over 40%,

reduced VOC emissions by over 70% and cu t NOx emiss ions by over 20% between 2000 and 2009 ± desp ite using more energy to ref ine cleaner lower sul phur fuels (Shell, nd).

Reducing Water Use:The energy sectors is becoming more concerned about water because

water has become scarcer globally. The latest advanced technologies are hel ping Shell companies to reduce the amount of wat er they need to spend in their daily operations (S hell, nd). In some of the countr ies, fres h water is reserved and be ing used up or po lluted faster than they can be replenished. From now until 2050, the wor ld¶s clean water resources will become limited due to population growth (Shell, nd).

Oil and gas operations use huge quantities of water,leading to issues in wa ter s tressed areas. Growing crops to mak e biofuels and mining bitumen from oil sands are water intensive. In Year 2009 S hell operations used around 198 m illion m3 of fres h water, down from 224 million m3 in 2008 (S hell, nd). The company is wor king on how to reduce the water usage through the implementation of newtechnologies. For example, T heir Pear l GTL plant, which will conver t natural gas to


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liquid products, has been designed to tak e no fres h water from its ar id surroundings (S hell,

nd). At the SAPR EF ref iner y (Shell share 37.5%) in South Afr ica, they have been us ing rec ycled household wat er, and s imilar ly at their Clyde ref iner y in Australia.Moreover, S hell also has launched a campa ign to conserve wa ter. In the Nether lands, the Schoonebeek project will

reuse munici pal wastewat er to mak e steam (Shell, nd). In Oman, S hell is tr ying out using reed beds to clean water produced with oil. This action saves the energy needed to pump water back into the ground and the local community can reuse the water for crops.

Animal Testing:Shell recognises the d ilemma of balancing potential animal suffer ing and the

need for the testing (needed because of the lac k of a reliable a lternative to ensure that new products are safe for peop le and the environment). Shell is wor king to reduce the number of animals used to test their products, to mak e test methods as humane as poss i ble, and t o replace animal tests wherever possi ble (Shell, nd). The basic approac h in this area is governed by the 3R s which is R educe, R ef ine and R eplace: Reduce:R educe the number of animals used in product safety t esting, without compromising

safety, wor king with other companies whenever possi ble and by shar ing of resu lts. Refine: ref ine test methods to mak e them as humane as possi ble. In tests they commission

mainly use laborator y ± bred ra ts, mice and f ish and do not involve cats, dogs or monk eys. Fur thermore, they also commission safety testing only at licensed or accredited research facilities. Laborator ies must also comply with the internationally accepted operating pr inci ples of good laborator y practice. Replace:R eplace animal tests with alternative meth ods wherever possi ble. Shell never

commission animal testing w here there are other reliable establishing the safety of produc ts. They belong to severa l organizations that promote the development of new animal ± free testing meth ods: for instance, the Fund for the R eplacement of Animals in Medical

Exper iments in the UK and the Centre for Alternatives to Animal Testing in the USA (Shell, nd).


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A team of ext ernal exper ts, ass isted by Shell representatives will review and comment on their animal testing standards, management processes and progress, their aim been to reduce the amount of animal testing (S hell, nd).

2.2.4 CSR IN THE COMMUNITY P rotecting P eople from HIV/AIDS:Shell companies not only supply energy, bu t the company

also address soc ial concerns. T he companyis genu inely hel pi ng communities and at the same time buildingits brand awareness amongs t them. Therefore, S hell is wor king to hel p ing

protect people from HIV/AIDS and to slowits spread (S hell, nd). Shell companies are a lso taking actions to protect their employees and their customers, suppliers and contractors from HIV/AIDS, to care for those infected and wor king with par tners to f ight the spread of HIV. T heir HIV/AIDS program means that they will not discr iminate against anyone who was affected by HIV/AIDS. Not only that, the program a lso includes providing or arranging medical treat ment for employees who affected by HIV/AIDS,

as well as par tici pating in education and prevention program for emp loyees and their families (Shell, nd). In addition, company look forward to enhance long ± term relationshi ps going forward with relevant local and global organizations or other companies to f ight the HIV/AIDS epidemic together, usua lly, in the places where their business operations tak e place (Shell, nd).

Support and Finance in Nigeria: Shell companies in N iger ia suppor t on f inance a wide range

of community developments initiatives in the Niger Delta to br ing benef its to local communities where they operate.The most impor tant contr i bution Shell companies in Niger ia mak e to society are through the money they pay to the federa l government (approximately $39 billion in taxes and royalties from 2005 ± 2009). T hese funds can be used b y federal governmen t to promot e development in the countr y, reduce the pover ty rate and suppor t economic growth (Shell, nd). In year 2009, the operations run by the S hell Petroleum Development Company of Niger ia (SPDC) contr i buted a fur ther $57.7 million (Shell share $18 million) to community development projects focus ing on a diversity of activities such as to promot e and suppor t


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small businesses, deve loping agr iculture, skills training, education, healthcare, micro lending and capacity building (Shell, nd). Respecting Human Rights:ShellCompanies believe in the suppor t of fundamental human

r ights in line with the legitimate role of business. S hell¶s Genera l Business Pr inci ples include respecting the r ights of their employees and to suppor t fundamental human r ights in line with the legitimate role of business. T hey wor k to ac hieve this by training their s taff, as well as co

± operating with governmen ts and other organizations (S hell, nd). Shell look fordirec t ways to suppor t human r ights that relate to their bus iness activities,by encouraging and hel ping governments to improve their human r ights. For example, Professor John R uggie, the UN special representative on business and human r ights, as he seek s to pu t into practice a framewor k whereby governmen ts should protect human r ights and bus iness

should respect the human r ights. Fur thermore, they respect the r ights of those wor king for them in line w ith the Int ernational Labour Organization Declaration on Fundamental Pr inci ples and Rights at Wor k, including: Freedom of Assoc iation ± employees can join a union wherever permitted by national law Freedom from d iscr imination in the wor k p lace, through equa l oppor tunities. Freedom from forced labour T he abolition of child labour (S hell, nd).

