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

Royal Dutch Shell in Nigeria

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Page 1: Royal Dutch Shell in Nigeria

ROYAL DUTCH/SHELL IN NIGERIA

CORPORATE SOCIAL RESPONSIBILITY Professor Déborah PhilippeHEC Lausanne Fall 2010CHRISTIAN KAUFMANN

Page 2: Royal Dutch Shell in Nigeria

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

Page 3: Royal Dutch Shell in Nigeria

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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Page 4: Royal Dutch Shell in Nigeria

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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Page 5: Royal Dutch Shell in Nigeria

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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Page 6: Royal Dutch Shell in Nigeria

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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Page 7: Royal Dutch Shell in Nigeria

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

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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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Page 9: Royal Dutch Shell in Nigeria

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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Page 10: Royal Dutch Shell in Nigeria

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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