In Conversation With Rhonda Zygocki

Speakers

• Rhonda Zygocki, Executive Vice President, Policy and Planning, Chevron Corporation
• Aron Cramer, President and CEO, BSR (Moderator)

Highlights

• Chevron’s challenge is to provide accessible and affordable energy to current and future customers. In order to meet that challenge, more research and development, efficiency, and natural gas are needed.

• Leadership is about a focus on value drivers in tandem with results. Chevron focuses on value through safety and community engagement, which help drive sustainability throughout its business.

Memorable Quotes

“Where is the best place for CSR to fit? The official answer is that it can work in a lot of different functions. In my personal view, however, strategy functions as the most important place for CSR.” —Aron Cramer, BSR

“More R&D, more efficiency, more natural gas. Can we make all of those things without a price on carbon? If a price goes on carbon, prices will go up.” —Rhonda Zygocki, Chevron Corporation

“We were talking about resource scarcity five years ago. Now with unconventional gas and potential pre-salts in Brazil, we may be looking at a 50-year supply of energy.” —Rhonda Zygocki, Chevron Corporation

Overview

Zygocki opened the session with the bold statement that there is no longer a CSR department at Chevron because corporate responsibility is integrated into every aspect of the company’s operations. As leader of strategy and planning of Policy, Government and Public Affairs, and Health, Environment and Safety at Chevron, Zygocki’s role is to understand the management of the business in a world of eroding public trust, changing issues, and shifting public policy, all of which are accelerating and occurring over multiple dimensions.

Leadership in the company focuses not only on being results-driven, but being values-driven. Such leadership is a result of integrating values like safety into the culture of the entire business. Zygocki explained how Chevron identified safety as a key component of responsible business, and thus created a culture that supported safety across the business units.

Another example that Zygocki offered was Chevron’s aboveground risk management. While engagement had previously been driven by regulation, Chevron’s current policy is to engage early, often, and throughout the life of a project. Site leaders are trained to identify risks and develop an engagement plan with stakeholders. While employees are measured on the execution of projects and not on engagement plans directly, there is inherent understanding that aboveground engagement drives successful project execution.

As a Fortune 5 company operating across 30 countries, Chevron faces divergent demands from its stakeholders: Customers seek low prices, communities seek employment and economic development, and the State of California seeks renewable energy at a lower cost.

The big challenge Chevron faces is to serve the energy demand of its present and future customers at an affordable cost. Given the impact of the oil industry on the climate, one way to meet the future energy demands of customers is by investing in nontraditional energy sources. While Chevron is investing in renewable and nontraditional energy sources, the transition to nontraditional energy will take an extensive amount of time. Within the industry, 80 billion barrels of crude oil are sold daily. Such immense consumption habits are not easily changed, nor are renewable energy sources that can meet such demand developed quickly. Zygocki said that in the United States alone, it would take 14 years to transition all vehicles to electric cars.

As Chevron, the industry, and the international community look for new energy sources, the focus may shift from the Middle East to the Americas with unconventional gas, future pre-salts in Brazil, and oil sands development driving the way. Zygocki enforced that the resources are there, the technology can unlock it, and all that is needed is access, which requires the approval of policy makers and the public.

As part of its stakeholder engagement, Chevron partners with governments in high-conflict areas or low-income countries to increase security and economic development. Zygocki said it is imperative that the company’s role is not perceived to replace government leadership or to become involved in politics, but to work cooperatively to support economic development by providing access to markets.