3.0 PETRONAS GAS BERHAD, MALAYSIA

3.1 COMPANY¶S PR OFILE PETR ONAS or Petroliam NasionalBer had, was incorporated on 17 Augus t 1974 under th e Companies Act, 1965. It is entirely owned by the Malaysian government and is vest ed with the entire owners hi p and control of the petroleum resources in Malaysia through the

Petroleum Development Act 1974 (PETR ONAS Annual R epor t, 2008).


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PETR ONAS Gas Ber had or PGB was incorporated in 1983 and is headquar tered in Kuala Lumpur, Malaysia. PETR ONAS Gas Ber had is a subs idiar y of Petroliam Nasional Ber had. The company engaged in separating natural gas into its components and stor ing, transpor ting and distr i buting such components thereof for a fee and the sale of industr ial utilities. T he Company's Plant Operations Division (POD) operates six gas process ing plants (GPPs) in

Ker tih and Pak a in Terengganu, with sales gas produc tion capacity of 2,060 million standard cubic feet per da y (mmscfd) and an additional standby units capacity of 750 mmscfd (PETR ONAS Gas Ber had, 2010). PETR ONAS Gas Ber had has also invest ed in pi peline operations in cer tain overseas locations, including Argentina, Australia, Indones ia and the Malaysia-Thailand Joint

Development Area (MTJDA). Since the company has strongly involved with environment and corporate social responsi bility, therefore PGB¶s CSR practices in cons idered as one of the best in Malaysia.

3.2 PETR ONAS GAS AND COR POR ATE SOCIAL R ESPONSIBILITY (CSR ) 3.2.1 CSR IN THE MAR KETPLACE In the interview, a representation of the company, Mr. Norman Isma il has mentioned that the main focus of the company CSR activities have been human capital development and education.PETR ONAS Gas Ber had or PGB stated in its annua l repor t of 2010 that af ter operating bus iness together in over 26 years, the company has dedicated itself to do bus iness the respons i ble way in its effor ts to create value for its shareholders, customers, suppliers, industr y as well as regulators. T herefore the management and staff have a duty to maintain the ideology of profess ionalism, integr ity, transparenc y and fa irness in ever y single business

aspect they involve and not limited itself to be a good corpora te citizen in the mar ke t place (PETR ONAS Gas Ber had Annua l R epor t 2010). C R in Contributing Knowledge and Resources

The Company had par tici pated in numerous international conferences dur ing the f inancial year in order to ack nowledge and s hare the informa tion of the lat est technology as well as the

best practices from industr y players around the wor ld.The 14th Asia O il and Gas Conference with the theme of ³Collective Approach in the New Paradigm´ which focused on the issue of


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ensur ing energy secur ity and continuous supply of gas amid continued geopolitical instability and heightened secur ity concerns in k ey oil and gas produc ing regions, was held in Kuala Lumpur in 7 ± 9 June 2009. T he 24th Wor ld Gas Conference with the theme of ³T he G lobal Energy Challenge: R eviewing the Strategies for Na tural Gas´ that focused on the strategies for continued growth and development of natural gas as the fuel of choice, was held in Buenos Aires, Argentina from 5 ± 9 October 2009. T hese conferences are cons idered as one

of PGB¶s most notable effor ts in the company¶s CR practices in mar ke t place (PETR ONAS Gas Ber had Annua l R epor t 2010). Moreover, PGB is a member of the Malaysian Gas Assoc iation or MGA and became its MD/CEO on its council. PGB continuous ly suppor t and subs idize MGA to advance k nowledge of gas technology and promoti ng safety practices. MGA a lso tr ies to sti mulate the

development of the gas industr y in Malaysia and improve the public understanding on the role of gas energy in the nation. T he company has par tici pated in some of MGA activities such as : y

Practical Environmental, Safety and Industr ial Guidance for Student Engineers. T he event held in Equa tor ial Hotel, Melak a at 27 and 28 March 2010 and it purpose to educated

engineer ing degree students from the Universiti Tek nologi Malaysia (UTM) and the Universiti Tek nik al Malaysia Melak a (UTeM) about the Company¶s operations of safety and health and its impact to the environment. y

MGA Tea-Talk of µIraqi Petroleum Potential & Oppor tunities¶. T he event held in Malaysian

Petroleum Club, Kua la Lumpur City Centre at 25 Februar y 2010, to recognize business oppor tunities in Iraq and engaged in networ king activities with Iraqi Businessman Union or IBU. y

Technical Visits to Gas Plants and Facilities in Bintulu and the Bak un Hydro Dam Project Site at 15-16 December 2009 to provide in viewing and ga ining k nowledge on the overa ll operations of the gas plant and facilities of MLNG, Shell and Murphy Oil.

y

Industr y Dinner 2009 a t 13 November 2009 in Kuala Lumpur Convention Centre to creat e stronger connection within the MGA members towards benef icial and prof itable cooperation in the gas industr y.

y

MGA FOR UM µMalaysian Natural Gas Industr y Outlook - Oppor tunities & Challenges¶ in

The Westin Hotel, Kuala Lumpur at 14 May 2009 to discuss the related issues of the utility of


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gas resources, gas pr icing, domes tic gas supply and demand s ituation (PETR ONAS Gas Ber had Annua l R epor t 2010).

