The corporate impact of addressing social issues: a financial case study of a project in Peru.

Large, multinational resource development projects can affect many aspects, including social, economic and ecological realities, in the regions where they operate. Social and environmental issues that are usually ignored in such projects are increasingly affecting the financial future of multinational corporations in negative ways. In this article, we advance the argument that corporations can successfully manage these issues and that if they choose to view these management efforts as an investment rather than an expense, they may well acquire a competitive advantage over companies that do not. We describe as a case study the Camisea natural gas and condensates development project in Peru, operated by Shell Prospecting and Development Peru (SPDP). Camisea is one of the first projects anywhere in the world to conduct a detailed analysis of key industry-related social issues and the processes, required investment and financial impact of managing them. The Camisea example supports the argument that addressing social and environmental concerns makes financial sense. In present value terms, the benefit of managing these concerns was expected to surpass the cost investment by approximately US$50 million.