Petroleum, Poverty and Profits: Changing Philosophies of Community Engagement

By Peter J. Robertson, Vice Chairman
ChevronTexaco Corporation

Eradicating Poverty through Profit Conference

San Francisco, CA, Dec. 13, 2004

I'd like to salute the World Resources Institute (WRI) for hosting this conference, and each one of you for attending. Being here shows your commitment to learning about, addressing and eradicating poverty.

This conference is a place to share the best practices we've learned as members of governments, nongovernmental organizations and the private sector. It can help us better understand the complex nature of poverty in today's world.

Our concerns about war and terrorism notwithstanding, I believe poverty is the single most important challenge we face in the 21st century. Poverty spreads the world's worst diseases, erects the tallest barriers to education and festers at the root of political instability.

It's a subject I care deeply about. I've seen some of the problems our conference is addressing firsthand. I've seen not only the devastation of poverty, but the hopeful steps that are being taken to combat it. So I'm glad to be here, and to take part.

Thanks to WRI for holding our conference here in San Francisco. I'm convinced the West Coast, as a center for high technology and innovative thinking, has a special role in fighting poverty -- and one that will only grow in the future.

Just a few blocks from this location, my company first opened our doors 125 years ago. Our ties to the international community go back nearly as far.

Early in the last century, we sold kerosene in China, the Philippines and Nigeria. We explored for oil and gas in the Middle East and Latin America. And, we were one of the first in our industry to enter Indonesia. So, from the beginning we've sustained successful economic engagements with the developing world.

Looking ahead, we need to build on our efforts to sustain equally successful community engagements.

Our productive portfolios of long-term oil and gas leases must be matched by productive portfolios of long-term community projects -- projects that improve lives and promote broad economic growth.

For my industry, this isn't solely a moral or ethical imperative. It's a business imperative too – one that goes to the heart of our ability to prosper and survive.

In the energy business, success is all about access – access to oil and gas resources. To get that access, we must first be good at our business and second distinguish ourselves by the way we behave.

It's the "how we do business" part of doing business: How we share technology and expertise; how we open up our business to local workers and entrepreneurs; and how we invest in the social fabric of our host nations and communities.

Over the years, ChevronTexaco has learned that the best way to pull people out of poverty is through economic growth. No real surprise there, but we've also learned that just throwing money at big projects isn't the answer. We've recognized – perhaps too slowly at times – that successful community engagement starts by building the capacity of individual people to help themselves. And we've discovered that we can't do this alone.

Our community initiatives -- like our energy projects -- are almost always undertaken in partnership. They target basic and compelling human problems. They endeavor to improve health, education and the environment. And they reflect the fact that economic growth is the key to social progress.

Internationally, the energy industry faces different challenges than those who seek solely to expand markets. To survive, we not only have to be asked in, we have to be asked back.

Our business is a long-term undertaking. Our largest investments -- those aimed at finding and producing oil and gas -- take many years.

The lifespan of a single well can be decades. A single field -- Kern River here in California, for example -- can produce for a century.

Our capital outlays are vast. Over the next five years, for example, ChevronTexaco and our partners plan to invest some $20 billion in Africa alone.

So our partners magnify our investments. Then, in our host communities, the dollars multiply again – rippling out to local suppliers and to workers.

Earlier I said poverty and its wider impacts threaten industry. Winning the fight against AIDS, for example, may determine in some areas of the world whether my company will have an adequate future workforce.

That's why in Africa, Latin America and Russia, ChevronTexaco sponsors HIV/AIDS education and awareness programs; blood testing equipment; special hospitals; anti-retroviral drugs for employees and their families, and other efforts.

We're proud of these projects. They not only help our operations, they're the right thing to do.

Another basic need for our host communities and for ourselves is an educated workforce.

So we're also proud that in Indonesia, in the past half dozen years, more than 36,000 students have received company assistance with their schooling. In Nigeria, each year more than 2,000 youngsters receive ChevronTexaco-funded high school scholarships.

