Chevron Under Fire

George  Serafeim; Rebecca   Henderson; Christine  Snively

Case | HBS Case Collection | January 2015

Chevron Under Fire

by George Serafeim, Rebecca Henderson and Christine Snively

Abstract

Oil giant, Chevron, faced numerous challenges on environmental, social and governance (ESG) grounds in the first decade of the 21st century, including some major lawsuits and actions by NGOs. The case describes those challenges and raises questions about what is the optimal response on the part of the company in order to ensure future growth and profitability, and how those challenges are going to affect the future competitiveness of not only Chevron but of the whole oil and gas sector.

Keywords: carbon tax; oil and gas; environment; drilling; Governance; Business or Company Management; Corporate Social Responsibility and Impact; Corporate Strategy; Environmental Sustainability; Energy Sources; Mining Industry; Energy Industry;

Language: English

Format: Print

18 pages

Educators

Citation:

Serafeim, George, Rebecca Henderson, and Christine Snively. "Chevron Under Fire." Harvard Business School Case 115-031, January 2015.

While there has been significant progress in the measurement of an organization’s environmental and social performance, metrics to evaluate the impact of products once they come to market lag far behind. In this paper we provide a framework for systematic measurement of product impact in monetary terms and delve into the rationale for the framework’s seven elements. We then apply the whole framework to two competitor companies and elements of the framework across companies in different sectors of the economy to show the feasibility of measuring product impact and the actionability of the framework. Not only does this application demonstrate feasibility, it also indicates the value of impact-weighted financial statement analysis. We see our results as a first step, rather than a definitive answer, towards more systematic measurement of product impact in monetary terms that can then be reflected in financial statements with the purpose of creating impact-weighted financial accounts.

In the fall of 2018, Hiro Mizuno, the Chief Investment Officer (CIO) of GPIF, the Japanese Government Pension Fund, was reflecting on his efforts to integrate Environmental, Social and Governance (ESG) issues into every aspect of GPIF’s portfolio. His efforts ranged from constructing new stock market indices based on ESG data, changing the compensation and incentives of active investment managers and passive funds, pushing for more corporate sustainability reporting and integrated reporting, and establishing collaborations with other asset owners to drive systems level change. He was convinced that the only way to meet his responsibilities to his beneficiaries was to improve the performance of the entire economy through a focus on improving corporate governance, increasing inclusion in the workplace and gender diversity and reducing environmental damage and progress towards tackling climate change. The early results from his efforts were promising, but was there more he could do?

Case | HBS Case Collection | January 2019 (Revised February 2020)

Should a Pension Fund Try to Change the World? Inside GPIF's Embrace of ESG

Rebecca Henderson, George Serafeim, Josh Lerner, Naoko Jinjo, Rebecca Henderson, George Serafeim, Josh Lerner and Naoko Jinjo

Keywords: pension funds; ESG (environmental, social, governance) performance; Investment Funds; Environmental Sustainability; Social Issues; Governance; Leading Change; Economy; Performance Improvement; Japan;

Citation:

Henderson, Rebecca, George Serafeim, Josh Lerner, and Naoko Jinjo. "Should a Pension Fund Try to Change the World? Inside GPIF's Embrace of ESG." Harvard Business School Case 319-067, January 2019. (Revised February 2020.) View Details

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Chevron Under Fire

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