Economic growth must be socially and environmentally sustainable. This is a challenge for all society，but businesses have a fundamental role. Shell companies are committed to contributing to a sustainable development in their business principles，and are integrating it into the way they do their work. They are committed to transparency and engaging with people’s concerns and expectations and involving external parties in decision-making. They believe that being socially responsible is essential for continued business success.

I will look at sustainable development，with particular reference to the social context，and what it means for business.I will discuss how we approach social responsibility in our operations and in the context of our wider business footprint at a country and global level.I will look briefly at energy developments we are pursuing in Shell that make a social contribution and why we are convinced social responsibility is good for business.

SUSTAINABLE DEVELOPMENT IS ABOUT RAISING PEOPLE’S LIVING STANDARDS.BUSINESS IS INSEPARABLE FROM ITS SOCIAL AND ENVIRONMENTAL IMPACT.YOU CAN THINK IN TERMS OF THREE PILLARS-ECONOMIC，SOCIAL AND ENVIRONMENT SUPPORTING A BUILDING.IF ONE IS WEAK THE STRUCTURE MAY FALL- HOWEVER STRONG THE OTHERS.

We have to take account of all three in our business decisions.Business succeeds by responding to expectations - of customers，shareholders，employees，neighbors，and society.

Companies primarily contribute through their business operations and not by philanthropy.In terms of what we are responsible for in Shell，it is the $12 billion we invest with partners in business every year that really matters，rather than the $140 million in donations - although these have an important catalytic role.

Modern energy is fundamental for health，quality of life and economic expansion.Two billion people are still without it.But the energy needs of the developing world are expanding rapidly.

Not surprisingly the major increase is in growing Asian economies.China will be consuming 16 per cent of the world’s energy by 2020.Developing the resources and infrastructure to supply this will be a major undertaking.

So let me turn to how Shell companies approach sustainable development within their businesses.Our framework for action starts with our values.We have learned to respond to changing expectations and five years ago we added a commitment in our business principles to contribute to sustainable development.

How are we making it happen？

Sustainable development must be part of how we do our business - strategies，processes，budget submissions，training，reward systems.When we apply for project budgets they must show how they will address the social and environmental implications- without compromising the economic requirements of a tough and competitive capital allocation process.

And we have a rigorous annual assurance process to make sure we are working to live up to our principles.I say ’working to’ because it is a tough learning journey.We must always keep a sense of humility about our ability to effect change.

And we don’t expect people just to trust us to do what we say.We have to show them.

Our annual Shell Report describes our overall goals，plans and targets and how we are living up to them.

The other key requirement is to engage with people - responding to their concerns and expectations.

Shell companies manage their social responsibility in a number of ways.I will cover four areas which are important to our social performance：

—Social impact management - how we manage our impact in our every day operations to minimize the negative and bring benefits

—Social investment on an operational and country level - increasing social capital.

—Global social contribution through the Shell Foundation

—Development of clean energies

The main tool for understanding the operational impacts and identifying benefits is an Environmental and Social Impact Assessment，or ESIA.This is completed before operations start and feeds into site selection，design and construction.

In China we have done this for two major projects：The Nanhai petrochemicals project and the West East Pipeline Project.

The 4.3 billion dollar Nanhai petrochemicals plant in Daya Bay，some 80 kilometres from Hong Kong，is now being built by the CNOOC and Shell Petrochemicals Company Limited，a joint venture in which Shell has a 50 per cent share.It will be one of the most advanced plants of its kind in the world producing much-needed petrochemicals for the rapidly expanding domestic market.

The project is being developed in line with sustainable development principles by the joint venture.It will bring economic development and opportunity to the area and at the same time change lives substantially.It involves the resettlement by the government of 8000 people from the site.The joint venture agreed with the government that resettlement will meet Chinese and international standards and assisted in producing a resettlement action plan detailing the process，including consultation.The joint venture has an independent consultant monitoring the resettlement process reporting publicly every six months.The company has also staged two extensive consultation exercises in the Huizhou area and has reached out to international stakeholders.

The joint venture’s principles are to maximize local content in the project.Working with the government，job opportunities are being found for resettled people.It has helped the resettled villagers form companies that are working for the project and is contributing business advice.So far more than 80 per cent of the project’s purchase orders have been placed within Guangdong，the majority within the local area.

