Sir Mark Moody-Stuart: And what we need is collaboration between civil society and business jointly towards government who will have more trust in the outcome. It's not just a business, not just a consumer outcome, but it's a joint approach.
Jane Goodland: Hello and welcome to the LSEG Sustainable Growth Podcast, where we talk to leading experts about a wide range of topics spanning sustainability, business and finance. I'm your host, Jane Goodland, and today I'm truly honoured to be joined by one of the world's most respected voices on responsible business and ethical leadership, Sir Mark Moody-Stuart. Sir Mark is a distinguished business leader, best known for his leadership of some of the world's leading companies in the energy and mining sectors, but also his long standing influence on corporate responsibility, sustainability and ethical leadership. Thank you so much for joining us here today.
Sir Mark M-S: It's a pleasure to be here.
Jane Goodland: So let's start at the beginning. You began your career as a geologist and then went on to work with very well-known companies such as Shell, Anglo American, Saudi Aramco, HSBC, but you've always had an interest in sustainability or sort of those connected pieces. Tell me, where did it all begin? How did you get interested in the first place?
Sir Mark M-S: Well, I think it began very early in my life because I was born in the Caribbean. My father ran the sugar industry and he was very committed to the transition from colonial situation to a period of independence in a country where the industry in which he worked was the major supplier of employment and finance and so on. And that went on in the oil and gas industry, where the industries I worked in was very often a dominant economic factor but also had social and environmental impacts. So it's really been a continuous process and I've watched the successes in countries such as Oman, for example, Malaysia, but also the failures, as in Nigeria. And to try and work out what causes success and what leads to failure, and it's a very important question.
Jane Goodland: So this is very much from the perspective of responsible leadership, sustainability in connection with the success of the firm as well over the long term?
Sir Mark M-S: Yes, it's both the success of the firm and the society in which the firm is working.
Jane Goodland: Now, much of your experience has been in the extractives industry, which some would say is probably at the very sharp end of social and environmental issues. I'm just wondering, how has that affected your perspective around responsible leadership, particularly in the context of some of these socially and politically complex situations?
Sir Mark M-S: Well, we had had in Shell since the 70s what I thought were extremely advanced general business principles, as we called them, which at an early stage, even in the 70's, acknowledged the importance of not just shareholders, but our own people, our customers, civil society and society at large. And we thought those principles were pretty good. But in 1995 we had a couple of events, an environmental event, Brent Spar, and a human rights event, the execution of Ken Saro-Wiwa in Nigeria, which called into question, were those principles fit for purpose? So we went out deliberately and did a consultation with our critics and others, society at large. We did, I think, 85 workshops around the world in many different languages with 12 Shell people in a slice through the company, outside politicians, civil society, etc., trade unions, and asked them what are the responsibilities of a global company in the late 20th going on 21st century? And every one of them said, that's an interesting question, we haven't thought about it before, thank you for asking. And they came up with a number of changes. I won't go into all of them. But one of the changes was sustainable development. They said, you need to commit to sustainable development. I think we didn't actually at the time, fully realise the implications of that. There was a tendency to think sustainable development was a few solar cells and windmills. So we went back to them and said, here are our new principles, and they said, well, that's fine, but they're just words. How do we know you're really doing it? So then we produced the Shell Report, and that became a commitment to look at the progress that we were making and involved, of course, FTSE4Good as well.
Jane Goodland: There's nothing like a reputation risk or an event to galvanise management's attention for progress. So I think 1995 must have been quite a difficult year, but it certainly provided the stimulus for deeper thinking at Shell around sustainability factors. Now, company boards are a crucial part of good corporate governance. I'm curious to know from your time in the boardroom, how do sustainability issues tend to show up in those board conversations? Is it about risk? Is it a about value creation or something entirely different?
Sir Mark M-S: Well, of course, if you have a major event, such as those in Shell that we had in '95, it's plainly got the attention of the board. But fortunately, that's not the case in all companies. So the question is, what brings it to the fore? And I think it's partly a feeling that this is what society wants. So it's partly reputational protection. Risk, are we doing the right things? And that can sometimes be quite passive rather than positive. If I go back to the Shell case, one of the changes that we made in the principles was that a company had a right to express its views on political situations. In Nigeria, we had always said there should be a fair trial, but we didn't comment on the trial because we had a very strong principle that we were not political actors. When we revised the principles, we said no, company has a responsibility to express its view on things which make a difference to society. So actually the revised principles somewhat liberated us. But going back to the board, I think its reputational risk basically is the way in. And unfortunately that's not always very apparent, or doesn't have a very active outcome.