C R in Commitment to P roduct and Service

The company is committed in the qua lity of product and service. It is shows that the company¶s reliability repor ts for sa les gas, ethane, propane and bu tane for the f inancial year are at 99.7%, 99.0%, 99.0% and 99.0% respec tively (PGB Annua l R epor t , 2010). Moreover, PGB¶s gas transmission business through the Company¶s Peninsular pi peline

networ k continues to continue signif icant system reliability and system availability records of 99.97% and 99.84% respec tively for the year ensur ing secure and continuous f low of gas t o end customers throughout Malaysia. The utilities bus iness has a lso been presenting remar ka ble results. Product deliver y reliability for electr icity, steam and industr ial gases for the year under review are at 99.5%, 99.3% and 99.9% respec tively (PGB Annua l R epor t,

2010) These results were achieved while PGB continue to develop the highest level of environmental standards and safety, which will be elaborated more in the company¶s CR in the Wor k p lace and CR in the Environment.

PE T RO NAS Gas Berhad to Costumer and Shareholders

The company continues to f ind and carr y out effor ts to improve it self in order to deliver wor ld ± class services and produc ts under the Company¶s vision and miss ion to its customers. Under these improvements, the company is looking at using t echnology to customer advantage as the company prepares to automate its billing generation and meter reading functions to improve accurac y. Dur ing the f inancial year, the company has conducted k nowledge shar ing sess ions with international pi peline transpor ters namely N.V. Neder landse

Gasunie and Interna tional Gas Union with the objective of eva luating their respective business models in search of a best practice model most suited for the company as well as to benef it its customers (PETR ONAS Gas Ber had Annua l R epor t 2010). Moreover, PGB stated in its annua l repor t that the company is committed to deliver ing strong

earnings to its share holders and achieving sustainable long t erm shareholders¶ va lue guided


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by the company¶s vision and mission. T he company¶s executives made and ma intain the strategies and business decisions, which guided by exemplar y corporate governance practices, shall be the best interest of the shareholders. T he company believes that it is impor tant for s hareholders to view the Company as a safe invest ment with stable earnings, therefore to have better understanding of PGB business, the company has arranged a ser ies of

shareholder visits to the company¶s C entralized Utility Facilities in Pahang on 17 August 2009 and Gas Process ing Plants in Terengganu on 2 November 2009 and 19 November 2009 (PETR ONAS Gas Ber had Annua l R epor t 2010).

3.2.2 CSR IN THE WOR KPLACE For the many years, PETR ONAS Gas Ber had (PGB) has been grea tly paying cer tain attention and emphas izing on its human capital. And in fact, as it was mentioned in interview that the company believes that the real involvement in the improvement in staff¶s skills enables the company and PETR ONAS to increase productivity and eff iciency (2011). Bas ically, people share the common spir it of being µTogether as One¶. T he company has been building and enhancing its wor kf orce only with the correct capabilities, competencies and leaders hi p skills.

E ncouraging the Learning E nvironment

The Company has been investing in developing the functional and leadershi p developments of its wor kf orce by providing var ious programmes to enhance their wor king skills. T hese will lead to the PGB¶s achieving great er success and a llowing it to identif y oppor tunities and tak e them(PET R ONAS Gas Ber had Annua l R epor t 2010).

The PETR ONAS Accelerated Capability Development (ACD) has been run b y the Company for the last two years. ACD has the coaching p lan that allows the company to assess and to monitor the staff¶s competency gaps. Af ter ever y company¶s training program, it is suppor ted by regular competency staff¶s check s, ensur ing that all the impor tant and cr itical skills are being utilized, ma intained and constantly improved, and s hared with the rest of th e wor kf orce. Usua lly, ACD assessments are run annua lly together with other assessments,


15

where are staff are required to a ttain cer tain levels of compet ency before being promot ed to the next level of management(PETR ONAS Gas Ber had Annua l R epor t 2010).

PGB also provides a programme ca lled Career Enhancement Oppor tunity (CEO) which gives oppor tunities to new exposures, exper iences and challenges for the staff withi n as well as outside the company. The CEO approach provides oppor tunities to the groups of jun ior engineers as well as exper ienced t echnicians to expand their exper iences, share their k nowledge and ga in new exper iences in a external wor king environment withi n PETR ONAS

Group of Companies, usua lly overseas (PET R ONAS Gas Ber had Annua l R epor t 2010). For the PETR ONAS Company, the training programmes are ver y cr itical and relevant, because they want to ensure genuine and wor thwhile development of capabilities and leadershi p values. It was repor ted, the company conducted 29,038 training da ys, which in

average was 13 training days per employee. The fundamental basis of the training programmes is to enhance wor kf orce¶s s kills, focus ing on health and safety, and leadershi p trainings. T hese programmes were conduc ted using different methods; the traditional teaching method (classroom learning), on ± the ± job trainings and now eLearn ing. Ever y

employee must attend a ll the required compulsor y training da ys, and at least one online eLearning module. PETR ONAS eLearning compr ises of numerous modu lesof self ± learning; and it was stated that all 2,184 employees completed 2,803 modu les within a year. It was proved that eLearning is one of the most effective methods that encourage staff to improve themselves without following the traditional teaching methods (PETR ONAS Gas Ber had

Annua l R epor t 2010). The PETR ONAS Staff Development Programme (SDP) gives f inancial suppor t as an encouragement and reward to potential and deserving employees to upgrade their education levels in related f ields. Employees not only contr i bute their best to the Company thereaf t er,

but also share fresh ideas and k nowledge withtheir colleagues (PETR ONAS Gas Ber had Annua l R epor t 2010).

P lanning for the Future Leaders

It was recorded that the staff mobility within las t year was 25.5% which character ised the staff relocation within the Company and throughout the PETR ONAS Group. Staff mobility is crucial for the Company, as it hel ps to create competitive advantages in enhancing skills in


16

different areas. It is the Company¶s respons i bility to ensure and long ± term succession for the sustainability of the business(PETR ONAS Gas Ber had Annual R epor t 2010).