The West-East Pipeline project is another example.The 4，000 kilometre pipeline in China is now being built by PetroChina.Shell is one member of a group of international companies negotiating to participate.The project will contribute to sustainable development by developing the use of natural gas in China，replacing coal.It will reduce greenhouse gas emissions，improve the air quality in cities for hundred of thousands of people，create employment and provide continuing tax revenues.

But these major benefits should not be at the expense of people directly affected by the project.Despite the fact that we were not yet part of the project，we worked with PetroChina to complete detailed social and environmental assessments over and above the requirements of Chinese law.We partnered with the United Nations Development Programme - UNDP - which completed a social impact assessment survey along the pipeline talking to 10，000 people to better understand the social impacts of the project and gather views.This is the first time a social survey like this has been part of a major infrastructure project in China.UNDP hopes that it will have an impact on the way large scale investment projects will be carried out in future in the country.

But it is more than managing impacts.It is also about how you bring lasting and real benefits to communities impacted by operations，harnessing opportunities that come from the project and finding other solutions to meet clear needs.

For the West East Pipeline Project，we sponsored UNDP to take the findings of its report and develop key areas for support of poor communities along the route.This will help the partners develop a social investment programme.While Shell remains in negotiation it is sponsoring a number of programmes in areas of need defined by the report.These include contributions to fight AIDS/HIV in Xinjiang，which has the country’s second largest AIDS population.

At a country level we assess our business reach and the social contribution we need to make in addition to our operationally based plans and programmes.In China we concentrate on areas where there are clear country needs linked to our business.We sponsor initiatives on road safety，poverty alleviation，education in renewable energy and sustainable development and capacity building of institutions.

On a global level we make a contribution through the Shell Foundation，an independent grant-making charity，with an endowment from Shell of US$250 million that gives it long-term financial security and independence.It works towards finding sustainable solutions to social and environmental problems linked to energy production and consumption，as well as to harnessing the potential of globalization to enhance the development prospects of vulnerable communities.

In China，the Shell Foundation has spent 2.2 million US dollars.It is sponsoring rice straw gasification trials，a community biomass project in Yunnan and a sustainable agriculture project in Gansu and Inner Mongolia.

China faces a particular challenge of fuelling its fast growth while tackling huge environmental issues created by coal，which supplies 70 per cent of the primary energy demand.It is committed to pursuing a sustainable energy strategy based on diversifying its energy base，developing clean energy sources and clean uses of coal.Shell is working in these areas in China.

Natural gas has a major role to play in China and Shell is involved in several major projects including developing gas in East China Sea.Gas to Liquids - GTL - is another way of using gas to produce ultra-clean products to reduce engine emissions and has potential applications in China.In Thailand，we recently launched a diesel in corporating these products - from our pioneering plant in Sarawak.We have just announced the world’s largest GTL plant to be built in Qatar.

Hydrogen is an even cleaner form of fuel but much further from commercial use.We have opened hydrogen stations in Iceland，Japan and the US and are involved in research.

Gas can also be produced cleanly from coal.Shell’s coal gasification technology has been in development for more than 20 years and has an environmental footprint similar to natural gas.We have a 50：50 joint venture with Sinopec in Hunan，to build a 2，000 ton a day coal gasification plant to supply synthetic gas as feedstock to a fertilizer plant.We have also licensed the technology to six companies.

Renewable energy is one of our five core businesses.China is Shell’s largest solar market in the Asia Pacific region and will continue to grow，particularly its rural electrification markets where Shell is a leading supplier.

A major Shell project to bring electricity to up to 78，000 rural households over five years in the Xinjiang Autonomous Region started to deliver in 2002.Some 8，000 have been sold so far.

We see a clear business case for social and environmental responsibility.

We believe it increases our effectiveness by reducing costs through eco-efficiency，as well as the risks of doing things that might damage our business.

We think it promotes innovation - helping us to understand the business opportunities arising from changing values and life-styles.

We think it is fundamental for our reputation，particularly with our customers.And vital for attracting and motivating the talent we need for success in an increasingly demanding business environment.

In Shell we are committed to growing value for our shareholders by delivering robust profitability and making the best of our competitive edge.But have no doubt that doing so depends on being seen to respond to changing expectations.We don’t just think that contributing to sustainable development is good business.We think it is fundamental for our future.

Thank you.