Elsewhere, ChevronTexaco has sponsored housing, job training and schools for homeless children in the Philippines; orphanages in Venezuela; a fully-equipped polytechnic university expected to enroll 5,000 students by 2010 and a master plan for economic development of Riau Province in Indonesia; and an internationally recognized community foundation for sustainable development in the rainforests of Papua New Guinea.

Increasingly, our community engagement emphasizes grassroots economic growth, especially rural agriculture and micro-enterprise.

A couple of years ago, ChevronTexaco worked with a diverse group of partners – many of whom are here today – to launch the $50 million Angola Partnership Initiative (API). One API project we're particularly proud of was brought to us by the United States Agency for International Development. This year alone, it will provide seeds, tools, food and technical aid to some 700,000 small farmers. That's about 8 percent of Angola's population.

In another API project a few months ago, we helped launch a new bank to make micro-loans to small businesses and low-income households. Plans call for opening 10 more Novo Banco branches across Angola in the next five years.

Such efforts go beyond our traditional company operating boundaries to address issues affecting entire regions or nations. They also reflect a profound shift in philosophy, from in Leon Sullivan's words, a "hand out" to a "hand up."

They explain why, at ChevronTexaco operations in Angola, Nigeria and Indonesia, most professional and managerial positions are held by national employees. In addition, hundreds of other non-U.S. national employees now serve outside their home countries in career-developing jobs with ChevronTexaco.

Why we do this isn't a secret. We want the best employees we can get.

In Angola recently, I told one young student – he was about 19 – that I was struck by his ability to pose a question in both Portuguese and flawless English. As I was talking, ChevronTexaco's local manager came up brushing past me and thrust his business card into the kid's hand. "Hey," he said, "you ever want a job, call me."

ChevronTexaco is just as aggressive in reaching out to local businesses.

Many of our international operating units now have a local content manager who, besides handling contracts, also provides training and other services to help build these businesses. We've learned that setting up companies to supply us isn't just good community relations. It saves us money.

Let me emphasize: these aren't things we do in addition to our business. They are organic extensions of our core business. They create an enabling environment not only, as I mentioned earlier, for successful economic engagement but for successful community engagement.

I believe three attributes are critical to the success of any attempt to eradicate poverty. They are partnership, transparency and community.

First, we must be steadfast in our commitment to the concept of alliance, especially public-private alliances that build human capacity as the best approach to eradicating poverty.

Second, we must continue to advocate good governance as the true foundation for social progress and economic growth.

Third, we must recognize, whether we are marketing to the "bottom of the pyramid" or funding micro-loans for women entrepreneurs, that -- to achieve any lasting solution to poverty -- the poor themselves must be fully engaged. Fighting poverty should not be something we do to people it should be something we do with them.

And, finally, one thing more.

We must forever eradicate the stereotype that business interests are antithetical to the interests of the poor, that private enterprise is incompatible with community and that profits create poverty.

On a recent trip to Huambo Province, deep in Angola's interior, I saw not only the devastation of poverty but also of protracted civil war. I met people with no memory of a normal life.

But in Huambo's fields where our Angola Partnership Initiative has helped reopen the nation's only agricultural research institute and its only graduate agricultural school, I saw the seeds of hope.

Someone once wrote that without action there can be no hope. I believe he meant that only action can propel us toward achievement and, ultimately, optimism.

And that's exactly what those sprouting fields told me was happening in Angola.

What I saw was an unforgettable contrast between the relics of despair – war trash – and actions that bring hope.

Huambo's empty buildings were still riddled with bullets, and the hulks of abandoned tanks still littered its streets. But on the town's outskirts, newly enrolled students were working in the institute's fields – fields that waved with freshly planted corn.

You could look at that corn, you could watch the students work the soil and you could see life coming back again. Today, I too harbor a hope.

My hope is that here at this conference one of my fellow multinational corporations -- perhaps one of you -- will take action, that you'll offer to partner with ChevronTexaco in the developing world.

If we work together, we can build the same kind of hope I saw in Angola – again and again – all over the world.

Thank You.

Updated: December 2004