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Case Study: Shell International

Providing due diligence advisory services for sustainability and Health, Safety and Environment (HSE) related issues of a proposed US$12 billion biofuels joint venture

Background

Shell International Petroleum Company Limited (Shell) and Brazilian company, Cosan S.A. (Cosan), intend to form a joint venture (JV) which would:

  • produce and commercialize ethanol, sugar  and power from sugar cane
  • distribute and sell ethanol, and industrial and transportation fuels to customers through a network of about 4,500 retail outlets in Brazil
  • explore business opportunities to produce ethanol and sugar elsewhere in the world.

Our Approach

Shell appointed ERM to provide a detailed review of sustainability and HSE issues in relation to the operation of Cosan and the future JV.   The output of which informed the valuation, the JV agreement and the business plan for the proposed JV.

The project team comprised over 40 people from 10 locations across the world completing site level reviews of:

  • 23 mills (including ethanol plants and CHP facilities),
  • owned and third party production land, and
  • more than 1,700 retail site and 40 depots.

The scope included a governance review of Cosan’s corporate procedures, systems and assurance mechanisms, including risk management and commitment to the sustainability related issues agenda.  In parallel, ERM supported Shell team in engaging with key stakeholders to gauge their response to the proposed JV and to inform the scope of issues for assessment.

ERM was asked to assess the proposed JV’s sustainability practices and performance against the international best practice standard for sustainable sugarcane production – Bonsucro.  This formed a core element of the due diligence and involved the development of a detailed action plan to address gaps identified.

Benefits and Value

ERM helped Shell carry out a detailed stakeholder engagement program as part of the overall due diligence program to help identify issues, perspectives and build trust with key stakeholders in important markets.

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