A Comparison of Shell and BP’s Corporate Social Responsibility Engagements

by

[Name of Student]

[Name of University]

Leadership, Ethics and Communication

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 Introduction

In contemporary corporate world, ethics is synonymous to productivity. The value of

sustainable responsible business, for instance, is exalted to parallel the need for effective

leadership. Corporate social responsibility (CSR), as this sustainable endeavor is often

referred to, captures the general orientation of a company to social accountability. In most

businesses, CSR is a model of productivity in and of its own. It is a built-in and functional

self-regulating mechanism that is targeted at creating the appropriate image for the company.

Fundamental to most CRS models and is the appeal to ethical standards, written or otherwise,

in the laws of the states or countries in which the businesses operate. Inherent too in most of

the CSR approaches are international norms for giving back to the community that houses the

company. Consequently, a company embraces those activities that mark its immediate

responsibility and sound operational ethics.

In most companies, the effects of production activities on the immediate and

extended environment, the impact that the same has on its employees, its chain of consumers,

suppliers, stakeholders and competitors in that order, and the promotion of public interest are

incorporated in an extensive plan of action. Furthermore, and as observed in many companies

globally, the company does or acts in a manner to indicate that it is concerned about and is

encouraging the growth and development of its community. CSRs then must devise

comprehensive programs targeted at eliminating practices that are considered harmful to the

public sphere. In essence, CSR deliberately includes public interest in decision making

towards achieving a balance in the triple bottom line- profit, people, and planet. In

considering CSR a special ethical paradigm in the corporate world, this paper compares the

CSR approaches of Beyond Petroleum (BP) and Royal Dutch Shell (Shell), two multinational

oil companies. In particular, the paper explores their corporate response to the environment,
the effects of their exploration activities as well as their general appeal to ethical standards

and to the public.

Corporate Approach to CSR in Multinational Oil Companies

For multinational oil companies (MNOCs), the challenges for which CSR must be

developed are numerous and more demanding. Concern for climate change and global

warming has reached its peak with most blame directed at anthropogenic causes of the same.

This paradigm hits MNOCs hardest. Claims that, throughout their production lines, MNOCs

cause global warming are perhaps the greatest ethical concern for multinational companies to

date. Oil exploration, it is supposed, adds enormous amounts of greenhouse gases to the

atmosphere and consequently depletes the ozone layer. During production, the distillation

processes is a direct injector of heat onto the atmosphere. This is said to raise atmospheric

temperatures, even if it is marginal.

Throughout the life cycle of petroleum and its by-products, it has been blamed for air

pollution, the heating effect, and the death of flora and fauna in oil spills, among other

detriments. Finally, the preciousness of oil makes it as bloody as many other precious

minerals. Its exploration has caused wars in African and the Middle East. That it is an

inevitable source of energy justifies its exploration and its profitability makes ventures into

oil multinational. MOCs then must reap these benefits but pay handsomely for the corporate

woes arising from their products and activities. Perhaps because of a more conscience-

focused marketplace, the demand for utmost ethical business actions and processes expose oil

companies whose products are sourced globally to much more scrutiny globally than other

regional and national companies. So are new environmental sustainability laws that are

gaining acceptance in developing and developed countries alike. The focus on ethicism in

these companies is therefore more pronounced than before.

 The transnational oil companies have traditionally focused on countering, among

other ethical business grievances, the human rights concerns, concerns for the right of their

employees, stakeholder rights, community relations, environmental protection, business

transparency and corruption allegations. Other ethical concerns include codes and principles

of practice and product stewardship (Frynas, 2005). Their response to these ethical concerns

has therefore been focused traditionally on the development of good corporate practices and

codes of conduct in their ranks, workplaces and subsidiary organizations. They have also

upped their engagement with the society in time to include environmental conservation and

sustainability programs, development programs, educational and information reporting

initiatives as well as in human rights, security and democratic advancement programs.

The footprints of transnational oil companies are most evident in developing

countries. Therein, they have continued to engage in foreign direct investments (FDI),

technology and skill development. They contribute large percentages in government revenues

and initiate developmental programs such as in health, education, commerce, transport,

agriculture, housing and construction. In South Africa, for instance, Shell, ExxonMobil,

ChevronTexaco, BP-Amoco, ENI, Occidental, and TotalFinaElf have engaged in the United

Nation’s initiated Global Compact, and the Global Reporting Initiative (GRI) programs.

