Linking Sustainability Practices to Improved Capital Project Outcomes

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Recently, Independent Project Analysis (IPA) partnered with the sustainability department of a major integrated oil company to study the effect of core sustainability practices on capital project outcomes. IPA’s robust database of capital projects all over the world, combined with research expertise, allowed it to measure the company’s sustainability approaches against other major companies and pinpoint areas that should be maintained or strengthened on future projects.

Sustainability is increasingly a key metric for capital projects, both in developing and developed countries around the world. As companies invest overseas or in their own backyards, sustainability issues must be well managed for a business to acquire and maintain its “social license to operate.” This social license “mandates” that to move a major project forward smoothly, the company must demonstrate it is a conscientious partner to the community.

Sustainability is commonly cited on corporate websites as a key value or practice, and companies are under pressure to demonstrate leadership in this area, which can encompass environmental preservation, heritage conservation, economic advancement, and institutional capacity building. However, the topic can be nebulous and difficult to measure. IPA was able to measure the integrated oil company’s sustainability approaches compared to others:

  • From IPA’s database of more than 18,000 capital projects, it identified a sample of about 200 projects globally that faced similar sustainability concerns
  • Representation of 49 owner companies, including major international companies and national companies in the oil and gas exploration and production, mining and minerals, chemicals, refining and distribution industries
  • Projects averaging total costs of approximately half a billion dollars, with many multi-billion-dollar investments

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