Following the North Star:
navigating companies
towards a good reputation
Lex Mundi Summit,
Amsterdam, the Netherlands
Donny Ching
Legal Director, Royal Dutch Shell plc
May 19, 2016
Donny Ching speech at the 2016 Lex Mundi Summit in Amsterdam
Donny Ching was appointed Legal Director of Royal Dutch Shell
plc on February 10, 2014.
He was previously General Counsel for Shell’s Project &
Technology business, based in Rijswijk, the Netherlands.
Donny graduated with a law degree from the University of
Southampton in the UK and was admitted to the Bar of England
and Wales in 1988. He joined Shell in Australia in the same
year and re-qualified as a lawyer in Victoria, Australia, in 1989.
He worked initially in the Resources business before moving on to
downstream and corporate work in Shell Australia.
In 1992, he moved to Shell Hong Kong to work on the Nanhai
petrochemicals project in China, as well as other smaller joint
ventures and projects that marked Shell’s re-entry into China. In
2000, Donny moved to London in the UK where he first worked
on some chemical divestments before moving to support Shell’s
then Gas & Power business. He helped to set up Shell’s global
liquefied natural gas (LNG) trading business and on projects such
as Pearl GTL in Qatar.
Donny moved to Singapore in 2004 as Associate General
Counsel for the Gas & Power business in the Asia-Pacific region.
His role included supporting Shell’s growing LNG trading business
and LNG projects such as Sakhalin LNG and Gorgon LNG. In
2008, Donny became Head of Legal for Shell Singapore,
responsible for legal support to the Downstream business in Southeast Asia. He became General Counsel of Projects & Technology
in June 2011.
Donny was born in Malaysia and is married with two daughters.
In his spare time, he enjoys tennis, skiing and cooking.
.
Donny Ching speech at the 2016 Lex Mundi Summit in Amsterdam
A good corporate reputation is becoming harder to earn and easier to lose. In this
speech, Donny Ching says that General Counsel have a special opportunity to help
build and maintain their company’s public standing. As legal advisers they have the
independence, insight and influence to help set the right course for their business.
But to keep their place at the top table where key business decisions are made, they
must always understand what their advice means for the bottom line.
Donny Ching was speaking in response to a speech delivered by Felix Ehrat, Group
General Counsel for Novartis, on the “Scope and role of the General Counsel in
building and protecting the enterprise’s reputation”.
Ladies and gentlemen,
Thank you. And thank you to Felix for a very
thought-provoking keynote speech.
I hope my perspective can add something
to the excellent points covered.
I want to tell you a story. It is a true story.
It is about a British doctor called John
Walton.
As a young medic Mr Walton was moved
by the mother of a patient who suffered from
a muscle-wasting disease. She told him: “I
watch my son die a little every day.”
Mr Walton dedicated his life to helping
people like that patient. He made scientific
discoveries that saved tens of thousands of
lives all over the world.
Not only that, he also raised many millions
of pounds to fund research and to help
families cope.
In recognition of his extraordinary work he
was knighted. He became Sir John.
And his local newspaper marked the honour
with an article. The headline amused Sir
John greatly.
It read: “Captain of the local golf club is
knighted”.
Reputation.
As Sir John discovered: it is very difficult to
control how others see us.
Shell’s reputation
As I am sure you will appreciate, Shell
works hard to build and maintain its
reputation. As a result, the Shell Pecten is
one of the world’s most recognisable
brands.
But when you look at how Shell’s reputation
has emerged from some of the big
challenges over the years, fairly or unfairly,
it hasn’t always been great. I’m thinking of
Brent Spar in 1995, of 2004 when it
emerged we had overstated our reserves
and of Nigeria, where operating conditions
can be especially difficult. I’m thinking of
our efforts to explore for oil and gas in
Alaska.
Shell’s high-profile brand means our
reputation is always under scrutiny.
In some countries we enjoy a strong
reputation. In the Philippines our logo has
even appeared on banknotes.
In other countries that reputation is often
under attack.
But, for Shell, the work we put in on
reputation is worth the effort.
If the company does not strive for a good
reputation then we lose trust. Without trust
governments don’t want to do business with
us, other companies don’t want to partner
with us and customers walk away.
It is fair to say that, in a world of car
emissions scandals, banking crises and
“When you look at
how Shell’s
reputation has
emerged from some
of the big
challenges over the
years, fairly or
unfairly, it hasn’t
always been
great.”
Donny Ching speech at the 2016 Lex Mundi Summit in Amsterdam
WikiLeaks, public trust in big companies is
weak and getting weaker.
Nowadays, reputation is harder to win. And
much easier to lose.
