Shell A Look Inside its Unethical Practices

By Sidra, John, & Raymon

About Shell
Royal Dutch Shell plc, commonly known as Shell is headquartered in The Hague, Netherlands. Shell is a global group of energy and petrochemical companies. Has operations in more than 90 countries and produces the equivalent of 3.1 million barrels of oil per day. Their aim is to meet the societys energy needs in ways that are viable concerning economical, social, and environmental factors.

Division of Labour
Consists of a variety of different managerial levels and types. Contains an authoritative upper management that either directly contributes to the production of the companys products and services, or works in specialized areas. Middle management made up of staff managers working in specialized support areas such as accounting, marketing, human resources, and engineering. Lower management is submissive to higher levels consists of line managers directly contributing to Shells oil extraction, distribution and sale of products.

Hierarchy of Authority
Upper Management Consists of the Executive directors, the CEO, CFO, COO and EVPs, who posses either a general or specific function, depending on their title. For this reason, upper management consists of both line and staff managers.

Middle Management Consists of Shells VPs, who interpret direction from upper management. Most of these managers are staff managers, working in specialized areas, and therefore are considered to be functional managers.

Lower Management - Consists of mostly line workers who directly contribute to the production of Shells products and services. They work in many functional areas of the company, and are not considered in the decision-making aspect of the company.

Bureaucratic Management Theory

Large Organization Tall hierarchal structure - Strong lines of control Authoritarian approach - orders taken from direct superior Standardized operating procedures e.g. Code of Conduct, Code of Ethics and their manual of General Business Principles

Ethical Issues
Caught in a multi-billion dollar securities fraud hired a woman who coincidentally worked for the Bush administration Accused of greenwashing the deceptive use of green marketing to promote products. Price Fixing- involved in price-fixing with a number of companies. Although Shell was fined, it did not deter them from engaging in this sort of behaviour. Higher employee fatality rate than any of its competitors.

Ethical Issues (Contd)

Accused of heavy pollution involving third world countries (major oil and gas leaks increased from 61 to 85 in the 1990s) Gas flares in Nigeria = health risk Involved in money-laundering associated with arms contracts in Saudi Arabia, which has helped fund terrorism. Reportedly sold one of their contaminated sites to a housing development.

Shells Commitment to Improvement

Express tremendous commitment to reducing their carbon footprint in 6 major ways: 1) Increasing the efficiency of their operations 2) Establishing a wide capability in capturing and storing CO2 3) Continuing research and developing new technologies 4) Developing better sources of energy (natural gas)

Shells Commitment to Improvement (Contd)

5) Providing products and services that use less energy and emit less CO2 6) Working with governments to advocate more effective CO2 regulation. Prevent spills by practicing an oil spill emergency response Pioneered a new technology dubbed GTL, which produces a cleaner liquid fuel derived from natural gas Employ over 30,000 technicians to innovate new solutions Listen and address the expectations of local communities

Quick Facts
Spent over $2 billion over the past 5 years on renewable energy technologies. Reduced greenhouse gas emissions by 35% in 2009 compared to their 1990s levels. Spent $13 billion on locally owned companies in low and middle income countries. Spent $132 million on social investment programs in 2009 alone.

Shells Stakeholders
Shareholders of Shell (Internal*)- Lost their investment if the general public realized the unethical practices Shell was utilizing. Residents of Berkshire (External*) -Health was put at risk due to harmful radiation caused by Shells toxic chemicals buried underground. Communities in Nigeria (External*)- Health was compromised due to the flaring of harmful chemicals conducted by Shell, which was distributed in the atmosphere.

Shells Stakeholders (Contd)

Ethical competitors of Shell (External*)-Lost clientele due to Shell price fixing with other oil companies. Customers (External*)- Forced to pay extremely high prices during Shells price fixing period, as they had no other alternative. Employees (Internal*)- Compromised their safety by working in unsafe conditions.

Shells Social Responsibility Strategies

Up until recently, Shell has opted to use an obstructionist strategy Behaved illegally and unethically (Practiced price-fixing, manipulated stakeholders, and covered up problems). Today, Shell has shifted into using a more accommodative strategy. Evident with their promise of reducing carbon emissions and preventing spills, reducing water use, and creating more energy efficient products.