Other CSR programs in Africa include promoting the attainment of Millennium Development

Goals, the Voluntary Principles on Security and Human Rights and a host of environmental

sustainability programs. Elsewhere, the transnational oil companies have enjoined in

promoting the Dow Jones Sustainability Index, etcetera.

CSR at Shell

Shell boasts of a comprehensive CSR initiative for which it has had a considerably

successful history. It has initiated excellent programs throughout its subsidiaries and across

the continents. Its recent CSR history is most evident in the activities of the Shell Foundation
in which it incorporated its CSR programs in 2000. Through the Foundation, Shell has made

a variety of social investments globally chief of which are its sustainable development

programs. The sustainable development programs are aimed promoting integrity in the

company’s operations and for maximizing the social and environment benefits of the

company to the communities in which it operates. Particularly, Shell maintains six distinct

programs – the Breathing Space, Embarq, Aspire, Trading Up, Excelerate and Climate

Change- all which are cognizant of the company’s likely effects to the environment and the

communities.

The Shell Foundation has continued to target the poor in its developmental

responsibilities. It has engaged in energy solutions and tackled indoor air pollution as well

and funded programs aimed at reducing greenhouse gases emissions. It also engages in a

number of programs to formulate sustainable solutions. Its contributions to development in

African oil states are the most profound even though the same corresponds to heavy criticism

for the political instability of such states. The protests of the Ogoni since 1995, for instance is

a mark of the influence of Shell exploration in Nigeria (SPDC, 2005 May). In response, the

company has initiated a myriad of developmental activities in northern Nigeria and other

areas in which it operates in Africa. The company has employed in excess of 12,000 persons

as skilled and non-skilled labors in addition to initiating community development

programmes in northern Nigeria.

In other parts of Africa, the company promotes educational development through

scholarships, building of classrooms and provision of school equipment and payment of

allowances to teachers. It has also ventured in transport development: road construction,

building of jetties, and purchase of speed boats. In finance, it has initiated microcredit

schemes and in agriculture, donation of farm implements to farmers and power plants, water

supply, borehole sinking and farmer training. Shell has also donated in health programs and
built hospitals in rural Africa. In other areas outside Africa, Shell has responded to general

needs of the communities in which it operates. In the UK, for instance, it has sustained a 26

year- Shell LiveWIRE program that encourages the youth to be entrepreneurs. The same

program is replicated in an international LiveWIRE program that target youths from 26 other

countries across the globe.

CSR in Shell transcends its activities undertaken by the Shell foundation. It has also

endeavored to straighten its environmental record. Its response to the outrage against the

supposed Brent Spar platform disposal in the North Sea is typical of the company’s response

to public outrages in favor of environmental conservation and sustainability. The company

reserved the intended action under public pressure but sustained the argument that it would

have been environmentally sound to sink the platform (Tan, 2005).

In general ethical practice, Shell has also responded to public outcries. In the

overstatement of its oil reserves in 2004, the company suffered the retribution through lost

confidence in the group’s activities. The company was fined a £17 million by the Financial

Services Authority. An ensuing lawsuit by non-American shareholders was socially settled by

a payment to the tune of $450 million to the shareholders in 2007 (SIMS, 2007). The

company’s renewable energy programs have also received praise from a variety of

commentators.

The company’s environmental pollution intervention has been the most hyped. In the

Niger Delta for instance, the company has acknowledged its role in environmental

degradation through oil spills. It has thus invested in replacing the pipes. Shell has also

responded to compensate victims of oil spills across the oceans chief of which was the

January 15, 1999 Shell tank oil spill in Magdalena, Argentina (Tuodolo, 2009). The company

has also responded to concerns about the health and safety of its workers especially in its UK

North Sea platforms. In enforcing general business principles, the company has set up an
international internet-based facility for whistle blowing. In this platform, alleged violations of

ethical standards and laws are reported. This is augmented by availing a voluntary code of

ethics that pledges transparency, honesty and integrity among its employees in all company

dealings (Shell International B.V, 2007).

