MGMT1001 COMMUNICATION IN BUSINESS

ASSESSMENT ONE: CRITICAL ESSAY

Student Name

Tahnee Tsen Tze Ting

Student ID

18907681

Email

t.tsen2@student.curtin.edu.au

Tutors Name

Mr Peter Lim

Tutorial Day and Time

Tuesday, 8:00am- 10:00am

Name of Company

Royal Dutch Shell

Semester/ Campus Details :

Semester 1, 2016 Sarawak

Title

Royal Dutch Shell: A review of the

companys social performance in regards to environment

and human rights
Word Count

1800 ( without cover sheet and reference list)

Royal Dutch Shell: A review of the companys social performance in regards to

environment and community development

Introduction
Since the 1980s, Corporate Social Responsibility (CSR) has been viewed as an important
subject. CSR has moved past local or national arenas and become the subject of global attention.
(Marchant, 2014) Royal Dutch Shells subsidiary, Shell Petroleum Development Corporation
(SPDC) and its operations and corporate social responsibilities in the Nigeria have since then
become the centre of focus around the world. (Marchant, 2014) Royal Dutch Shell plc or simply
known as Shell is a worldwide group of energy and petrochemical companies that have been
established in more than 70 countries. (Shell Global, 2016) Shell is one of the six super majors
in the oil and gas industry, (Boyce, 2014) and it is the second largest oil company overtaking
Chevron. (Katakey, 2016) Fortune.com ranked Shell as the third largest company in the global as
in 2015. (Fortune, 2016)

Even though Shell was deemed to be a pioneer in corporate social responsibility, however, the
company continue to be a constant aim of civil society activism and legal proceedings concerned
with unethical practice. (Hennchen, 2014) This essay will scrutinize Shells performance and its
impact on society in regards to environment and human rights, giving certain focus to its
stakeholders. In this paper, the main stakeholders involved are the local communities in Nigeria
and shareholders of the company. The review of this essay will also try to discover whether
Shells positive impacts on society are enough to compensate for its negative impact as a result
of the companys unethical actions.

Cases against Shell

One of the most controversial environmental issues that Shell is infamous of is the Niger Delta
oil spills. The Delta region is a vital natural habitat and an ecosystem that continues to provide
the basic necessities of life for millions has been affected badly by Shells continuous
exploration and production. And because of that Shell has been strongly criticized. (Burger,
2011)

According to Shell, the main reason of the 75% of oil spill incidents happened is because of
third-party intrusion due to sabotage and oil theft. (Burger, 2011) But is it true that the oil
leakage is wholly caused by sabotage and oil theft? According to Amnesty International (2016),
their research evidently shows that Shells own equipment has been to blame. And in August
2011, there were two massive oil leaks in Ogoniland in 2008 and 2009 respectively, and the
court decided that Shell had to accept legal liability for these two oil spill incidents as a
consequence of its own equipment malfunction. (Hennchen, 2014) Through this, it can be shown
that Shell is using Spin Doctor to cover up certain stories.

According to a farmer from the Kegbara Dere village, Barine Ateni, she described that all the
aquatic life in the river, their farmland and every else living things there are destroyed as a result
of the oil leak happened in her community in 1970. Shell claimed to have cleaned up the mess
not only once but twice, yet, when Amnesty International paid a visit to the site in August 2015
they discovered that the soil around Bomu Well is still encrusted with oils which obviously have
been accumulated for 45 years since the oil leak incident. (Amnesty International, 2016) And
therefore, many non-profit organization have slammed Shell for its hypocrisy as it advertised

itself to be green and that the company is committed for sustainable development whilst their
action showing otherwise, where Shell has failed to clean up the mess properly. This action by
Shell is known as Green washing. (Center for Constitutional Rights (CCR), 2016) Besides that,
Shell falsify the data of oil spills and keep on delaying the cleaning campaign. Shell admitted
that it had underestimated the volume of oil spills in the region as shown in the court documents.
Shell kept on emphasizing that the volume of oil spills impacting the Bodo community was only
4,000 barrels of oil, while the volume of oil spilt in the region shown in expert evidence is of
500,000 oil barrels. (Amnesty International, 2016)

