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ConocoPhillips

ConocoPhillips

OVERVIEW

In April 2007, ConocoPhillips was the first American oil company to join the U.S. Climate Action Partnership, which seeks mandatory reductions of greenhouse-gas emissions through federal policy changes. It has increased biofuels R&D and set up a joint venture with Tyson Foods to turn animal fat into energy. But it has a troubling legacy—dozens of Superfund sites and polluted refineries that are still being cleaned up—and employees have questioned its safety practices.

MANAGEMENT SCORE: 11 out of 25

After being booted from the FTSE4Good index in 2003 for not meeting human-rights standards, the company launched a new sustainability campaign that included “commitments to the public” on citizen engagement and the environment.

Worker well-being The company is generous to employees (the target is matching every $1 of employee savings with $8 of company stock), and has an explicit goal of zero injuries.

Alternative energy Less than 1% of 2006 profit came from what it calls “emerging businesses” and sources other than fossil fuels; investment in renewables R&D is less than 1% of its $15.6 billion capital budget.

Keeping score A sustainable development scorecard is required for all projects over $30 million, which helps mitigate community and governmental opposition. All but one of ConocoPhillips's 13 company-operated refineries in the U.S. and U.K. have set up community advisory councils.

IMPACT SCORE: 40 out of 100

Even among Big Oil, ConocoPhillips’s environmental record lags. The EPA has linked it to dozens of Superfund hazardous waste sites, while a University of Massachusetts study ranked it the third worst corporate air polluter. By 2006, the company had accrued environmental cleanup costs of more than $1 billion, largely for pollution at domestic refineries.

Greenhouse gases In 2006, the company produced 853 million barrels of oil and equivalents, and released 68.7 million tons of carbon dioxide—a below-average efficiency rate. ConocoPhillips requires cost-of-carbon evaluations for all new projects that could release more than 50,000 metric tons of carbon dioxide, and plans to spend $1 billion by 2011 to further cut air emissions.

Biofuels Spending on renewable and “unconventional” energy sources was about $100 million in 2006 (and was expected to go up by 50% in 2007. In April 2007, it announced a collaboration with Tyson Foods to turn pork, meat, and chicken fat into diesel. The company, which already uses soybean oil as fuel in Europe, plans to spend $100 million over the next three-to-five years to prepare refineries to process biofuel.

Diversity The 17-member board includes three women (one African-American); the executive team has two women and one Asian. More than one in four U.S. workers is a woman and one in five a minority, though the numbers among managers (14% and 11%, respectively) are below the industry average.

Safety While the company has yet to achieve its lofty goal of zero fatalities, its death rate (three reported in 2006 among employees and contractors) is better than most of its peers. Its injury rate, slightly above average, has fallen for the past five years, but employees at the 2007 annual meeting expressed concern that budget cuts were compromising plant safety.

Foreign operations Of the 21 countries in which ConocoPhillips operates, 12 have “questionable governance” according to Transparency International. It scored below ExxonMobil, BP, Shell, and Chevron on Save the Children’s revenue transparency index. The company returned to Libya in 2006 after a 19-year absence, while it pulled out of Venezuela last spring after the state seized control of its operations. On the plus side, it’s set up 40 clinics for workers in 10 countries.

Lobbying The company averaged $3.5 million in annual lobbying over the past two years. Most of that money targeted Alaska, where it recently submitted a proposal to develop a new multibillion-dollar natural-gas pipeline.