PETR ONAS¶ the Building Leaders hi p Programme (BLP) is the main platform that hel ps to select and educate potential leaders for the Company. Today, there are 87 potential leaders who have been chosen across the Company; and they are put through intensif ied development programmes, coaching etc (PETR ONAS Gas Ber had Annua l R epor t 2010). The main a im of PETR ONAS¶ Emerging Leaders hi p Programme (ELP) is to hel p up ± and ± coming supervisors with leadershi p tools and techniques to transform into effective leaders. PETR ONAS not only stress on cer tain leaders hi p programmes, but they also believe in self moti vation. T his has been a lways impressed upon these potential leaders, leading to many sessions to educate employees to ac hieve persona l and bus iness goa ls and objec tives (PETR ONAS Gas Ber had Annua l R epor t 2010).

Staff E ngagement and Management Commitment

PETR ONAS tr ies to maintain the harmonious wor king environment at all ti mes and this depends on cons tant employees¶ communication, int eraction and engagement. Many of the engagement sessions with the employees were conduc ted in business locations in order to provide transparenc y and this was made ava ilable to all level of employees, focusing on the Company¶s performance and curren t business achievements. Last year, PETR ONAS

conducted 52 forma l engagement sessions, many more informa l sessions by providing oppor tunities for the employees to share their views, ideas and concerns abou t the Company. It is c lear that all the communication and engagement activities will not be effective w ithout the staff¶s suppor t (PETR ONAS Gas Ber had Annual R epor t 2010).

A Healthy Workforce is a P roductive Workforce

PETR ONAS has been encouraging its employees to adopt and to follow a healthy lifestyle. Last year, the Company ran the µStop Smoking¶ and µWeight Management¶ programmes. However, employees a lso tak e own initiatives to do different ty pes of activities, exercise


17

sessions (from indoor bowling to treasure hunts and even ou tdoor aerobics). All this will lead to the more ba lanced wor king environment (PETR ONAS Gas Ber had Annua l R epor t 2010).

It is a must for the Company to ensure that all its employees stay healthy, therefore a ll staff and their family members are provided with good medical care. When the H1N1 pandemic case took a place, the Company continuous ly under took preventive actions for a ll the staff, by advising them on the prevention and management of thespread of H1N1. An Emergenc y R esponse Procedure (E R P) was prepared by the company in order to mak e sure that the

readiness of the employees in dea ling with the pandemic (PETR ONAS Gas Ber had Annua l R epor t 2010).

The µA l ± Fa lah¶ programmes that has been run for the second year, is to mak e sure that all employees have healthy physical, emotional and ps ychological conditions. T here were done a total of 18 sess ions and 357 employees attended it dur ing its second year.

The Health Risk Assessment (HR A) programme covers emp loyees¶ health r isk s which ar ise from the Company¶s operations. T here are f ive cr itical r isk s, w hich are hazardous chemicals, physical (noise, vi bration, thermal stress, radiation and pressure), ergonomics, biological and psychosocial (PETR ONAS Gas Ber had Annua l R epor t 2010).

Charting the Way Forward

PETR ONAS Gas Ber had is continuous ly emphasizing on the development of its wor kf orce, as they believe that it will ensure the Company¶s future growth, operational success and its strong relationshi p with the stak eholders going forward. Long ± term success is dependent on effective human capital development (PETR ONAS Gas Ber had Annua l R epor t 2010).

3.2.3 CSR IN THE ENVIR ONMENT Based on the interview, Petronas Gas Ber had (PGB), the company has a lways been fully

aware of prot ecting the environment by emphas izing the conserva tion and preserva tion of the environment. In order to continue sustaining its bus iness operations in a sustainable manner, PGB believe that there always be a ba lancing act to play between the organization¶s resources, its Health, Safety and Environment (HSE) system and the environment. PG B k eep


18

the pace on the developing the HSE practices with the PGB Health Safety and Environmental Management System (HSEMS). It is a set of control paramet ers that is used to proactively

manage all the HSE hazards and consequences, which are associated with the business activity and to provide assurance to a ll stak eholders that HSE r isk s in the business are being managed to a level that is as low as reasonably practicable (PETR ONAS Gas Ber had Annua l R epor t, 2010). In the process of deve loping of ba lancing between business activities and

being respons i ble to the environment, PGB do not only advance the HSEMS, but also management of schedule wastes, minimizing black smok e f lar ing and greenhouse gas (GHG) emission to guarantee that the Company is opera ting in safe and c lean environment and to meet the t erm to the legal and bus iness requirements. In addition to that, from the int erview, we found that in order to reduce the damage to the environment PGB introduce the NGV in the local mar ke t by promoti ng the greater benef it of the use of na tural gas in homes and

factor ies. In 2009, PG B and Mitsubishi Corporation had jointly formed the Clean Development Mechanism ( CDM) Wor ks hop that was planned to converse on the process and requ irement s

for CDM. CDM is an arrangement under the K yoto Protocol that allows industr ialized countr ies with GHG reduction commit ment to inves t in projects that reduce emissions in developing countr ies as an a lternative to more expens ive emission reduction initiatives in their own countr ies (PETR ONAS Gas Ber had Annua l R epor t, 2010). Based on the interview,

we found out that in order to demonstrate the concern for the environment PGB focus on technology to produce additives to gasoline/petrol to reduce the fumes. Not only produc ing

additives to gasoline, the t echnology is a lso used to hel p emphas izing on the impor tance of scheduled wast emanagement by using e ± POWER S (PGB Wast e R equest System), a system that uses electronic notif ication in managing scheduled wastes reques t (PETR ONAS Gas Ber had Annua l R epor t, 2010).

3.2.4 CSR IN THE COMMUNITY P rogram BAKTI P endidikan PE T RO NAS ( P B PP): Dur ing the interview, Mr. Norman Isma il has stated that the company ack nowledges the need of community CSR practices. He

menti oned that the implementation of the company¶s commit ment to community involvement in the CSR activities could be seen from numerous s tudents who have benef ited from the

program BAKTI Pendidik an PETR ONAS and many of national consumer campa ign MKT408: COR POR ATE SOCIAL R ESPONSIBILITY AND SUSTAINABILITY

19

engagements. Mr. Norman Isma il said that it is impor tant for the company and PETR ONAS to demons trate its gratitude toward people by implementi ng its commitment to CR practices in the community (PETR ONAS, nd).

