Royal Dutch Shell in Nigeria

 

ROYAL DUTCH/SHELL IN NIGERIA CORPORATE SOCIAL RESPONSIBILITY CORPORATE RESPONSIBI LITY Professor Déborah Philippe HEC Lausanne Fall 2010 CHRISTIAN KAUFMANN

 

BACKGROUND [1/2] Different Actors Actors within w ithin this conflict  Nigeria

& Nigerian Government Government

 Despite

its plentiful resources and oil wealth, poverty is widespread in Nigeria (high

unemployment & crime rates) with growing population  Nigerian State is heavily heavily dependent on oil sales accounting accounting for 80% of government revenues and 90% of foreign exchange  Military

rule for more than 30 years with corrupt system ( negligent sovereign & unreliable business partner)

 Royal

Dutch Shell

 Operating

in Nigeria (Niger Delta) since 1958 as SPDC

 Joint

venture between SPDC, BP and the Nigerian Government (NNPC) since 1973. (NNPC increased stake in venture over the years)

 By

the mid-1990’s SPDC controlled about 60% of Nigeria’s oil reserves and generated about $235 million in profits for the year 1994.

 Unpopular

 Shell

in Nigeria

employees and equipment are constant targets of attacks 2

 

BACKGROUND [2/2]  Ogoni

People

 Tribe

in the Niger Delta which depend on the natural resources of the Delta to survive (farming & fishing)

 Affected

negatively by the oil activities in their t heir region

 Virtually

no compensation from government or oil companies for their deteriorating life

style

  Ken

Saro-Wiwa & MOSOP

 Nigerian

author & environmen environmentalist talist which headed headed the Movement Movement for the Survival Survival of the Ogoni People (MOSOP)

 Strong spokesperson against the Nigerian Gov. and SPDC  Focused on creating international awareness for their cause  MOSOP 

wrote the Ogoni Bill of Rights

Demand political autonomy & compensation

 Focused

on creating international awareness for their cause

 Represented 

a growing problem for Shell & Nigerian Governmen Governmentt

Arrested in 1994 with other 8 activists and sentenced to death by a military court for inciting murder. 3

 

is Sh Shell th the su subject of of cri critticism 1. Why is and controversy? [1/3]  Degradation

of the Niger Delta environment by processes of oil spills and natural gas flaring (“ecological disaster?”) 

Decades of regular oil spills both on land and offshore



Disposal of waste into waterways

 Natural

gas flaring

 Devastation

of acid rain to the land and people



Other environmental issues include: deforestation and loss of  biodiversity,, water contamination and air pollution  biodiversity pollution from refineries and chemical facilities.



Inadequate cleanup solutions to help solve the above issues 4

 

1. Why is is Sh Shell th the su subject of of cri critticism and controversy? [2/3]  Poverty

& Underdevelopment

 Nigerian

population and especially especially the Niger Delta Delta citizens live in poverty poverty while SPDC are making millions in profits

 Due

to environmental damage access to food and clean water become more limited 

Violation of human rights

 Delta

population severely under compensated by Shell and the Nigerian government for their oil activities

 Close

Ties to Dictatorship

 Joint

venture with NNPC

 Need

for protection from attacks



Request for increase in security and provide monetary and logistical support to the Nigerian police 5

 

1. Why is is Sh Shell th the su subject of of cri critticism and controversy? [3/3]  Easier

target for criticism

 Multinational

company can be more easily held accountable than a military dictatorship 

Ken Saro-Wiwa used this in his favor to attract international attention for the cause of the Ogoni people

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2.

 

What do you think of Sh Shell’s stated business  principle of non involvement in political matters?

 Common 

Practice

Shell’ss non-involvement principle is a common practice among Shell’ MNEs1 

Poses Risk for MNEs to interfere in local matters

 Undermine

 SPDCs 

local sovereignty

close link to Dictatorship cast doubt on neutrality

Joint Venture Venture & Security alliance

 Need

for active active engagement in cases regarding regarding human rights rights abuse



Acknowledge share of responsibility (even by omission)



Disinvest in extreme cases

 Peng, Mike W. 'Global Strategy' 2nd Edition 2006 South-western

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3.

What, if anything, should Shell have done differently during its time in Nigeria? [1/2]

 Superior

operating standards

 Oil

production represents a high risk for communities in the Delta region & absentee government puts further responsibility on SPDC 

Increased standards of good practice to avoid oil spills



Adequate clean up procedures for contaminated land and



water Increased assessment of environmental and social consequences from operations 

Third party involvement to ensure reliability

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3.

What, if anything, should Shell have done differently during its time in Nigeria? [2/2]

 More

proactive engagement with the communities in the Niger Delta region 

Rather than rely on military oppression to assure security 

Legitimize themselves through development projects and community investment

 Since

local government is not reliable to implement policies & compensation to ensure basic rights for their population ➔

Plan & act independently (with help of NGOs) to ensure better implementation of environmental & social policies to the people directly affected by their operations

 More

proactive engagement concerning the unfair trial of Ken SaroWiwa & other 8 activists 

Threat to disinvest would have lowered risk of accusation of collusion  between Abucha and Shell 9

 

4.

What wo would you rec reco ommend for th the fu future to Shell’s board of directors? [1/2]

 Transform

the relationship between civil society and their company from adversary to ally  Become 

Ensure robust, independent and coordinated oversight of their oil activities including the impact on human rights

 Develop 

more transparent

a relationship of trust among the Delta inhabitants

Opening lines of communication between the company and the community 

 Work

Allowing citizens to play a small role in the decision-making process can go a long way in rekindling a tarnished relationship

together with communities & development agencies to

identify priority projects and implement them 10

 

4.

What would you recommend for the future to Shell’s board of directors? [2/2]

 Formulate  If 

clear guidelines for disinvesting

violence or human rights abuse escalate in Nigeria SPDC should be prepared to make difficult decision

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