Jane Goodland: So, I mean, reputation, I guess, is one way, but have you seen board conversations thinking about sustainability factors or sustainable development, as you say, being more of a kind of value creation type of kind of business model, business strategy type of conversation as opposed to a reputational one?
Sir Mark M-S: No, I think that is something that needs more. I mean, people, there is a tendency, unfortunately, to look at it as a cost, and it isn't a cost, it's actually a benefit. It benefits the atmosphere in the company, the relationship with the people in the, colleagues in the companies. It benefits relationships with civil society. Very important is an openness to discuss with civil society and not be defensive. And I think in Europe, generally, we're slightly better than the US side in not being defensive. So certainly, in my experience, it's much better to when civil society organisations and not-for-profit organisations criticise you to say, now what is it that's bugging you, as it were? Can we talk about it and other things we can do in common?
Jane Goodland: Yeah, I can understand that. Building on that theme a little bit more around kind of dialogue and collaboration, I know you're not content with sort of running lots of the best known firms in the world, you've also kind of written books and or book or one book, I can't remember how many books.
Sir Mark M-S: Only one. Only the one. Quite enough, quite enough.
Jane Goodland: But in that it talks about collaboration and engagement, and I'm kind of interested to explore what your view is with respect to what's the job of the market and the company to solve, versus the problem of a government to solve? Because many of these issues are common to both the government of the day, but also the companies working in that marketplace. So what's your perspective on that? Kind of government / company?
Sir Mark M-S: Well, the market, of course, needs a framework in which to operate, a framework which sets the guardrails and guides the direction of the market and that's the job of government. Now government, democratic governments always have two concerns in their mind. One is consumers. Is this going to cost more? And that's where you need civil society and others saying, no, we support this. The other fear they have is that we in business will fall back on our usual defence, which is, well, if we do that, we won't be competitive. And what we need is collaboration between civil society and business jointly towards government who will have more trust in the outcome. It's not just a business, not just a consumer outcome, but it's a joint approach which will encourage government to set things like carbon pricing frameworks and so on, which they've been slow to do properly to have really effective carbon pricing frameworks, and that's not just the fault of government, it's the fault of civil society and us in business not making the argument jointly. We make it severally, but not jointly.
Jane Goodland: Also in your book, you talk about this notion of dining with the devil when you refer to working with governments around the world who perhaps don't necessarily hold the same types of views around certain standards or practices. Tell me a bit more about this kind of view about when to engage and when to leave?
Sir Mark M-S: Well I think it's extremely important in any society if you can have companies run to high standards demonstrating that running an honest company, not bribing people, making sure that you have proper employment rights and so on, I think that as a demonstration, as a catalyst, even in very corrupt countries, countries with governments who commit human rights abuses, this is important and of course if you are an important economic player you get to talk to the head of state or government so you have access and you can use that access to say, look, that doesn't really make a great deal of sense, shouldn't you be doing a bit more of this? And again, I think it's important to keep yourself honest, to have an engagement with civil society, to say, look, I have access, what do you think I should be talking to the government about? This is what I'm talking about. And I've had those conversations and said to people, look it's interesting, you appear to trust me, when I report what I'm saying to the government, I'm the only one, you weren't there, I am the only who actually knows what I said and you apparently are willing to take my word for it. Equally of course, I trust you not to stand up in public and say we told Moody-Stuart to tell the government of country X this that or the other, because if you do that I'm sunk with the government. They'll think I'm just speaking on behalf of others. So there's a great deal of trust. Now, what's the point at which you have to withdraw? I think that's the point at which you cannot maintain within your own organisation and with your own people, your own standards. And the closest I've ever come to that is actually in countries where they discriminated on behalf of nationals, most countries have employment which discriminates on the part of nationals. So a national has more right to be employed and the employment of nationals is encouraged. But in some countries you have permanent residents who are not nationals, and they get left out of this. And if that's pushed by the government, you should employ nationals and not just so-called permanent residents, that's against our principles. And that's the closest it's come, in my experience, to strain.