Program BAKTI Pendidik an PETR ONAS (PBPP) is a program which involves interaction activities with the local author ities, public awareness programs and o ther social responsi bility programs. P BPP itself is a s tructured and integrated long ± term education programs focus ing on marginally performing school children. Moreover, it is cons idered that PBPP is an avenue where the Company par tici pates with the objective of encouraging academic excellence amongst intermediate s tudents. PETR ONAS Gas initiated the program in 2002, with suppor t and involvement by the Company since 2006 (PETR ONAS Gas Growth Annua l R epor t, 2008). Under the PBPP program, PETR ONAS Gas has adopt ed three schools, which are Sek olahKebangsaanSantong in Pa k a, Terengganu, Sek ola hKebangsaanKemasik in Kemasik , Terengganu and Sek olahKebangsaan P inang Tungga l in Kepala Batas, Pulau Pinang. T here are around 560 s tudents w ho have advantaged from these three sc hools. T he four th and latest one is Sek olahKebangsaanBatuAnam in Segamat, Johor that was successfully adopted on 4 July 2010. Apar t from academic activities and ac hievement , the students were a lso tak en for year ly educational f ield tr i ps to PETR ONAS¶ exper iential learning facilities such as PETR OSAINS, Aquar ia, PETR ONAS Twin Towers, KLCC Par k and Sepang International Circuit. Moreover, as recognition for the students¶ overa ll ac hievements and to ack nowledge their

effor ts in achieving outstanding results and demons trating signif icant improvements at school, the Company has organiz ed an annua l pr ize giving ceremony (PETR ONAS Gas Growth Annua l R epor t, 2008). The remar ka ble ac hievement of the students under P BPP can be seen from the 80 students that were involved in the PBPP, which passed the UPSR or Ujian P enilaianSekolah Rendah

examination. T here are 92% of students who passed the examination of which 16 students achieved 5As whilst 20 students scored 3As and more. T his is a cons iderable improvement in compar ison with 2008 result, with higher number of students obtaining 5As compared t o previous year. T he Company¶s effor ts in suppor ting the PBPP was once aga in k nown due identif ication a t national level where PGB was shor t ± listed for the Star Biz-ICR Malaysia Corpora te Social R espons i bility Award under the Community Categor y (PETR ONAS Gas

Growth Annua l R epor t, 2008).


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Corporate Social Responsibilities:Since the company has committed itself to continue

var ious activities in corporat e social responsi bilities in wide range of related actions. T he company tr ies to g ive moti vation and mora l suppor t to orphans and the underpr ivileged. Due to this purpose, the Company has organized var ious char itable activities, which demonstrated their concern and empathy towards the less for tunate. The Company took the oppor tunity

dur ing PGB Suk an 4 Penjuru and Head Off ice Family Day to visit orphanages in the area and contr i buted towards the improvement of the place. Dur ing the R amadhan fasting month, we invited orphans and a lso students from the Program BaktiPendidik an PETR ONAS to brea k

fast and at the same ti me contr i buted towards their preparation for the upcoming Aidilfitri(PETR ONAS Gas Growth Annua l R epor t, 2010).

PETR ONAS Gas¶s senior management and staff, together with their family members contr i buted their persona l ti me, energy and money for these CSR activities. The ³Ownershi p, Unit, R elationshi p and Satisfaction´ (OUR S) program is one of the most popular programs in the Company and it has achieved its objective in providing the ownershi p mindset to the

employees and their family members. Dur ing the program, oppor tunities are provided for employee¶s family members to observe wor k p lace environment and a lso exper ience an overview of the Company¶s operations (PETR ONAS Gas Growth Annua l R epor t, 2010). There is a total of 60 CSR activities were carr ied out with the communities in the area where the Company operates. T hese activities are concerned on the physiological and motivation

activities, which are mainly focused on improving the welfare of single mothers and th e under pr ivileged. It is recorded in PETR ONAS Gas annual repor t that the total amount contr i buted by Senior Management and staff is around RM93,516 in year 2010(PETR ONAS Gas Growth Annua l R epor t, 2010).

Other Stakeholders E ngagement:In addition, the company has crea ted public awareness

programs to engage with the local communities within the area of its facilities and plants. Through these activities, the company was able to create awareness of how impor tant the preventive and safety control measures, which need to be carr ied out along with the company¶s pi peline rout e. Project Sunga i Angk at at Gas Processing Plant (GPP) and T he Company¶s involvement in Sabah-Sarawak Gas Pi peline (SSGP) Project is named as some of

var ious activities under this program(PETR ONAS Gas Growth Annua l R epor t, 2010). The Company also creating awareness to the public of how to activate the emergenc y procedures in order to antici pate for unexpected situation occurs. T his public awareness MKT408: COR POR ATE SOCIAL R ESPONSIBILITY AND SUSTAINABILITY

21

program is a joint effor t between the Company and relevant local author ities such as F R DM, representatives from the Munici pality Council and Land Depar t ment (PETR ONAS Gas Growth Annua l R epor t, 2010). The Company has recognizes the impor tance of building and developing good relations with relevant local author ities and public media to endorse bett er understanding of its bus iness. The Company was also able to understand the regulator y requirements of the different agencies through this good relationshi p, such as activities to encourage the correlation including p lant visits, spor ting activities and regular engagement sessions (PETR ONAS Gas

Growth Annua l R epor t, 2010). The company¶s bus iness par tners are another similar ly impor tant group of stak eholders. PETR ONAS Gas maintains to intensif y its correlation with its suppliers throughout the annual Contractors Forum. 2010 is the f if th year that the forum has been des igned with the purpose to improve eff iciency in supply chain management in order to suppor t the company¶s operations. Open discussion between the Company and its suppliers will be held in the forum purposely to facilitate effective wor king relationshi p (PETR ONAS Gas Growth Annua l R epor t, 2010).