The main stakeholder that is severely affected is the local communities in Niger Delta especially
the residents of the Ogoniland. To drill for oil, Shell has since then built pipelines across the
peoples farmlands and in front of their homes in 1958. The people of Ogoniland have been
forced to live in a gas flaring condition, when enormous amount oil leaks from these pipelines.
This accident has covered the land with oil, which suffocated and killed all the aquatic life.
(Essential Action, 2016) The oil spills affected the sensitive habitats for birds, fish and other
wildlife, leading to a huge loss of biodiversity, causing the area to impoverish. The water sources
are also polluted badly where the people depend on for drinking, cooking, bathing, laundering
and fishing. (Center for Constitutional Rights (CCR), 2016) As the oil spills have damaged the
fisheries and farmland that the community depends on for their livelihood, many of them cannot
work anymore. (Stein, 2015) The poisoning of the land and water not only leads to a devastating
economic but also a serious health consequences for the people. (Essential Action, 2016)
Because of the unethical practice, Shell was forced to leave Nigeria in 1993. (Phys.org, 2012)
This has impacted on the shareholders as Shell Nigeria is one of the largest oil producers in the

Royal Dutch/Shell Group. (Essential Action, 2016) And again in 2015, Shell was ordered by the
court to compensate the Bodo farmers for 55 million, instead of maximizing profit for the
shareholders, the company is creating liabilities. (Amnesty International, 2015) Amnesty
International advices Shells investors that if Shells continues to fail to inspect and report on oil
spills properly, potential financial liability of the company will arise and later on will affect the
maximizing profit for the investors. (Amnesty International, 2015)

Cases for Shell

Human Rights Compliance Assessment (HRCA) tools established by Shell, provides a step-bystep method to evaluate all potential risks of human rights violations. Employees of Shell are
offered training courses on the companys Business Principles and Code of Conduct. There is
also an exceptional course for employees with managerial post to comprhend their
responsibilities and perform action to support human rights (Jacoba Schouten 2010).

In 2000, Shell established the Shell Foundation, an independent charity focused on poverty and
environmental charities. Community development projects were brought indirectly through the
Foundation. Shell spent about US$56.8 million in 2010 on community development projects in
Niger Delta. It is one of the largest corporate social responsibility portfolios operated by a private
company in Sub-Saharan Africa. (Hennchen, 2014)

Every year, Shell perform various social investment projects, focusing on community and
enterprise development, education and health. Much of this is done in partnership with the Niger
Delta Development Commission (NDDC). In 2014 alone, Shell-operated ventures contributed

$202 million to the NDDC as required by law. Some $112 million was directly invested by the
SPDC JV and SNEPCo in social investment projects. Collectively, this makes Nigeria the largest
concentration of social investment spending in the Shell Group. (Shell, 2015)

Shell also did a lot for their host communities in regards of education and health. For instance,
they sponsor at least 17,000 students on a Shell scholarship every year. And in 2014, $14.8
million was invested in scholarships and other education programmes. They also have a number
of economic empowerment projects targeted at improving the lives of the people in Niger Delta.
There are 27 health facilities in Niger Delta that is supported by Shell. Shell also set up The Obio
Cottage Hospital in Port Harcourt in 2010, and it is one of the most visited health facilities in the
region. This is because Shell introduced a community health insurance scheme. (Shell, 2015)

In 2006, Shell introduced a novel approach of working with communities which is known as the
Global Memorandum of Understanding (GMoU). This GMoU represented a significant shift in
the companys approach, placing emphasis on more transparent and accountable processes,
regular communication with grassroots organizations and greater sustainability and conflict
prevention (Shell 2012). Because of the introduction of this GMoU model in 2006, Shell won
the Sustainable Stakeholder Engagement award in 2015 (Shell, 2015). Agreements for 40 GMoU
clusters covering 387 communities in the Niger Delta had been signed as at the end of 2014

Conclusion
If Shell wanted to maintain its license to operate, the company would have to take its public
responsibilities more effectively and sincerely than it has done since the 1990s especially in

terms of protecting the environment. From external point of view, yes, even though Shell put a
lot of efforts in developing communities in regards of human rights, its efforts in protecting the
environment in Nigeria is not sufficient. Not many evidences that can support that Shell has took
a sincere approach to clean up the oil pollution. Shell has again and again failed to clean up the
oil spills properly by falsify the data of oil spills and delaying the campaign. Therefore this is one
area where Shell shall improve in.

Shell should not be the only one to be blamed on for the lack of clean-up. Nigerias oil spill
regulators are also responsible for this. This is because it was investigated that three out of four
oil spill sites, government regulators had actually approved that Shell has cleaned up according
to the regulatory standard where actually Shell did not. (Stein, 2015) Therefore, because of the
complex nature of the environment of Nigeria where Shell operates in, the fundamental problems
in the region cannot be addressed by Shell alone, as the country itself is corrupted where law and
regulations are not enforced accordingly. (Marchant, 2014)

Unfortunately, regardless of Shells poor performance in protecting the environment in Nigeria,

customers will still purchase products from Shell as oil & gas plays an vital role in our lives, for
example, car petrol. This can be proven as even though Shell is surrounded by controversies, it
still manages to be the second largest oil company in the world. (Katakey, 2016)

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