Download - Royal Dutch Shell in Nigeria
ROYAL DUTCH/SHELL IN NIGERIA
CORPORATE SOCIAL RESPONSIBILITY Professor Déborah PhilippeHEC Lausanne Fall 2010CHRISTIAN KAUFMANN
BACKGROUND [1/2]
Different Actors within this conflict
Nigeria & Nigerian Government Despite its plentiful resources and oil wealth, poverty is widespread in
Nigeria (high unemployment & crime rates) with growing population Nigerian State is heavily dependent on oil sales 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 in Nigeria
Shell 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 region Virtually no compensation from government or oil companies for
their deteriorating life style
Ken Saro-Wiwa & MOSOP Nigerian author & environmentalist which headed the Movement for
the 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 Government
Arrested in 1994 with other 8 activists and sentenced to death by a military court for inciting murder.
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1. Why is Shell the subject of criticism 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 from refineries and chemical facilities.
Inadequate cleanup solutions to help solve the above issues
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1. Why is Shell the subject of criticism and controversy? [2/3]
Poverty & Underdevelopment Nigerian population and especially the Niger Delta citizens
live in 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
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1. Why is Shell the subject of criticism 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 Shell’s stated business principle of non involvement in political matters?
Common Practice Shell’s non-involvement principle is a common practice
among MNEs1
Poses Risk for MNEs to interfere in local matters
Undermine local sovereignty
SPDCs close link to Dictatorship cast doubt on neutrality Joint Venture & Security alliance
Need for active engagement in cases regarding human rights abuse Acknowledge share of responsibility (even by omission) Disinvest in extreme cases
71 Peng, Mike W. 'Global Strategy' 2nd Edition 2006 South-western
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 Saro-Wiwa & other 8 activists Threat to disinvest would have lowered risk of accusation of
collusion between Abucha and Shell
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4. What would you recommend for the future to Shell’s board of directors? [1/2]
Transform the relationship between civil society and their company from adversary to ally Become more transparent
Ensure robust, independent and coordinated oversight of their oil activities including the impact on human rights
Develop a relationship of trust among the Delta inhabitants Opening lines of communication between the company and
the community Allowing citizens to play a small role in the decision-making
process can go a long way in rekindling a tarnished relationship
Work together with communities & development agencies to identify priority projects and implement them
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4. What would you recommend for the future to Shell’s board of directors? [2/2]
Formulate clear guidelines for disinvesting If violence or human rights abuse escalate in
Nigeria SPDC should be prepared to make difficult
decision
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