Discussions with suppliers on issues and areas for improvement were also conducted dur ing the forum. Moreover, the forum was used as a c hannel to identif y which suppliers who have implement ed excellent Health Safety and Environment practice or which one who stand out in their provision of produc t deliver y and services. T his has motivated the suppliers to

provide the best quality of products and services at the same ti me and to constantly improve their performance (PETR ONAS Gas Growth Annual R epor t, 2010).

4.0

COMPARISON OF SHELL AND PETRONAS GAS BERHAD

Nowadays, there are many more international companies that strongly focus on their CSR programmes. The international mar ke t¶s conditions havebeen constantly changing, and in order to maintain and grow their bus iness, many companies must implement strategic tools, and one of them is companies¶ CSR involvement. Companies lik e Shell and PETR ONAS Gas Ber had are a lso emphas izing on their CSR involvement in order to maintain their position in the international mar ke t place by cover ing severa l major dimens ions, including mar ke t place,

wor k p lace, environment and community. MKT408: COR POR ATE SOCIAL R ESPONSIBILITY AND SUSTAINABILITY

22

Shell is one of the most well recognized companies around the wor ld. T he company¶s involvement in CSR activities had been and still is ver y signif icant. And, it has been cover ing

all major CSR dimensions, such as mar ke t place, wor k p lace, environment and community. Firstly, talking about mar ke t place, Shell have positioned their CSR programmes as a one of the major factors that can contr i bute to the community and environment, as well as identif ying the true impact of CSR on bus iness operations.S hell will gain rea l benef its by

being involved in CSR programmes in the long ± run b y creating and enhancing a culture of social and environmental responsi bility within the organization that will lead to the s tronger mar ke t credi bility, strengthen client loyalty and attract new customers and investors. And some of the executives believed that CSR initiatives can increase sales. Secondly, the Companyhas been contr i buting to the development of local communities, bas ically, in its areas of opera tions. T he main contr i bution has been in developing of education, re ± sourc ing oppor tunities to apply for jobs within the S hell Group of Companies wor ldwide. Also, there are many different programmes have been provided focusing on upgrading individual skills, employees skills. Thirdly, the main Shell¶s contr i bution in environmental CSR dimension is cover ing areas such as reducing air pollution, reduc ing water usage and go ing aga inst of animal testing. Last but not least, there are severa l cr itical CSR programmes have been run by Shell by cover ing community. The Company has been tr ying to protect its staff from HIV/AIDS, to suppor t f inancially the local communities w here the company operates and emp has izing and respecting human r ights. On the other hand, PETR ONAS Gas Ber had, it is clear ly stated in the centra l company of PETR ONAS¶ Mission Statement, which has four ma in objectives, and one of them is to ³contr i bute to the well ± being of the people (of Malaysia) and the na tion´. T hat is s hown that CSR programs, which covered mar ke t place, wor k p lace, environment, and community, have become one of the major concerns of PGB as well. PGB has won three awards at the

2009 Pr ime Minister CSR Awards, for BEST OVER ALL CSR PR OGR AMME, BEST EDUCATION PR OGR AMME and BEST CULTUR E AND HER ITAGE PR OGR AM. First, related to the mar ke t place, in order to contr i buting k nowledge and resources, PG B has par tici pated through numerous of conferences, w hich purposely to s har ing the information of the best practices in the industr y around the wor ld. PGB is a lso a member of the Malaysian


23

Gas Association or MGA that concern to sti mulate the development of the gas industr y in Malaysia. Moreover, the company is committed to deliver ing strong earnings to its

shareholders and ac hieving sustainable long-term shareholders¶ va lue b y k eep performed the business excellently. Second, about the wor k p lace, PGB has creat ed The PETR ONAS Accelerated Capability Development (ACD), Career Enhancement Oppor tunity (CEO), and T he PETR ONAS Staff Development Program (SDP) in order to encourage the learning environment. PETR ONAS¶ the Building Leadershi p Program (BLP) and PETR ONAS¶ Emerging Leadershi p Program

(ELP) are programs under PG B¶s p lan for the future leader. T he µAl ± Fa lah¶ programs and The Health Risk Assessment (HR A) are created by PGB to built A Healthy Wor kf orce as well as Productive Wor kf orce. Third is related to environment, PGB k eep the ra te on the developing the Health Safety and Environmental (HSE) practices with the PGB Hea lth Safety and Environmental Management System (HSEMS). Moreover, under the management of schedule wastes, minimizi ng blac k smok e f lar ing and greenhouse gas (GHG) PGB mak e sure it operating its business in safe and clean environment. Four th, about the community, PGB has strongly engaged with education area through Program Bakti Pendidik an PETR ONAS (PBPP), which provided to oppor tunity to learn more about how the Company progressively, proactively and pos itively contr i butes to the society. The company also organized many social events of its senior managements and staffs¶ family as well as c har itable activities with orphans and underpr ivileged. Moreover, PGB also creating public awareness programs to engage with the local communities w ithin the area of its facilities and plants.