Jane Goodland: So we are living through a period of a great deal of geopolitical change. I'm sort of keen to explore the extent to which you feel that the role of multilateral agreements, the likes that we see for sustainability issues, do they, in your opinion, still have a role? Do you think that they are able to deliver some of the progress that collectively the world and the organisations around the world are trying to achieve? Or do you think we're going to see a change in that approach going forward?
Sir Mark M-S: In the United Nations, the Global Compact, which I was a strong supporter of and remain so, we had something called Business for Peace, which indeed was business trying to develop peaceful solutions, but we had many local networks. And in China, we had a strong local network, and that local network of their own volition, not pushed by anyone, held workshops on human rights. So these were responsible Chinese companies saying, what are our responsibilities within the framework of the Chinese Communist Party system, et cetera? And it's a very interesting question, because the approach to human rights, should not be seen simply through a Western viewpoint. China, of course, is remarkable in that it has moved several hundred million people from the countryside to the towns and as far as I know it's the only country in history that's managed to do this without creating slums in the cities, which is a remarkable achievement. The interesting thing is of course that they've done it by controlling population movement, which we in the West would regard as somewhat of an offence against human rights. Everyone should have a right to go and live wherever they want. So there are interesting points for discussion and I think we need to bring the world together to talk about that, not simply reject what's a different approach.
Jane Goodland: So the one thing I want to ask you is probably the hardest question that we may well have got to, which is if you were able to give one piece of advice to today's business leaders, what would it be with respect to responsible leadership?
Sir Mark M-S: I would say it's a question of openness. Openness to the people within your own company, what they think. Openness to government, and in particular openness to civil society organisations. And openness to your critics in particular. Civil society will very often raise a subject in a rather critical way. And if one is open and addresses the criticism and says, let's look at that, let's examine the facts, and come and look and see what we're doing. I can give you an example of that. In Sudan, we had an operation in Sudan, which was involved in the, not in the production of oil and gas, but in the marketing of petroleum products. And it was entirely run by Sudanese people. And I was approached by the head of Amnesty International who said we think the government of Sudan is committing human rights abuses in the south of Sudan and we think that Shell is refuelling at the airport the helicopter gunships which go down and commit these human rights abuses. So I said, fine, let's have a look at it, and I went to the head of Shell in Sudan and said a couple of questions, do you think the government is committing human rights abuses, and his answer was yes. Do you think that are we supplying fuel into government, military vehicles and so on? And he said, no, absolutely not. We refuel the world food programme at the airport, but we absolutely don't refuel for government. But he said let me have a check and make sure. After a while, he came back and he said what I said initially is absolutely correct, but what I have discovered was that we sell fuel to a government agency, a civilian agency, and they put it into barges, barge it down to the south of Sudan, and then it goes into helicopter gunships. So I went back to him, I said, what do you think we should do about that? He said, I think we should stop it. How will we do that? We can't make a fuss about it because that would endanger the human rights of our Sudanese employees in Sudan. He said, well actually, fortunately, it's quite easy. The government are always on at us about wanting to take this contract over, so we should just give the government the contract then we would be clear of it. So, I went back to my colleague in Amnesty and said, here's the deal, we will pull out, but I'm not saying it's going to stop, it just is it'll be done by the government. So we will be clear of it. But one other thing, please don't shout about it and say that Shell has withdrawn from this because of human rights, because that will endanger the human rights of our employees. They, to their credit, said no we won't make a fuss, and they never publicly talked about it. So I think openness and collaboration is extremely important.
Jane Goodland: Great. Well I think anyone listening who is working in an organisation should take that advice on board and I think it is very widely applicable in terms of a philosophy, so thank you so much. And thank you for your time and sharing your experience and insights over your remarkable career. Thank you so much Mark.
Sir Mark M-S: Not at all. It's been a pleasure. Thank you very much.
Jane Goodland: Well, that's all we have time for today on the LSEG Sustainable Growth Podcast. But if you want to get in touch with this show, you can do so by email at
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