CSR at BP

CSR at BP is akin to what Shell does albeit with more inclination to environmental

sustainability than in direct community involvement. BP is equally determined to reorient its

operations to conform to more environmental sustainability. The CSR at BP started with its

rebranding from British petroleum to Beyond Petroleum in 1997 (Frynas, 2005). This

branding came with a new and greater commitment to global energy and environmental

sustainability than just an oil company. Lord John Browne perhaps appears as the most

prominent face in BP’s CSR with his introduction of safety and environmental friendly

innovations.

BP has responded more acutely to the sheer environmental impacts of its activities.

These include innovations and measures to reduce the impacts of its oil extraction,

transportation and refinery to energy use in its operations. It also focuses on measures aimed

at reducing its contributions and other external impact on climate change. It targets the use of

more environmentally friendly products by its customers- the cleanest burning fossil fuel.

The company has continued to report own figures on greenhouse gas emissions, oil spillages,

days lost via injury at work, employee satisfaction, as well as its community investment

activities worldwide.

The company’s policy statement is a commitment to a myriad of wide-ranging and

ambitious ethical business principles. Its reporting is tailored towards illustrating how these

commitments are met even as the profitability of the business is supported. For a long time,

the company’s personal safety report has been commendable. The company also has several
programs for its environmental impact reduction across the world. The reports of these

programs have detailed accounts of how BP has continued to improve human development.

For instance, the company has traditionally targeted the development of women leaders

across Africa and other developing nations since 2000. In South Africa, for instance, the

company has continued to support the economy through technology and capital transfer. It

also provides avenues for marketing the country’s exports in addition to supplying of

accounting and imports for up to 25% of GDP by 1984 (Eweje, 2007). In Angola, the

company has engaged in among other things the development of the education sector through

scholarships. It also funds programs in health awareness and combating AIDS.

In recent times, BP has engaged in a number of programs that respond to

environmental and social concerns. In its attempts to be responsible for its environmental

practices, BP has formulated a vision, “To do no damage to the environment…to find

innovative ways to manage our environmental impact at local, regional and global levels.” Its

approach to implementing this vision is a multi-pronged program that addresses climate

change through lower carbon products and flaring reductions, enhancement of biodiversity,

developments in water usage, and waste and air emissions managements. It also implements a

number of energy efficiency programs in which it set a target for lowering gas emissions

from its operations by 10% in 2010 from its 1990 values. It achieved this target in 2001. It

also reduced its burning of surplus gas and oils (flaring) as well as its emissions from

products, al to respond to concerns about the global environment.

To reduce global emissions, the company has also pioneered the replacement of oil

with gas in hydrogen fuel cells. It has also partnered with private and public organizations to

implement the CUTE (Clean Urban Transport for Europe). Its CSR programs extend to the

use of renewable energy in its ‘beyond petroleum’ position. It has thus focused as much on

wind and solar as its bases of operation and business development.

 Comparing CSR Approaches at the Two Companies

Because CSR is a remedial approach to social concerns, companies should be as

comprehensive as possible in handling social concerns and in manners commensurate to their

contributions thereof. From the foregoing, it is apparent that the Shell approach to CSR is

more comprehensive than the BP approach. There is more evidence in support of Shell’s

activities than BP’s. Furthermore, the Shell CSR strategy is more directed to the right

communities and operations than the BP’s general and limited approach to environmental

conservation and sustainable development. As is evident in its response to the latest oil spill

in the Mexican gulf, BP is ill-prepared to respond to its CSR than Shell did with the

Magdalena scenario. Apparently, CSR in Shell transcends its activities in the Shell

Foundation over and above BP’s “beyond petroleum” vision.

Conclusion

From the foregoing, transnational oil companies not only regard the environmental

effects of their activities but also the general appeal of their activities to the global audience

that monitors and censures such activities. CSR in transnational oil companies also target

activities within the companies but which stir ethical connotations such as management of

employees and the general ethical principles as enshrined in the companies’ corporate

culture. The view that oil companies make more damage to the environment than other

multinationals makes their CSR more comprehensive. CSR at Shell differs from that at BP in

this comprehensiveness. It targets wider social concerns and responds completely to its CSR

needs than BP.

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