24

5.0

CONCLUSION AND R ECOMMENDATION

To summar ize, we all k now that environment al problems issues has become a major consideration not only for government, society, but also in the business wor ld. Many companies have been tr ying to par tici pate ³taking care´ of the environment by using CSR as one of their bus iness activities. However, CSR do not only to tak e care of environment, or so called ³green´, but it is more to consider bigger picture of your internal business activities t o the stak eholders, get involve to ever y business da y-to-day activities. Both companies, S hell

and PETR ONAS, put CSR as an integral par t of their business activities. Mar ke t place, wor k p lace, environment and community are addressed to be the four major concerns of the CSR activities of both companies. R oyal Dutch Shell plc, as we have read before, pu t CSR in an impor tant place at their

business strategies. Corporate Social R espons i bility (CSR ) turned out to be a vital strategy for companies to survive in a ruthless mar ke t environment. In a condition where mar ke ts¶ shif t and customers¶ preferences become more unpred ictable and complex, adopting CSR strategy could be a powerful tool for survival. Shell has been prominent in the development and promotion of CSR activities, having made signif icant inves t ments in initiatives that address var ious social issues by spending millions of USD for CSR . Shell¶s ma in contr i bution in environmental is cover ing areas suc h as reducing a ir pollution, reducing water usage and going aga inst of animal testing. Shell also have special attention to the community by providing program to protect their employees from HIV/AIDS, which mainly come from Afr ica, and a lso suppor ting the local communities f inancially and emphasizing and respecting human r ights.

Different with Shell, PETR ONAS has seen CSR as one of their bus iness practices once they were incorporated. It is clear ly stated in the central company of PETR ONAS¶ Mission Statement, which has four ma in objectives, and one of them is to ³contr i bute to the well ± being of the people (of Malaysia) and the na tion´. Since CSR is one of the company¶s basis, PETR ONAS have been rapidly developing CSR practices in the 4 dimensions of CSR . With strong and success CSR performances, PETR ONAS get several achievement for BEST OVER ALL CSR PR OGR AMME, BEST EDUC ATION PR OGR AMME and BEST CULTUR E AND HER ITAGE PR OGR AM.


25

As CSR has become one of vital strategies for wor ld business corpora tions, it is a ver y wise decision to adopt CSR into our bus iness activities, where major ity of Asian companies still do not apply it to their business. Meanwhile, most of European companies have been palcing CSR as an integral par t of their bus iness. CSR will not only hel p the environment from

destructed, but also hel p the company itself to be more produc tive and give good image to th e society. By adopting one of CSR guidelines, a company will be able to manage and monitor their CSR activities effectively, and it also hel ps a company to repor t their activities to the

public in order to show company¶s social integration and environmental concerns in their business operations.


26

R EFER ENCES

Shell (nd) µ Cleaner Air¶, Shell, O fficial Website, (online) (cited 23 Marc h 2011). Ava ilable from: htt p://www.shell.com/home/content/environment_ society/environment/air/

Shell (nd) µR educing Wat er Use¶, Shell, O fficial Website, (online) (cited 23 March 2011). Available from: htt p://www.shell.com/home/content/environment_ society/environment/water _ use/

Shell (nd) µEnvironment¶, Shell, O fficial Website, (online) (cited 23 Marc h 2011). Ava lable from: htt p://www.shell.com/home/content/environment_ society/environment/

Shell (nd) µHIV and AIDS¶, Shell, O fficial Website, (online) (cited 23 March 2011). Ava lable from: htt p://www.shell.com/home/content/environment_ society/society/hiv _ and _ aids/

Shell (nd) µSocial Performance¶, Shell, O fficial Website, (online) (cited 23 March 2011). Available from: performance htt p://www.shell.com/home/content/environment_ society/society/niger ia/social_ / PETR ONAS (2010) µCS R Activities¶,PETR ONAS Gas Ber had Annua l R epor t 2010 PETR ONAS (2008) µCorporate Social Responsibilities¶, PETR ONAS Gas Growth Annua l R epor t 2008¶, (online) (cited 31 Marc h 2011). Ava ilable from: htt p://announcements.bursamalaysia.com/EDMS/subweb.nsf/7f04516f8098680348256c6f00

17a6bf/ef9f7340ecdcb8cd48257479002cba71/$FILE/PETGAS Annua lR epor t2008%20(2.6 MB).pdf PETR ONAS (nd) µProgram BAKTI Pendidik an¶, PE T RO NAS , (online) (cited 31 Marc h 2011). Ava ilable from:


27

htt p://www.facebook .com/pages/Program-Bakti-Pendidik an

PETR ONAS/144730136013?v=app _ 2347471856 NOR WAY (2011) µ Corpora te Social R espons i bility in Malaysia¶ N ORWAY, The O fficial Site in Malaysia, (online) (cited 31 March 2011). Ava ilable from: htt p://www.norway.org.my/News _ and _ events/Business/ Bedr if tenes-Samfunnsansvar/ CSR (2008) µWhat is Corpora te Social R espons i bility (CSR ) and Sustainable Business?¶ Simply CS R , (online) (cited 31 March 2011). Ava ilable from: htt p://www.simplycsr.co.uk /def inition-of -csr.html


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APPENDIX TRANSCRIPTION OF THE INTERVIEW

R esearcher :

Third Par ty

Date of Interview:

22 Marc h 2011

Interviewee¶s Biodata:

Norman Isma il on behalf Ridzuan Bin Zulkif li

Company:

PETR ONAS GAS BER HAD

Occupation:

Executive (Corporate Communication) Public Affairs & Genera l Services Dept.

-

How would you personally def ine CSR?

-

Corporate Social Responsibility means different things to different organizations and different people. I believe that CS R relates directly to the actions undertaken by organizations to ³give back´ to society and again this can take many forms. I personally believe CS R are activities or programs undertaken by corporations, private or public listed, that are not profit generating but A RE B E N E FICIAL T O ITS E M P LOY EE S, ITS SHA RE H O LD ERS, S OCI E TY IN G E N ER AL AND TH E NATI O N. This is also clearly stated in our parent company PE T RO NAS¶ Mission Statement which has four main objectives, one of which is to ³contribute to the well ± being of the people (of Malaysia ) and the nation´. And you can see this in the CS R programs and initiatives that PE T RO NAS undertakes over the years.

-

What is your company¶s business model? And how long has been model been in place?

-

PE T RO NAS was formed in 1974 and is wholly owned by the Malaysian government. P etroleum is our core business. The corporate vision is to be a Leading Oil and Gas Multinational of choice. PE T RO NAS Gas basically supplies gas to the power, industrial and commercial end ± users in Malaysia as well as Singapore since 1986.