Importance of Social Responsibility

Since oil companies deal with non-renewable energy resources, it is vital that they practice environmentally friendly methods. Since non-renewable resources exist in a fixed amount and are consumed much faster than nature can create them, oil companies such as Shell need to take precaution when regulating the amount of oil being used If Shell were to continue its unethical practices, our society would collapse, for we are so dependant on oil products. The unethical production of oil can further harm our environment through air and water pollution, worsening the state of the planet.

Our Solution to Shells Ethical Issues

Hiring a government official to work for the companys interests: Avoid hiring a person who is working for the government as they are supposed to regulate our company, not help corrupt it. Green washing: Avoid showcasing false advertising and enforce hefty penalties upon any worker that does so. Forming Price-Fixing Cartels: Perform research to find the most profitable price instead of abiding by illegal means to acquire this. Largest Employee Fatality Rate: Create a safer working environment and carry out extensive forecasting of what might go wrong in order to be better prepared in the event of an emergency.

Our Solution to Shells Ethical Issues (Contd)

Pollution (Gas flaring & gas and oil leaks): Develop environmentally friendly machinery to reduce gas emissions. Practice simulations to find the best solution in case of a spill. Increase inspections & improve technology. Money Laundering: Avoid bartering agreements between countries that use unethical practices. Barter with nations that will utilize your money for the good of society. Selling contaminated sites to housing development: Inform all victims of the community, reimburse them for damages and attempt to decontaminate the site.

Shell Clip
http://www.shell.com/home/content/aboutsh ell/our_strategy/shell_global_scenarios/scena rios_videos/video_2/

Works Cited (MLA Format)

"Boycott Shell/Free Nigeria: The main issues." Essential Action. N.p., n.d. Web. 2 Oct. 2010. <http://www.essentialaction.org/shell/issues.html>. Donovan, John. " Toxic ethical ranking of Royal Dutch Shell Royal Dutch Shell plc .com." Royal Dutch Shell plc .com. N.p., n.d. Web. 3 Oct. 2010. <http://royaldutchshellplc.com/2009/02/17/toxic-ethical-ranking-of-royal-dutchshell/>. Donovan, John. "Shell, Saudi Arabia, Arms-for-Oil and Radioactive Poisoning Blogger News Network." - Blogger News Network. Web. 04 Oct. 2010. <http://www.bloggernews.net/118913>. "Environment & Society - Canada." Shell Canada - Canada. Web. 03 Oct. 2010. <http://www.shell.ca/home/content/can-en/environment_society/>. Gribben, By Roland. "Shell Employee Safety Royal Dutch Shell Plc .com." Royal Dutch Shell Plc .com. Web. 04 Oct. 2010. <http://royaldutchshellplc.com/category/shell-employee-safety/>. "Official Rules and Regulations - Global." The Shell global homepage - Global. N.p., n.d. Web. 4 Oct. 2010. <http://www.shell.com/home/content/ecomarathon/about/rules/companies>

Works Cited (Contd)

"Shell Accused of Greenwashing, Again Environmental Leader Green Business, Sustainable Business, and Green Strategy News for Corporate Sustainability Executives." Environmental Leader Green Business, Sustainable Business, and Green Strategy News for Corporate Sustainability Executives. Web. 04 Oct. 2010. <http://www.environmentalleader.com/2009/02/04/shell-accused-of-greenwashing-again/>. Shell Canada - Canada." Shell Canada - Canada. N.p., n.d. Web. 4 Oct. 2010. <http://www.shell.ca/>. "SHELL CONNECTION WITH AL-YAMAMAH BAE CORRUPTION SCANDAL." Royal Dutch Shell Group .com Home Page. Web. 04 Oct. 2010. <http://www.shellnews.net/rayfoxwebsite/ShellConnection-Al-Yamamh-BAE-scandal.html>. "Shells intimacy issues - Ethical Corporation." Ethical Corporation. N.p., n.d. Web. 3 Oct. 2010. <http://www.ethicalcorp.com/content.asp?ContentID=2753>. "Shell Oil in the McSpotlight." M c S P O T L I G H T. N.p., n.d. Web. 2 Oct. 2010. <http://www.mcspotlight.org/beyond> Wright, Robert. "Shell Caught Again in Bitumen Price Fixing Cartel Royal Dutch Shell Plc .com." Royal Dutch Shell Plc .com. Web. 04 Oct. 2010. <http://royaldutchshellplc.com/2010/03/05/shell-caught-again-in-bitumen-price-fixingcartel/>.