Such stakeholders include governments, communities, partners, contractors and suppliers, employees, customers and investors.

What are the challenges?

International growth has exposed us to various challenges and risks. In some of the countries where we operate, we face the dual challenges of poor business environment and underdevelopment, on the one hand, and high and increasing expectations and demands on our industry, on the other. A looming world recession may also point to tougher times ahead for host governments, communities and companies alike.

We believe that our ability to operate successfully now and in the future will therefore depend on how well we manage to meet these challenges in collaboration with our stakeholders.

What are we doing?
 
We are committed to sustainable development based on our core activities in the countries where we work, by:

• Making decisions based on how they affect our interests and the interests of the societies around us
• Ensuring transparency, anti-corruption and respect for human rights and labour standards, and
• Generating spin-offs and local content from our core activities to help meet the aspirations of the societies in which we operate.

Through social risk management, integrated impact assessments, integrity due diligence of business relationships and stakeholder dialogue and engagement, we have mechanisms in place to identify and understand societal needs and expectations, the potential risks and impacts of our core activities and the implications for project design and operations. We integrate our social responsibility activities into our business planning, and we evaluate and measure the effects of our actions.

We believe that transparency and human rights are cornerstones of good governance and a productive business environment; they allow businesses to prosper in a predictable environment and enable citizens to hold governments accountable. We believe that in transparent and anti-corrupt environments the benefits from our industry will also be more readily shared by society as a whole. We pursue openness and seek to combat corruption by supporting the Extractive Industries Transparency Initiative (EITI), and by publishing our revenues and investments as well as the taxes we pay in our countries of operation. We make every effort to operate our business in a way which respects human rights and labour standards, through our commitment to our employees, in collaboration with our contractors, and by managing our impact on the communities in which we operate.

Wherever we have an active presence, our aim is to create local content and generate positive spin-offs from our core business in support of the development ambitions of host countries. Drawing on our history as a national oil company (NOC), we aim to be a preferred partner and, wherever possible, work to align our interests with those of society around us - including through training and hiring of local employees, promoting local sourcing, or by working to establish competitive local enterprises that can participate in our value chain.

What have we achieved?

In 2008, integrity and human rights in our operations have been at the forefront of our agenda. In October 2008 we received the findings from the external investigations into Norsk Hydro's petroleum activities in Libya. The main conclusion was that consultancy agreements related to Norsk Hydro's earlier activities in Libya contain issues which could be problematic in relation to Norwegian and US anti-corruption legislation. (See separate article).

During 2008, our main focus in this area was on strengthening our ability to manage and mitigate integrity and human rights risks in our operations. To this end, we have implemented stricter requirements and processes for integrity due diligence for assessing and managing risks in our business relationships. To further comply with our Ethics Code of Conduct policy, we rolled out an ethics training and awareness programme reaching staff from 40 countries of operation, especially targeting senior management, procurement staff and others regularly exposed to third parties.

In line with the proposal of the UN Special Representative on Business and Human Rights, we revised our human rights due diligence procedures. A key element of this has been our continued implementation of the Voluntary Principles on Security and Human Rights (VPSHR) in selected operations. We have also focused on adapting our training in corporate social responsibility to the needs of different staff and key personnel. This includes human rights. We initiated a supply-chain review of significant contractors and suppliers in key locations, focusing particularly on labour rights and employment conditions.

Moreover, we revised our guidelines for integrated impact assessment, in which there was particular emphasis on including social impacts and including impacts on human rights in line with the International Finance Corporation's (IFC) Social and Environmental Performance Standards. IFC-authorised training in the Performance Standards was also conducted for project management and other relevant staff. We also participated, in collaboration with the World Business Council for Sustainable Development (WBCSD) and other partners, in finalising and launching a framework for measuring our direct and indirect impacts and improving our dialogue with host communities and other stakeholders. We also updated our Corporate Social Responsibility plans in 13 key countries of operation, documenting key social and political risks to our business strategy and projects, mitigating actions and steps, and potential opportunities to improve our operations in future.

In 2008, we continued to support local development in the countries in which we operate. We paid taxes to governments totalling NOK 172.4 billion, up from NOK 132.0 billion the previous year. Our procurements from local suppliers in non-OECD countries increased to NOK 3.1 billion compared with NOK 2.5 billion in 2007. We invested in capacity-building and skills development for our local employees and communities alike, as well as in upgrading and development of local enterprise skills in Algeria, Brazil, Russia and Venezuela, among others. Our social investment contributions in support of the development ambitions of host countries and communities amounted to NOK 233 million, spread across 18 countries.