Petronas Spells Trouble or Troubled

Petronas.

The name evokes admiration in many Malaysians, for there stands a towering national company; a benchmark and an example for all other GLCs.

Indeed, some go so far as to say that it is Malaysia’s only truly world-class company, up there with the best.

Well … actually, that depends on how you measure “best”:

Shell tops the list of the worlds most sustainable and ethical oil companies for the third year running.

In the 2006 study Shell achieves the highest score of any oil company ever, achieving 89.01%.

This is the result of the third in-depth study measuring oil companies’ compliance with over 280 key areas of sustainability, corporate governance, ethics, social responsibility and transparency by the Madrid-based ethics research and rating company Management & Excellence S.A. [Management & Excellence press release]

The study was conducted on 15 of the world’s major oil companies, Petronas included.

Petronas came out 15th, and you might think that’s not too bad.

Think again.

Petronas’ overall score was 20.15%.

The press release says “fourteen of the 15 companies ranked here publish annual environmental reports”, but doesn’t name the company that didn’t.

But here’s a clue: Petronas had the lowest score of 25% for Environmental Policies.

The second lowest was Chevron, with 67%. The average score was 83%.

For Corporate Governance (where have I heard that before?), Petronas scored 4.17%.

The second worst was Gazprom with 25% (yes, even the corruption and Mafia-ridden Russians got a better score). The average score was 58.61%.

For Transparency, Petronas propped the table with a score of 21.43%. The average score was 67.54%.

For Ethics, the company scored 19.23%, accompanied by Russian bottom-feeders Gazprom (23.08%) and Lukoil (30.77%).

The average score was 73.33%:

Ethics in essence means having and promoting a detailed code of conduct and staying out of trouble.

Companies with low scores, such as Gazprom and Petronas, largely failed to communicate and implement a code of conduct and ethics, although this is among the least expensive ways of gaining points.

Top performers, such as Chevron, Statoil and Total, implemented codes explaining how employees should deal with difficult cases of bribery and conflicts of interest.

Only in one area was Petronas not last — sponsorships, where the company came in second last with a score of 42.86%. But that was still far off from the average score of 72.74%.

So there you have it.

Our national pride and joy.

By far, the least ethical, least transparent organisation with the weakest corporate governance among the world’s top oil companies.

The Government and Petronas owe us an explanation.

ps : Just so you know, this isn’t to backfire Petronas for not offering me an interview   ❗

pss : Thanks to Aisehman (Mar ’06)