In this context it is not enough to simply say:
“Trust us.”
Trust.
Reputation.
These are not simply messages to be
broadcast.
They are the outcomes that result from
consistently ethical behaviour. They result
from strong company performance that is
delivered safely and responsibly. They come
from the way our operations create shared
value in society – the jobs, the development,
the essential energy products for progress.
Trust and reputation are what a company
can hope for if it always follows good
principles.
And, in my view, the unique position of
today’s General Counsel means they have a
special responsibility to help companies
navigate towards a good reputation. That
responsibility applies to ethics. And, as Felix
highlighted, it applies to business outcomes.
General Counsel are empowered by their
independence, their insight and the
influence they enjoy. They must use that
power well.
A personal perspective
I can trace my perspective back to a
personal battle I had over the nature of
reputation.
I joined Shell in Australia almost 28 years
ago after being called to the Bar in
England. I therefore had to requalify, which
meant taking some classes at the renowned
Melbourne University.
At that time in Australia, and it was the
same all over the world, there was a huge
wave of protests about apartheid in South
Africa.
At a time when many other companies were
leaving South Africa, Shell had decided to
stay. Each time I went to the university, I had
to run the gauntlet of people who were
protesting about Shell.
“Trust and
reputation are what
a company can
hope for if it always
follows good
principles.”
Running that gauntlet wasn’t easy. People
were emotional – they were angry at the
companies they thought were contributing
the problems in South Africa. I have to admit
that I had some sympathy for their point of
view.
But Shell believed that staying in South
Africa was the right thing to do. The
company felt it could have more impact, be
more of a force for change, if it remained.
There was a conviction in the company that
we were not just there to make money.
There was a genuine belief that it was worth
taking a short-term reputational hit to gain
long-term influence towards the right
outcome for the country.
Now, I’m not trying to claim that Shell
brought down apartheid, but as I watched
how things unfolded I came to see that
Shell’s long-term perspective on reputation
was right. It became my own.
It was one of the very first things that drew
me into Shell. It is one of the things that
keeps me at the company still.
I truly believe a company must hold on to
the long-term view, the good principles that
guide it. I think of those guiding principles
as our North Star.
They may not be for General Counsel to set:
as important as we are, we do not get to
throw stars into the sky! But we must
certainly help to make sure those principles
are followed.
“I truly believe a
company must hold
on to the long-term
view, the good
principles that
guide it. I think of
those guiding
principles as our
North Star.”
Donny Ching speech at the 2016 Lex Mundi Summit in Amsterdam
The role of General Counsel
Now I said that General Counsel have a
unique position, which means they have a
special responsibility when it comes to
reputation and managing the paradoxes
mentioned by Felix.
Let me explain what I mean.
Three things mark out General Counsel for
this role.
The first is independence. As lawyers we
are always looking at both sides, always
taking into account the other person’s view.
This gives us perspective.
The second is insight. Lawyers today are
involved in every major business decision.
This gives us knowledge.
The third is influence. Today’s General
Counsel have a seat at the top table. This is
a seat we must earn the right to every day
by always keeping in mind business
outcomes and the bottom line. This seat at
the table gives us the power to use our
independence and knowledge to guide the
business.
I should tell you a bit about how it works at
Shell.
It is a company that employs many
engineers.
That makes for a very logically-minded
organisation which believes a solution exists
to any given problem. As a company we
tend to believe we can convince people
simply using facts and logic.
So Shell really needs a person who can
say: “No, that won’t work this time.”
As an example, take this polar bear. [Slide
of the polar bear Greenpeace put outside
the Shell Centre in London]
Last year Greenpeace put this impressive
beast on the road outside our UK
headquarters.
The organisation was already the subject of
an injunction preventing its supporters from
trespassing on Shell property. The injunction
dated back two years to when a court had
ruled its protesters had acted dangerously. It
was intended to prevent them putting
themselves and others in harm’s way.
The bear itself was on a public road so was
not in breach of the injunction. But some of
the protesters harassed our staff as they
came to work and had put some posters on
our walls and windows. They had therefore
deliberately violated the injunction.
You may recall that Greenpeace had been
quite a thorn in our side while protesting
against our activities in Alaska. There were
stunts and they applied pressure on our
business partners like Lego.
Some people in Shell therefore saw the
polar bear as the last straw… a problem in
need of a solution. Some saw the injunction
as that solution.
But for me, Shell’s North Star here was not
about stopping the protest. It was about
safety.
Yes, they were in technical breach of the
injunction, but was there a safety or security
risk? No, there was not.
So was it appropriate to enforce the
injunction? No, it was not.
When I looked at the potential business
outcomes the choice was clearer still and,
on this point, our communications experts
agreed wholeheartedly.
