1. Introduction
1.1 Background
The dispute of Royal Dutch Shell’s oil contamination in Nigeria case is widely acknowledged as a turning point of CSR evolution worldwide as the voices of societies could be a major drive to either support or damage a company’s reputation.
Corporate Social Responsibility is becoming a key initiative and an essential tool in the growth of MNEs. Royal Dutch Shell was one of the first major oil companies to weave CSR into its business philosophy. Nevertheless, the implementation and the philosophy are not necessarily in alignment as they were designed to be. Certainly this was the experience of Shell who discovered a number of paradoxes inherent within the realities of this concept when it was criticized for its dispute of irresponsible acts in Nigeria.
1.2 Aim
This report is aimed to provide analytical contributions on Royal Dutch Shell efforts putting into CSR activities and its response to the case in Nigeria. This report is divided into three main parts; Part One will be the overview of Shell as well as its portfolio. Part Two and Part Three will examine Shell’s CSR principles and the implementation. While Part Two will focus on its philanthropy, ethnic codes, risk management and CSR contributions, Part Three will be the critical analysis of Shell’s Nigeria dispute in which leading to major changes in corporate cultures.
1.3 Scope
This report examines the essences of Royal Dutch Shell’s CSR by drawing CSR theories and corporate practices. It does not discuss the extent of CSR impacts to the corporation in financial terms in which would be an interesting topic for research in the future.
2. Overview
Royal Dutch Shell plc, widely recognized as Shell, is a global group of energy and petrochemical companies of Dutch and British origins. The headquarters are located in The Haugue, Netherlands with its registered office at the Shell Centre in London, UK. (Shell Official website: Shell at a Glance 2010) The merger of ‘Royal Dutch’ and ‘Shell’ happened in 1907 with the proportions of shares are divided to 60% Royal-Dutch; 40% Shell. Despite merging their interests the company entities remain separate: One can buy shares in Royal-Dutch or in Shell-Transport, but not in the Group as such. (Corporate Watch website n.d.) Also, the company is operating in over 140 countries.
The company’s main business is the exploration for the production, processing, transportation, and marketing of hydrocarbons. (Shell website 2010) Over recent years, Shell has successfully become one of the most progressive companies within its sector. Since it withdrew from the Global Climate Coalition (GCC)[1] in 1998, Shell has put tremendous efforts into branding itself as a caring, green company. (Corporate Watch website n.d.) After the company publicly admitted being responsible for the contamination of farms in Sao Paulo, Brazil and was heavily criticized for its careless acts causing serious damage to environments and health (Suassuna 2001) , Shell has attempted to revoke its reputation and portray itself as a good corporate citizen by joining the ‘greenwash’ campaign and investing a large number of its income into CSR activities for instance $1.7 billion was spent on CO2and renewable energy technologies over the last 5 years. (Shell Official website: Our Business 2010)
3. Portfolio
3.1 Brand
The Shellbrandis one of the most recognizable logos in the world. The �pecten” is publicly known as it was designed after the giant scallop- ‘Pecten Maximus’ which the logo was designed based on the work of Raymond Loewy and was introduced to the world in 1971. The yellow and red colors used were inspired by Spain’s flag connecting the fact that service stations of Shell in its early years were built in California which pertaining strong ties with Spain at that time. In 2004, the slash in �Royal Dutch/Shell” was removed, aligning with the legally merger of the Royal Dutch and Shell from two separate entities to one single corporate. (Shell Official website: The History of the Shell Logo 2010)
3.2 Business
The management of a vertical integration combining advancement of technology with commercial expertise is Shell’s primary business today. This integration applies to all stages of productions from exploration (the upstream) to distribution and marketing (the downstream). Royal Dutch Shell businesses can be separated into five core businesses which are (1) exploration and production, (2) gas and power, (3) refining and marketing, (4) chemicals as well as (5) trading and shipping. Royal Dutch Shell stated clearly that its strategy and priorities for the future are “more upstream and profitable downstream.” (Shell Official website: Our Business 2010)
3.2.1 Upstream
Its upstream main focus is searching for and recovering oil and natural gas inside and outside the Americas. These activities are conducted as joint venture partnerships mostly with prominent local oil companies. As well, upstream condenses gas and engages in gas to liquids technology. (Shell Official website: Our Business 2010)
3.2.2 Downstream
The downstream business comprises a wide range of oil products in which involve refining, supplies, trading and shipping crude oil as well as manufacturing and marketing such products for example petrolfuels,lubricants, gas for household, transport and industrial use as well as other petrochemicals. (Shell Official website: Our Business 2010)
3.3 Corporate Governance
Royal Dutch Shell’s core valuesare honesty, integrity and respect for people which form the basis of the Shell General Business Principles (SGBP). The Board of Directoris committed to ensuring that the highest standards of corporate governance are implemented and maintained throughout the company. Internal controls activities take independent auditing and regular reviews for instance are the processes designed to support the principles and practices concurrent with core values in order to assure the company is achieving desired transparency and accountability.(Shell Official website: Corporate Governance 2010)
Shell’s business used to be greatly decentralized globally especially in the downstream with companies based in over 100 countries, each of them was operating independently whereas, the upstream had a tendency of more centralization with most of technical and financial practices directing from the head office in The Hague. However, all of Shell’s operations today are directly more centralized and managed from the offices in UK and Netherlands. It can be assumed that whereby the autonomy of �operating companies” has been displaced, more “global businesses” have been established. (Corporate Watch website n.d.)
References
Corporate Watch website, n.d., ‘Royal Dutch/Shell Group’, viewed 15 February 2010, <http://www.corporatewatch.org/?lid=302>.
Corporate Watch website, n.d., ‘The Evolution of CSR’, viewed 16 February 2010, <http://www.corporatewatch.org.uk/?lid=2682>.
Shell Official Website, 2010, ‘Corporate Governance’, <http://www.shell.com/home/content/src-en/corporate_governance/dir_corporate_governance.html>.
Shell Official Website, 2010, ‘Our Business’, viewed 14 February 2010, <http://www.shell.com/home/content/aboutshell/our_business/>.
Shell Official Website, 2010, ‘Shell at a Glance, viewed 15 February 2010, <http://www.shell.com/home/content/aboutshell/at_a_glance/>.
Shell Official Website, 2010, ‘The History of the Shell Logo’, viewed 15 February 2010,<http://www.shell.com/home/content/aboutshell/who_we_are/our_history/history_of_pecten/history_of_the_pecten_23112006.html>.
Shell United States Website, 2010, ‘Our Core Business’, viewed 15 February 2010, <http://www.shell.us/home/content/usa/products_services/solutions_for_businesses/energy_na/core_businesses/sena_core_business_welcome.html>.
Source Watch Website, 2010, ‘Global Climate Coalition’, viewed 15 February 2010, <http://www.sourcewatch.org/index.php?title=Global_Climate_Coalition>.
Suassuna K, 2001, ‘Contamination in Paulinia by Aldrin, Dieldrin, Endrin and Other Toxic Chemicals Produced and Disposed of by Shell Chemicals of Brazil’, for Toxic Substances and Technologies Campaign: Greenpeace Brazil, viewed 15 February 2010, <http://archive.greenpeace.org/toxics/reports/shellreport.pdf>.
[1] TheGlobal Climate Coalition(GCC) was one of the most outspoken and confrontational industry groups in the United States battling reductions in greenhouse gas emissions. Prior to itsdisbanding in early 2002, it collaborated extensively with a network that included industry trade associations, “property rights” groups affiliated with the anti-environmentalWise Usemovement. (Source Watch Website 2010)