29

This is done through the P eninsular Gas Utilization ( P GU ) network. This P GU network operates six (6 ) gas processing plants and over 2,500 km of gas pipelines. The growth of the gas business led to the development of the offshore gas fields in Malaysia.

-

Does your company¶s business model affect the environment? And if so, can you describe how?

-

The supply of natural gas does not affect the environment. In fact the greater use of gas as against other fuels will lead to improvement in the e nvironment. Natural gas is one of the cleanest fuels available.

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Does your company fully disclose its CSR activities? And where are these CSR activities disclosed?

- In the past, the parent company does not disclose externally any of its CS R activities.The company and our parent, PE T RO NAS fully disclose their CS R activities today. PE T RO NAS is a very responsible corporate citizen and values its role in the development of Malaysia and the welfare of the people. PE T RO NAS has won three awards at the 2009 P rime Minister CS R Awards, for B E ST OV ER ALL CS R PROG R AMM E , B E ST E DUCATI O N PROG R AMM E and B E ST CULTU RE AND H ER ITAG E PROG R AM.Now in the PE T RO NAS as well as PE T RO NAS Gas Annual Reports, we have a section highlighting CS R. Aside from the Annual Reports, the media coverage of the CS R awards also helped with the disclosure to the public of the CS R activities.

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Do you believe that these CSR activities help your company¶s image?

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CS R is not just about helping the company¶s image. Yes, obviously when the company undertakes CS R programmes, these reflect well on the company. PE T RO NAS as a group had always run numerous CS R initiatives. The management always believed in contributing towards welfare and human potential development. PE T RO NAS had


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been and still is committed to the supporting education and community programmes. Many of these programmes touch the people both in the urban as well as rural areas and of course, the people benefiting from the programmes have high regard for PE T RO NAS.

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What CSR practices may help you to achieve?

- As stated earlier, CS R practices benefit many of the people in Malaysia. Aside from helping to uplift the living and education standards of the Malaysian people, these efforts will help build the nation. At the same time, this also will uplift the morale of the staff, knowing that the company and their contribution in the work place have such a positive impact on people as well as the country .

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What CSR activities does the company undertake in the marketplace and what does these activities help your company achieve?

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The main focus of the company CS R activities have been human capital development and education. This is also the case for PE T RO NAS. Scholarships, training programs, provision of mobile libraries etc form the bulk of the CS R efforts by the company and its parent. These CS R activities have helped raise the education as well as the skill sets of the people. This in turn will contribute towards nation building.

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What about your company¶s CSR pract ices in the workplace? And what will they help you to achieve?

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The company¶s focus on education, training and human development has been beneficial to the company and PE T RO NAS. The improvement in skill sets and knowledge has helped the staff morale and more importantly made the company stronger. The improvement in staff skills has enabled the company and PE T RO NAS to increase productivity and efficiency.


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Does your company also focus on community CSR activities? And if so, how have they helped your company?

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The company and PE T RO NAS recognize the need of community CS R activities. The number of national consumer campaign engagements and especially the number of students benefiting from the P rogram Bakti P endidikan PE T RO NAS ( P rogram Bakti ) clearly demonstrates the commitment to community involvement in the CS R activities. Again I want to stress that all of these raises the understanding of ³give back´ by the company and PE T RO NAS to the people. I personally am a strong believer and advocate for these CS R efforts.

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Does your company run CSR activities focusing on the environment? If so, can you elaborate on the most successful activity?

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The company and its parent PE T RO NAS have always been aware of the need to preserve the environment. The introduction of NGV to the local market, the promotion of the greater use of natural gas in homes and factories etc are all geared towards reducing damage to the environment. The focus on technology to produce additives to gasoline/petrol to reduce the fumes all demonstrates the concern for the environment.

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Which are the most important CSR dimensions for your company to stress on and why?

- Like PE T RO NAS, the company¶s major focus must be human capital development. This has major impact, not just for the growth of the company and its parent, but this will be a major contributor to the growth in prosperity in Malaysia.

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Do you believe that CSR activities help you to attract investors, specif ically institutional investors?


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- Again I want to reiterate that CS R is about giving back, about human development, about nation building. The focus is not on attracting investors, be they individual or institutional. However I believe that investors value corporations that show a social responsibility. In the case of the company and PE T RO NAS, I am sure we rank no 1 in this respect.

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In your opinion, has your company¶s CSR activities benef ited your company? And in which way?

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P roperly planned and executed CS R programmes ALWAYS benefit the company. One can see that PE T RO NAS extensive CS R programmes and the various subsidiaries¶, such as our company¶s CS R programmes actually contribute to communities in many forms. These help build stronger relationships and links with the customers. The programmes also promote educational capabilities which benefit the nation. And naturally the focus on employees in some of the CS R programmes helps build loyalty, integrity and efficiency amongst the staff. Therefore our company and all companies under the PE T RO NAS brand are highly respected. The value of the listed companies in the PE T RO NAS family are highly valued as the two recent listing had shown ± PE T RO NAS P etrochemicals and PE T RO NAS Heavy E ngineering are well above their issue prices. Institutional support for the companies demonstrates that PE T RO NAS brand and management are highly sought after and the high emphasis on CS R (especially to employees and stakeholders ) clearly played a part. Like many of the staff in the company, we are very moti vated and happy to be involved in the numerous CS R activities. The company that cares for the staff, the community and the nation will be the company to work for.

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What do you plan to achieve by being involved in CSR acti vities in a long run?

- I am constantly learning about all the differ ent dimensions of CS R. The constant push for improvement of the CS R programmes greatly motivated myself and all the other staff involved in the CS R activities. The realization of the value and benefits that CS R brings is a great motivation for myself and the management to do more. By doing


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Petronas Gas (PGB)

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