If we took Greenpeace to court, they would
generate huge publicity.
They would have won, whatever the result
of the case.
Donny Ching speech at the 2016 Lex Mundi Summit in Amsterdam
Shell decided to leave the protesters alone.
Eventually, they went away.
Keeping faith
But these decisions rarely feel so clear at the
time. It is all too easy for things to go
wrong.
We do not have to look hard to find an
example.
Take General Motors. It spent years denying
there was a problem with the ignition switch
on some of its vehicles – a problem that, it
was alleged, could cause road accidents.
The claims turned out to be true. The
switches were faulty.
GM eventually recalled nearly 30 million
cars and paid $900 million to settle
criminal charges.
And last year the company admitted some
of its employees had known about the issue.
The fault has been linked to numerous
deaths.
I was guided by our North Star: that we do
not put people in harm’s way. I advised that
we should recall and we recalled.
We faced a reputational challenge and we
acted in the right way, in a way that
protected, and possibly enhanced, our
reputation.
Without that North Star, our guiding
principles, we could easily have made
another decision. A wrong decision.
The say-do gap
That broader perspective is, I believe,
becoming even more important in the face
of an emerging trend I have noticed.
In order to actively manage their reputation,
some companies are making bold
statements about what they are doing.
Maybe it is about their great compliance
programme, their focus on human rights,
their position on the environment or climate
change.
The coverage of the story in the media has
been… unforgiving.
This reputational rhetoric must, however, be
backed by actions. Otherwise, you are
creating what I term a “say-do” gap.
To take a very different example from my
experience in Shell.
You fall into that gap when your investors or
customers realise that you did not live up to
what you promised or, worse still, that you
never intended to. You can imagine the
myriad of claims that could be made in
these scenarios.
20 years ago we were faced with a recall
decision. There was a fire in Hong Kong
involving an LPG cylinder sold by Shell and
a woman had been injured. We
investigated but could not establish whether
the cause was user-error or a fault with the
equipment.
We had to decide. Do we immediately
recall because of the possibility of a fault
with the attendant costs, business disruption,
impact on reputation and potentially create
panic in the community? Or do we first
gather evidence?
As General Counsel, you have to challenge
and probe this growing desire to make a
bold statement externally.
Is your company matching its claim now?
How is the company going to follow
through on these commitments? Is senior
management aware of the potential
limitations that making promises will impose
on your business?
You may still end up making the bold
statement but you will at least be aware of
what it takes to live up to it.
“Reputational
rhetoric must be
backed by actions.
Otherwise, you are
creating what I term
a ‘say-do’ gap.
You fall into that
gap when your
investors or
customers realise
that you did not live
up to what you
promised or, worse
still, that you never
intended to.”
Donny Ching speech at the 2016 Lex Mundi Summit in Amsterdam
You won’t fall into a “say-do” gap.
for granted. We continually need to prove
that we deserve our place.
Going back to the Socrates quote used by
Felix: “The way to gain a good reputation is
to endeavour to be what you desire to
appear”.
For we influence not just legal outcomes, but
the future of the business as a whole.
I think Socrates got it absolutely right,
especially on the sequence: it is better to
first do what you want to be, than to say
what you want to be and hope that you can
live up to it.
Now, I started this speech by telling you
about John Walton.
Conclusion
I will say just a few more words.
As General Counsel you have insight and
you have independence. And these have to
be applied both to ethics and to business
outcomes to help foster good company
performance.
When leaders come up with proposals they
have, by definition, a vested interest.
Human nature is human nature. It is very
difficult to be committed to something and
also to be truly objective.
My role – our role – is to be the voice that
challenges. We can challenge vested
interest, we can challenge entrenched ways
of thinking.
But insight and independence are nothing
without influence and General Counsel
should never take that seat at the top table
This is reputation
And I’d like to end by returning to him.
It was 1979 when Mr Walton became Sir
John, apparently for his services to putting
greens rather than for his medical brilliance.
Ten years after being knighted he was
made a Lord.
“My role – our role
– is to be the voice
that challenges. We
can challenge
vested interest, we
can challenge
entrenched ways of
thinking.
But insight and
independence are
nothing without
influence and
General Counsel
should never take
that seat at the top
table for granted.”
He died a few weeks ago and he was
rightly mourned as a giant of medical
science and a wonderful example of human
kindness.
This time his local paper's headline
read: “Tributes paid… to pioneering
neurology expert… Lord Walton.”
Now there was a man who followed his
North Star.
That… is what I call… … … a reputation.
That is what I aim for at Shell.
It is what I believe all General Counsel
should aim for at their companies.
Thank you.
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